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Sezmi says goodbye. Here’s why.

Sezmi has hit the deadpool, at least from the consumer perspective. The company, which had offered a combination of over-the-air broadcast content and some streaming video, announced it has shuttered its consumer-facing services and will be focusing on selling its hardware to operators instead. The decision comes after finding little customer adoption, despite raising some $71 million.

Here are the top five reasons Sezmi was unable to convince cord cutters to pony up for its service:

1. Expensive proprietary hardware

When Sezmi first launched, its combination of over-the-air tuner plus online streaming hardware cost a whopping $299. The price came down as time went on, but even at $149, the hardware was too expensive for most people to justify purchasing — especially since the hardware was incompatible with other services. Moreover, consumers have caught on that proprietary systems rarely pan out, meaning you’re often left with a useless piece of hardware if the service shuts down, as Sezmi eventually did.

2. A confusing value proposition

Not only was Sezmi’s hardware expensive, but it wasn’t clear what users were actually getting with the package. In addition to the one-time hardware cost, users also had to pay $4.99 a month for access to broadcast content — like ABC, (s DIS) CBS, (s CBS) Fox, (s NWS) NBC, (s CMCSA)(s ge) PBS, Telemundo and Univision — which most would be able to access through a regular old HDTV antenna, and without having to pay a recurring monthly fee. Live in Los Angeles? Then you were in luck, and could sign up for a $19.99 per month Plus Service, which also included cable networks like Bravo, CNN, (s TWX) Comedy Central, (s VIA) Discovery, (s DISCA) MSNBC, MTV, TBS, TNT and USA. Either way, it wasn’t clear why a user would choose Sezmi over streaming services like Netflix (s NFLX) or Hulu Plus.

3. Not enough content

For the amount of money Sezmi was asking its users to put down for hardware, plus the amount they would have to pay each month, there was very little to differentiate the service from alternative video sources. Outside of a few live broadcast channels, Sezmi didn’t offer much that users couldn’t find elsewhere. Sure, it had access to some streaming content like YouTube videos, (s GOOG) but that wasn’t enough to compete against the 250 or so channels available through streaming set-top boxes from the likes of Roku or Boxee.

4. Consumers not cutting the cord quickly enough

While there are plenty of reasons to believe what Sezmi had to offer just wasn’t good enough, there’s also the matter of timing. Sezmi might have been a little ahead of the adoption curve, in terms of releasing a hardware-based solution to help users cut the cord and not rely on cable anymore. Sezmi’s hardware was first announced in 2008, but didn’t become widely available until last summer. Even so, the number of users who have cut the cord over the past year or so looks to be limited, even if we expect that number to grow in the future.

5. Too many other choices out there

At the end of the day, though, users who wished to cut the cord had a number of hardware options and services to choose from. On the hardware side, Sezmi was not only up against streaming boxes, but connected TVs and Blu-ray players, as well as game consoles offering streaming services that people already had in their houses, not to mention the vast amount of content that consumers could access from Netflix, Hulu Plus, Amazon Prime Instant Videos (s amzn) and other services. With so much choice out there, it was too difficult for Sezmi to make a dent in the market or convince users why they should standardize on its proprietary hardware or pay for its broadcast TV service.

9 Responses to “Sezmi says goodbye. Here’s why.”

  1. I loved my Sezmi, especially the huge size of the drive, and not having to pay for cable. I did recently sign up for Dish, but am already hitting the drive limit. Is there a way to use the Sezmi to record or is it now just an expensive paperweight– I was one of the original $300 purchasers!

  2. Jars Klaus

    Sezmi was a Ponzi scheme all along. For Buno and its founders to live like fat cats off venture money. Their claim to fame was making false and outrageous claims. They only lasted this long because Bob Pavey at Morgenthaler was too stupid to know better. This company raised over $100Million. Worse scandal than Solyndra.

  3. JeffCarter

    Main Reason they died: They never communicated their strength, which was time shifted recording of high definition TV for $150 capital investment and a paltry $5 a month. Is there anything out there even remotely similar cost/benefit?

  4. Sezmi was a free-spending company with a faulty view of what consumers want. With over $90 million spent you’d think they would have done some market studies and figured out they were wrong.

  5. I had Sezmi for over a year an the service was very adequate for OTA channels. Images were bold,shape and clear because no cable providers’ compression. I had the system for my daughter just for kids programs like Caillou and Sesame Street.

    I concurred with Mr. Lawler’s 5 points for Sezmi’s demise. I will add another, content providers said no in almost all markets. I am really surprised Sezmi even last this long. Oh well…

  6. Chris Painter

    I would even question their ability to gain traction as a provider of just hardware to other MSO’s. After testing their hardware and service for a month, I returned my system. Partly for the reasons you mentioned above, but also because the hardware was a mess, way too many cables and complex to setup. The UI and overall on screen experience wasn’t much of an improvement over others I’ve used either. If Tivo, with their well known brand and accolades for their experience struggle to get MSO’s to bite, I imagine Sezmi will not fair much better.