I Want To Change TV: Mitch Berman, CEO of ZillionTV (Part 2)

SM: They are using the Internet connection to download movies to the set-top box and view them from there.

MB: Yes. Again, you have three distinct flavors: Internet TV companies going directly to the PC, traditional operators, and independent boxes all providing video services. That is a highly competitive and confused landscape. Going back to how we began this conversation tied to the idea of an ecosystem, I believe the company that understands the balance between consumers, advertisers, content providers and ISPs will win, if they create the right balance and business model.

SM: Let’s talk about the business model for a second. As a consumer I can consume television, video or film. I can view ad-supported TV free. There is a pay-per-view model with subscription or transaction options. Does that reflect the options the consumer has today?

MB: Almost. With ZillionTV, consumers have the option to rent, buy to own, or watch ad-supported movies or TV shows free. However, the policies vary from program to program, as the content providers set the rules. So, not all programs are free with ads. ZillionTV is attempting to prove the value of what is called AVOD, advertising video on demand. No one has done AVOD on TV to date. ZillionTV is attempting to prove its value. Above all, ZillionTV does not do subscription. ZillionTV is a subscription-free service. With ZillionTV you do not need postage, PCs or subscriptions.

SM: For cable TV you have to pay subscriptions to get part of it, and then you get the free channels included.

MB: Yet you still get ads on the portion you are paying for. Unless you have rabbit ears nothing is really free, but then again with the digital transition you are still paying. What you just said is really important. You said free subscription. However, people pay $100 on average in this country to get cable “free.”

SM: I am saying we have cable television and non-cable television.

MB: Yet how do you access TV content on cable? You have to have a cable subscription to get it, unless you are among the 5%  of people in this country who have no subscription service at all. Those are the folks who need to buy a digital converter box from the US government, as analog airwaves are being shut off.

SM: I remember at one point when I watched very little television I used my monitor as a Netflix viewing box. I didn’t have access to cable, but it was there.

MB: How long ago was that?

SM: It was a long time ago.

MB: Less than 5% of the United States TV households, mostly in rural areas, have no television subscription service.

SM: So it is all cable?

MB: No. Cable or satellite.

SM: Cable or satellite. Cable is X dollars a month plus advertising. So there are two forms of monetization for the provider. What is satellite?

MB: Similar business model. You pay a monthly subscription to watch TV. There are different packages that include movies, sports and pay-per-view. The difference with satellite is you need to install a dish on your roof and there is no true broadband service available. In addition, you have to pay for your set-top box.

SM: With cable you don’t pay for the box?

MB: You do pay. Go look at your monthly cable bill and you will see that you are renting the box for about $4.95 a month.

SM: So you pay for the hardware, the subscription, and indirectly for the advertising. Those are the three ways television companies are monetizing and consumers are accessing television. Is there anything else like IPTV? Aren’t they just charging for the box?

MB: The IPTV operators are doing the exact same thing as the cable and satellite operators. You get installation of a box, you pay the box off on a monthly basis and you pay a subscription every month.

SM: OK, so that is the baseline we are working with.

MB: Yes. It’s a business model that has been in place for over 40 years. That is what 100 million TV households in the US are doing right now. The Hulus of the world are on a PC screen, not a TV screen. They are not doing subscription, but attempting to monetize content via ads on a PC. Those video programs are free to watch on a PC screen one-on-one. Television is a communal experience. All of the statistics say that if I watch a movie or TV show, I prefer the big screen. If you go down to Best Buy you will notice that the TVs are getting bigger, not smaller.

This segment is part 2 in the series : I Want To Change TV: Mitch Berman, CEO of ZillionTV
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