When Sezmi launched its TV service in greater Los Angeles this week via an exclusive deal with Best Buy, it made a strong bid to poach cable customers fed up with high fees.
Sezmi’s main sell is that it offers what looks like a basic cable package at a fraction of the cost. Those willing to cough up $299 for the hardware plus a monthly fee of $19.99 can receive all of the region’s over-the-air TV stations (their high-def main channels, plus their digital subchannels), Web video, on-demand content and — here’s the rub — 15 cable channels, including USA, TNT, Discovery, MTV and CNN.
A cheaper $4.99-a-month option gives access to all the broadcast and Web content, but not the cable networks.
Sezmi has signed distribution deals with the cable nets similar to those of a cable operator, says prexy Phil Wiser. But in a twist, Sezmi distributes the cable channels over the air by leasing unused spectrum from local broadcasters for transmission; only Sezmi customers can decode the encrypted content.
Sezmi’s reliance on traditional over-the-air technology got a boost last June when the entire country switched over to government-mandated digital broadcasting. This made antenna reception of TV stations clearer and gave local broadcasters the spectrum space to offer their additional subchannels — which are available via Sezmi but, for the most part, not from cable operators.
The $299 kits sold by Best Buy include a “smart” over-the-air antenna and a set-top box that customers connect to both their TV sets and broadband service. The box stores up to 1,400 hours of programming and also functions as a DVR that organizes Sezmi’s services in a browsable fashion.
“Consumers are frustrated with the current services that are available, and not just from a pricing standpoint,” Wiser said. “It’s still hard to just turn on the TV and find something to watch,” which, he said, is “unacceptable” in an age when it’s so easy to browse the Internet for content.
Sezmi’s launch this week follows a test run last November, when the company limited its universe to a thousand L.A. subscribers. “The goal was to get feedback,” said CEO Buno Pati. “What happened was overwhelming. Within two weeks 14,000 had signed up. We had to turn most of them down.”
But that trial was free and is not necessarily a good indicator of how the public will respond to a service that asks for $300 up front.
Venture-capital-backed Sezmi has received about $75 million via three rounds of funding. One of its board members is Andrew Lack, a top Bloomberg exec and former NBC chief operating officer.
The company says its L.A. launch is the first phase of a national rollout. It plans to make the service available in all parts of the country where TV households get good over-the-air reception of local stations.
Best Buy, with which Sezmi has “more than a simple retail relationship,” per Wiser, will remain the exclusive Sezmi store nationwide.