Todd Weaver’s playing for keeps.

The founder and CEO of ivi Inc. says he’s not going to let a copy infringement lawsuit from several major broadcasters, including CBS Corp. (NYSE: CBS), NBC Universal , Fox Broadcasting Co. , and Walt Disney Co. (NYSE: DIS)/ABC, stop his company from retransmitting live broadcast signals over the Internet.

Weaver tells Light Reading Cable that the firm, which recently began distributing feeds from TV stations in New York and Seattle via the ivi.tv Website, will soon begin encoding signals from stations in Los Angeles, San Francisco, and Chicago.

While ivi’s $4.99 monthly subscription service is available today as a desktop application, Weaver says ivi will soon expand to other Internet-connected devices, including the Apple Inc. (Nasdaq: AAPL) iPad and iPhone. By targeting college kids and other consumers that are cutting the cord on subscription cable and satellite TV services, Weaver says ivi also wants to distribute content to over-the-top Internet video services and hardware from sources such as Boxee and Roku Inc. , along with Internet-connected TVs.

In an interview with Light Reading Cable, Weaver says ivi is also talking to cable networks about distributing their programming, and hopes to offer viewers à la carte programming options.



Contents:

— Steve Donohue, Special to Light Reading Cable



Light Reading Cable: How can you afford to wage this fight?

Weaver: People assume that you must have an absolute war chest and have a billion dollars to claim that you are not infringing on copyright. It is an expensive process. It’s a legal process, and we have the leading IP [intellectual property] firm out of Seattle representing us -- Black, Lowe & Graham. They [broadcasters] are saying we’re infringing on copyright. We’re saying we’re not, according to US copyright law. We point at the same paragraph they point at. It’s really not a multibillion-dollar effort. It is something that is a known legal plan, and so we are plowing forward.

Light Reading Cable: You’ll continue to operate as the litigation moves forward?

Weaver: Absolutely. Any time you’re facing a lawsuit against the names that we have in the suit right now, that does affect the business as we have to then talk about that whole piece. However besides that added hardship, it is business as usual. We’re going to continue to add markets. We’re continuing to add a large number of subscribers, and the legal proceedings will continue.

Light Reading Cable: Haven’t other companies tried to retransmit live TV signals on the Internet -- there was a company called iCraveTV?

Weaver: It in no way relates to what we’re doing. That the consumer has the ability to watch live TV on the Internet is about where the similarities end. They weren’t paying the broadcasters. They were not conforming to US copyright law.

Light Reading Cable: There’s another site called Filmon.com/TV. Are you familiar with them?

Weaver: What I gather is it’s a me-too service. We did incorporate before they did, and ran beta tests well before they did.

Light Reading Cable: When it comes to the idea of a virtual cable company, couldn’t anyone retransmit TV signals via the Internet, pay a compulsory license fee, and compete with you?

Weaver: We’ll see competition. Even YouTube, with their live streaming, that can become a competitor if they wanted to become an online cable system like us. And Hulu could, and cable and satellite companies could try to create an offering that’s similar.

At the end of the day it’s going to come down to technological hurdles. The ability to have it where it’s easy to tune, change channels, have it be continuous TV with a similar reliability that you get in your living room, is what I think really sets us apart.Next page: Chasing à La Carte

Light Reading Cable: Are you looking at striking deals with cable programmers or cable networks to retransmit basic cable networks or offer individual shows?

Weaver: Absolutely. We formed our beachhead in live distribution and we are in negotiations. We have distribution agreements out -- we’re talking with a lot of cable channels. We have the ability to create some pretty unique packaging options as well so somebody can select a smaller package or à la carte channels that they’re interested in.

Cable offers a large package that people pay a massive amount of money for when they only want 10 channels. The problem is that every single person who wants 10 channels wants a different 10 channels. Our platform can easily handle à la carte and handle the ability for monetizing, where the content owner can set the price. ESPN or HBO or Food Network could set the price -- $7.99, $3.99, $2.99 -- and the consumers will be able to decide if it’s worth it for that channel or not, and be able to customize their package.

Content owners, because of the legacy structure of the industry as a whole, some of them will be locked into packages. But other ones are researching and looking at doing à la carte as a new form of carrying their content to people.

Light Reading Cable: Most of the established and fully distributed cable networks are opposed to à la carte distribution.

Weaver: It really is case by case. If you were to take the case of ESPN, and let’s say Viacom-owned channels, they have existing contracts where it’s not going to be a short-term thing for them to roll into à la carte. That is what the future is going to be, but it’s going to take time for those contracts to finally expire and roll into new negotiations where they can do it.

And there are some other [premium] cable satellite channels that are currently à la carte, and there are some independents, newcomers, that are perfectly fine with being in a package as well as à la carte so people can pick and choose.

We have the platform and the ability to securely protect all content and monetize every view, handle à la carte subscriptions, or handle package offers.

Light Reading Cable: Are there any local broadcasters that support ivi, that like what you’re doing?

Weaver: The broadcasters -- when we met with KING-5 Seattle, here locally in Seattle, it was exactly the same thing as the industry as a whole. Initially there’s major freak-out. But after their station manager scratched the surface, he was the one who said to us, “After I think about it for a second, I increase my viewers, those statistics are going to be tracked by Nielsen and other ratings services, and so my rate card for advertising gets to go up, and in turn you’re paying the statutory compulsory licensing, so I’m going to get revenue back from that as well, which is identical to what cable and satellite do.”

We are just a third distribution means. So it’s something new, it’s something innovative, and of course we’re going to get that initial, “I must protect my content” piece. However it is not illegal, it is a perfectly legal. We’re following every letter of the law and are distributing content legally, and broadcasters are paid.

Light Reading Cable: So KING-5 isn’t suing ivi? They actually support what you’re doing?

Weaver: Well, “support” would mean that they’re rallying behind it, or voicing their support. There are a lot of broadcasters who have not sent us cease-and-desists, but their parent network has. [Ed note: Belo Corp. owns KING-5, which is an NBC affiliate. NBC has sued ivi.]

Next page: Subscriber Targets: Cord Cutters & the Cordless

Light Reading Cable:How many subscribers have you signed so far?

Weaver: Our subscriber numbers are blowing up, but we’re not going to disclose the exact count. It’s an overwhelming number.

Light Reading Cable:Who are the subscribers -- early adopters, cord cutters, college kids?

Weaver: We were expecting right out of the gate for it to be industry insiders, and then early adopters. Right now it’s a pretty amazing spread across the demographics. We certainly do have the industry insiders, because a lot of our initial press releases were to the industry. We’re seeing housewives in the middle of the country who can’t get a good enough digital signal but they can watch online, [as well as] youth [who are] directly in Manhattan.

Light Reading Cable:Who do you expect your largest user base to be?

Weaver: Cord cutters are going to be a big piece, but the youth is such a huge market, where they don’t establish a cord to begin with. With cable prices continuing to jack higher and higher, people are really starting to look at alternatives. Next page: Device Roadmap: PCs Today, iPads & Androids Tomorrow

Light Reading Cable: When could we expect to see ivi available on an iPad, iPhone, Android phone, or other mobile devices?

Weaver: The roadmap is really about a new device every two to three months. After iPad, which is the hottest device that we’re looking to have out in the [iTunes] App Store, probably mid-October, then we move to the iPhone because it’s a similar device. Then we’ll be adding the Android, and after that it’s various devices. It’s either going to be set-top embedded, like a Roku or Boxee, or we might go straight to Internet-connected TVs like a Vizio.

Light Reading Cable: Are you talking to the over-the-top players like Boxee or Roku?

Weaver: We have met with them, a little while ago, before launch. After launch, we haven’t reached out to them. However we have had some of their developers contact us for porting to their devices, so there is definitely a demand for it.

Light Reading Cable:Why did you launch in New York and Seattle first? How will you decide which markets to go into next?

Weaver: Seattle is our backyard. It was easy to deploy and get things tested out. We started with Seattle and then added New York, and we’re going to be adding Los Angeles, Chicago, and San Francisco.

Light Reading Cable: If I live in Seattle, am I only going to get the Seattle stations? Are you also delivering those signals to out-of-market viewers?

Weaver: It’s a place shifting, where you can be in L.A., and see the Seattle channels and also see the New York channels. We pay a higher rate for any viewers that are outside the markets. It’s all calculated according to US copyright law. If the consumer is in the Seattle market and they’re watching Seattle channels then the royalty payment is slightly less. If they are out of market it is a higher rate.

— Steve Donohue, Special to Light Reading Cable