Video services

Sezmi Raises Cash, Slims Down

Sezmi Corp. , the startup planning to use digital-TV spectrum to deliver a video service for telcos, has picked up another $33 million to build out its network.

But it's also told The New York Times that it cut about 20 percent of its staff of 100 to cope with the impact of the economic downturn. There's plenty of that going around. (See Hatteras Chops Headcount and Orckit Hunkers Down, Axes 90 Jobs.)

The funding, announced late Tuesday, came from new investor Advanced Equities Inc. and prior investors, including Morgenthaler , OmniCapital Group LLC , Telecommunications Development Fund (TDF) , and Legend Ventures LLC . (See Sezmi Scores $33M.)

Sezmi, founded in 2006, had previously raised $17.5 million. (See Sezmi Corp..)

The latest money appears to be part of a planned $51.5 million round that was outlined by Sezmi in a recent Securities and Exchange Commission (SEC) filing.

Earlier this month, Sezmi announced it had gotten its TV service through technology trials in the Seattle area, proving that the idea at least works. (See Sezmi Passes Trial Phase.) Now the company needs to work towards its planned commercial launch in 2009 as well as acquire spectrum licenses for other U.S. markets.

The company broadcasts most of its TV channels over spectrum owned, but unused, by local TV stations, which provide full usage rights to Sezmi. That is augmented with DSL-based delivery of Internet video and more obscure channels. All the services are viewed using a TV set. (See Sezmi Aims Beyond IPTV.)

Sezmi's planned business model is to offer the full service to telcos as an alternative to an IPTV package, the key point being that Sezmi doesn't send most channels via the Internet.

Sezmi hasn't needed to build a network -- its main task has been to create a content package that includes all the TV channels regular viewers expect to be able to view. Some observers say this puts the service at risk of looking incomplete next to the services on offer from cable operators, or next to the packages SES Americom and other aggregators can already offer telcos. "There's always one channel that somebody wants that you don't have," says Colin Dixon, an analyst with The Diffusion Group (TDG) .

Dixon has his doubts about Sezmi's chances, given that the company and its telco customers have to convince the public they've got something better than existing TV options. "It's tough when you're in a saturated market like the U.S.," he says. "What we always tell people is: Don't substitute. Augment. Then the infrastructure is going to build itself around you."

Still, Sezmi hopes it's got an advantage in terms of being able to handle a full-blown telco TV service.

"While we see other systems try to cobble together set-top boxes and middleware, we've built this thing completely end-to-end," Sezmi chairman Phil Wiser says.

— Craig Matsumoto, West Coast Editor, Light Reading

COMMENTS Add Comment
Pete Baldwin 12/5/2012 | 3:26:11 PM
re: Sezmi Raises Cash, Slims Down This hadn't occurred to me before, but I wonder if Sezmi's digital antenna will make the marketing pitch to consumers at all awkward.

Maybe I'm overthinking this. After all, if a telco offers Sezmi to someone who's using over-the-air TV, that person is going to need a digital antenna anyway, right? But as someone who's used cable for a couple of decades, the thought of having an antenna would be a definite change.

Sezmi's bigger challenge probably still lies in establishing scope -- it will take some legwork for them to get into each new market. I still appreciate the ambition of the idea. We'll see where it goes.
Jeff Baumgartner 12/5/2012 | 3:26:11 PM
re: Sezmi Raises Cash, Slims Down Using this technology to deliver paid TV services historically hasn't been successful -- see Moviebeam and USDTV. But I think Sezmi's got a better chance at survival. USDTV went after the "cable-nevers" segement with a relatively inexpensive product and limited programming lineup, but ended up signing up fewer than 10K subs before shutting it down. Sezmi certainly has more buzz (and a more interesting product) than USDTV did...just not sure if they'll be able to get enough subs to pay the freight.
Sign In