ZillionTV: Part Deux

I admit, I was a bit harsh on ZillionTV last week. I based my report on a limited amount of information - essentially, the press release and the Web site - both of which left a lot of room for interpretation.

Shortly after that item posted I heard from ZillionTV and had a nice long chat with CEO Mitch Berman and Senior VP Mike Catalano.

"You made us look like the Sheriff of Nottingham, but we're really Robin Hood," says Berman.

The former HBO exec says he and Catalano built ZillionTV to serve consumers by trying to break the logjam of rights management and "availability windows" that makes video on demand so very frustrating. But the only way to make it palatable to content owners (aka, Hollywood) was to ensure that everyone got a piece of the action -- hence the targeted advertising model.

"If we can create a balance where everyone gets something out of it, ultimately consumers will win," he says. "We're acting as a bridge representing the consumer point of view to [Hollywood], so we can get as close as we can to doing the kinds of things people want to do."

Berman also says the quality of the service is far superior to Netflix Watch Instantly and other streaming video services. LATimes.com's Jon Healy had the benefit of seeing ZillionTV in action. Here's what he had to say about the quality:

I watched a bit of ZillionTV in Berman's office in Santa Monica, and the images were quite impressive. Seconds after programs were selected, they began playing in what looked to me like DVD quality -- a welcome contrast to the delays inflicted by Hulu and Netflix's streaming services. ... Just as impressive was the motion-sensitive remote control, which enabled Berman to select items simply by pointing at the right spot on the screen and clicking.

A few other corrections and elaborations:

1. Berman says the activation fee for the box will be just shy of $50, not $100 as I reported (that misinformation came from Reuters, fyi). Why charge a fee? Because people are more likely to use the service if they have to pay something for it up front, he says.

2. Though the major studios are equity partners, along with Visa, they don't own a majority of shares and they aren't running the show, says Berman. In fact, he says his biggest challenge has been convincing skeptical studio execs to ditch their old business models and experiment with his scheme, which makes up for lost rental revenues with targeted ads and direct-to-consumer sales.

3. You don't have to watch ads if you don't want to. In most cases you'll have a choice between watching an ad-supported program or ad-free pay-per-view. The ads will precede or follow movies but not interrupt them.

"When I told the content owners I wanted to give consumers the choice to watch programs for free, they held a cross up to me like I was Dracula," Berman jokes.

Berman is hoping ZillionTV will allow advertisers to break out of the rigid 30/60/90-second spot and get more creative - like making episodic ads where part one precedes the show and the conclusion comes after.

4. Here's the key point: The personalization aspect of the service is entirely OPT IN, says Berman. If you don't want to share your programming or advertising preferences, you don't have to. You won't see targeted ads, and ZillionTV won't suggest other shows you might want to watch, based on your habits.

5. Even if you do opt in, advertisers won't know who you are or what you've watched, though ZillionTV will. It will act as the intermediary to deliver targeted ads. If you purchase something via the service, the seller will have your name and shipping address, but little else, says Berman.

On the other hand, if you do opt in, ZillionTV is collecting a lot of information about you - your name and address, demographic information, your viewing preferences, the programs you've watched, the commercials you view, and what you end up buying. The service could also be used to survey users or test-market products to gather consumer feedback. Upcoming "loyalty programs" could add more information about you, depending on what they involve.

Catalano says ZillionTV collects the same data on viewing habits as video-on-demand providers like Comcast, which records the names of every program you've purchased. (I've got a query into Comcast about what they collect and how long they keep that info; I'll update this item if they respond.)

Over time, ZillionTV could build a very rich profile of you and your interests, tied directly to your identity. As described, this goes beyond what Comcast, TiVo, or even targeted Web advertisers collect. It's a level of data collection I haven't seen before.

However, Berman and Catalano pride themselves on being privacy advocates. And Zillion's privacy policy says it won't share this information with third parties without your consent -- unless, of course, it gets a legal order to do so.

That means if Uncle Sam (or your spouse's divorce attorney) comes a-knockin' at their door wanting to know what programs you watch, ZillionTV may have to tell them. If you're nuts for NASCAR and American Idol, it's unlikely to bother you very much. If some day ZillionTV's offerings include the Al Jazeera News network or adult content, it might.

Data collected for one purpose but used for another is often fraught with peril -- and always for the folks whose data got collected. If ZillionTV is acquired, the new owner may have other ideas about how it wants to use those profiles. Whenever a lot of data collects in one place, the risks increase.

Many people would happily give up their personal information and view commercials if they can watch what they want, when they want, for free. ZillionTV is banking on it. As long as you go into it with both eyes open, that's fine. But we won't know for sure what kind of data ZillionTV collects or how well it's protected until the service rolls out nationally later this year.

Stay tuned.

Sofa tuber Dan Tynan gets off the couch just long enough to tend his blogs, Culture Crash and Tynan on Tech.

Copyright © 2009 IDG Communications, Inc.

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