Sezmi drops basic cable channels

Sezmi, the hybrid broadcast/over-the-top Internet service, announced last week that it will discontinue its $19.99/month bundle of 23 basic cable channels. The cable channel service was only launched in a portion of the Los Angeles market, and Sezmi claims that customers didn't want it, although it was the only thing differentiating the Sezmi service from a good over-the-air antenna.

Now, Sezmi is falling back to a package combining broadcast TV, video-on-demand and Web content for $4.99/month. However, in order to use the Sezmi service, subscribers need a high-speed Internet connection and Sezmi's $150 bundle of a broadcast antenna and 1 Terabyte DVR. By comparison, consumers could subscribe to the ivi TV service for $4.99, which only requires a high-speed Internet connection and runs on most personal computers.

I don't think that lack of customer interest was the only, or even the primary, reason why Sezmi dropped its cable package. However, Sezmi now has an additional problem--many customers in its 35 other markets bought the Sezmi system with the expectation that they would eventually get access to the cable channel package. Now that the cable channel option is dead, I expect many users to discontinue the service or demand refunds.

Sezmi has changed its focus to providing IPTV services for telecom providers in countries with minimal infrastructure, such as the company's recent deal with Malaysian service provider YTL Communications, using YTL's LTE wireless network. As a result, the eventual discontinuation of its U.S. service may not be a big problem. However, Sezmi's problems once again illustrate the difficulties for new players trying to break into the U.S. multichannel video business.