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ZillionTV's Investors Said To Be Shopping Its Assets

ZillionTV, the startup developing an ad-supported broadband IP video service for telcos, appears to have ceased operations and its backers are now in the process of trying to sell its assets, according to two sources familiar with the company.

The phones and fax line listed for ZillionTV's main office -- most recently at an address in Santa Clara, Calif., according to its website -- have been disconnected.

Reached via e-mail, ZillionTV chairman and co-founder Mitch Berman declined to comment on the status of the company. He added that he would be "glad to speak" in December.

ZillionTV received a $4 million seed round of funding from Sierra Ventures and Concept Ventures in December 2007. In addition, Qwest Communications in early 2009 invested a reported $10 million in return for the exclusive rights to offer the IP-delivered service in its footprint.

Sierra Ventures managing director David Schwab and Concept Ventures managing director Julien Nguyen did not respond to requests for comment. A Qwest spokeswoman on Wednesday reiterated that the telco "made a very small, or immaterial, investment in Zillion" in 2009 but otherwise had no additional comment.

ZillionTV, which at one point had around 100 employees, had been expecting to launch its service commercially in the second half of 2010 with Qwest and other telco partners over DSL broadband connections.

The company touted content-distribution agreements with five major Hollywood studios -- Walt Disney Co., 20th Century Fox Television, NBC Universal, Sony and Warner Bros. -- and was hoping to launch with 15,000 titles available for free, to rent or for purchase. ZillionTV also claimed to have backing from Visa and set-top chip manufacturer Sigma Designs, which provided the media processor for its set-top.

According to one industry source, ZillionTV's content-distribution agreements with the movie studios would not be transferrable to an acquiring entity.

ZillionTV's idea was to sell subscribers a subsidized Internet-connected set-top (for less than $100) and let them watch free TV shows and movies after sitting through targeted ads, or sell them transactional VOD content. The startup had even envisioned adding a TV commerce component by linking users' Visa cards with the service to purchase products directly from their TV.

In October 2009, ZillionTV hired Jack Lawrence as its CEO, who took over management duties for Berman. Previously Lawrence was CFO of games company Cranium and Dotcast, which had supplied underlying datacasting technology for Disney's now-defunct MovieBeam service.

Berman, prior to joining ZillionTV, was corporate vice president of global marketing for C-COR, the video-on-demand vendor acquired by Arris in December 2007. Prior to C-COR, he headed marketing and operations for interactive television middleware vendor OpenTV, and had worked at E! and HBO.