The self-install service, called Sezmi, requires a high-speed Internet connection and costs a one-time fee of $149 for the equipment, which includes a TiVo-like digital video recorder and an indoor antenna box disguised to look like a speaker. Broadcast stations are delivered through the antenna; extra features, like On Demand programming and YouTube videos, come in through an Internet connection.
Launched last month in South Florida, Sezmi offers the live feed from 17 local stations, including PBS, FOX, Univisión, and ION, and will show the high-definition signal when available. To compensate for not having basic cable stations -- at least for now -- some cable shows are available via download from On Demand, and users can also access Web podcasts and YouTube videos.
As popular shows and videos become easier to find on the Web, Sezmi is among a new population of television offerings that target consumers who are reluctant to pay monthly bills of $70 or higher for advanced television services from providers like Comcast, AT&T U-verse, DirecTV or Dish Network.
Whether it will meet consumer expectations is still a question.
Each television in the home would require a separate $149 system. The indoor antenna box will strengthen the over-the-air signal of local HD stations, but certain structures -- like thick concrete -- or placing the device on the floor, could hamper signal reception.
If the Internet goes down, Sezmi can only access over-the-air stations. And although several popular cable shows are available for free download through On Demand, not all have the most recent season, such as AMC's Mad Men.
The only area that can get some cable stations now is Los Angeles, but not every station is available in HD.
"A lot of people are complaining about Sezmi's lack of HD programming,'' said Andrew Eisner, director of content for consumer electronics review site Retrevo. "It's kind of nice someone is taking on the cable and satellite industry and offering alternatives, but it is a new service and you are taking a little bit of a risk by buying some hardware for a system that you're not 100 percent sure is going to be around next year.''
Sezmi, headquartered in Belmont, Calif., but with an engineering office in Fort Lauderdale, made a deal with Best Buy's tech help service, Geek Squad, to aid customers having trouble. Customers have 30 days to get a refund.
Although Sezmi hasn't released sales figures, it reported a successful pilot launch in the Greater Los Angeles area in November, with about 20,000 people signing up for the service in the first three days, according to Dave Allred, Sezmi's senior vice president of marketing and product management. It's available in 16 metro cities, including Orlando, and plans to expand the service to 35 markets this week.
[UPDATE: On August 5, Sezmi announced it expanded to 36 metro areas.]
"It's really driven by the fact that there's not too many alternatives for TV than cable or satellite," Allred said. "There is a gap between what consumers have been looking for and what the market offers."
This basic offering of local broadcast channels, called Sezmi Select, is available now for most markets Sezmi serves, including South Florida. The company plans to roll out Sezmi Select Plus at a later date for $20 a month, which will have about 23 popular cable stations including CNN, Bravo, Comedy Central and Syfy -- but not ESPN.
The Sezmi DVR is similar to TiVo. Each family member can have his own personalized menu screen and recordings; the system will "learn'' what the user likes and record similar shows automatically. It offers movies and shows downloadable through On Demand -- including many of the same movies and shows available with other television providers, at similar prices.
Sezmi's release comes at a time where more consumers are watching television shows whenever they want for free on websites like ABC.com, FOX.com or NBC-owned Hulu.com, which is launching an option for $9.99 monthly subscriptions to full seasons. Add to that streaming videos on services like Netflix or on game consoles like Xbox 360, and a new line of televisions and Blu-ray players designed to connect easily to the Internet, and you have a recipe for dropping cable and satellite providers.
Most likely to use the service, say Sezmi execs, are viewers in their 20s. That jibes with data from consumer electronics review site Retrevo.com, which found that viewers under the age of 25 were the largest group that watched television online: 23 percent of that demographic said they watch most of their television online, and 6 percent get their TV only from the Web.
In that same survey, 26 percent of people all ages said they have canceled or considered canceling their cable or satellite service, and 17 percent said they wouldn't because they couldn't get their favorite shows online.
Forrester Research estimates that nearly 9 million U.S. households are already watching some online video on a TV. But since wide adoption of Internet-connected television is a few years away, Forrester doesn't expect a net decline in subscriptions to traditional pay-TV service until 2014.
Los Angeles-based technology reporter Jared Newman, 27, cut off his cable provider in December 2008. He primarily watches Netflix from his Xbox 360, or uses rabbit ears to tune into local stations. He tested Sezmi for PCWorld and found it to be a good alternative to paying for cable, since he doesn't watch much TV.
"I personally really liked it,'' Newman said, adding "The interface could have used some work, but really what I liked was just the value of it.''
Since the cable stations he saw were "noticeably lower in quality'' than the local HD stations, he doesn't recommend it to HD fanatics.
"It depends how much of a stickler for video quality you are,'' Newman said. "For me, personally, as long as I can watch South Park, I can be happy."
Eisner at Retrevo predicts offerings like Google TV, Boxee and Internet-connected televisions will be adopted faster than something like the Sezmi hybrid of Internet and over-the-air television.
"I think the days of serial programming has come to an end, except for live events,'' Eisner said. "In general, a lot of people now want to watch 30 Rock when they want to watch it. The Internet is going to make that possible."