Qwest Communications has invested $10 million in startup ZillionTV in return for exclusive rights to offer the IP-delivered video-on-demand service in the telco’s footprint, according to legal documents.

ZillionTV is currently expecting to launch commercially in the second half of 2010 with Qwest and other telco partners—who would deliver the content over DSL broadband connections—while the startup also pursues a direct-to-consumer strategy to expand the reach of its advertising-supported service.

ZillionTV is aiming to deliver 15,000 movies, TV shows and other video selections by the time it launches, and has distribution agreements with several studios including Walt Disney Co. (NYSE: DIS), 20th Century Fox Television, NBC Universal (NYSE: GE), Sony (NYSE: SNE) and Warner Bros. (NYSE: TWX) The Sunnyvale, Calif.-based, founded in 2007, laid off more than one-third of its employees last year and currently has a staff of about 56. More on Multichannel.