Silverlight, Microsoft’s new Web video technology, has failed to take off in the year since it was introduced. But that could change when the Olympics begin this week.

The software giant is powering online streaming for the two-week worldwide sporting event and the Games will likely be the coming-out party that drives meaningful consumer adoption of Microsoft’s Web video player and platform.

EYES ON THE PRIZE Microsoft's Silverlight is joining the land grab to deliver videos online and earn the dollars from networks and programmers that use such services.

That’s because the 2,200 hours of live coverage that NBC plans to carry on the Web will be funneled through Silverlight, Microsoft’s equivalent of Flash, the ubiquitous Web video technology from Adobe.

Microsoft’s entry into Web video underscores the high-stakes business that online video is becoming. The sector is growing fast: Advertisers poured $471 million into online streaming last year, a number that should grow to $7.2 billion in 2012, according to Forrester Research. By most estimates, consumers are watching about 10 billion videos online each month.

Microsoft is joining the land grab to deliver those videos online and earn the dollars from networks and programmers that use such services. The company will compete with a lofty list of big shots entering Web video, including Google, Netflix and Apple as well as incumbents such as Adobe.

But Microsoft is going to have to earn some gold medals for performance in the next couple of weeks if its technology is to become a mainstay for both consumers and media companies.
Microsoft hasn’t released numbers on Silverlight downloads, but the technology isn’t widely used yet. Customers include Major League Baseball and the National Basketball Association.
Microsoft says it’s ready to play now.

The company is planning for 500,000 to 600,000 simultaneous streams on the high end during the Games and has reserved additional bandwidth from content delivery networks Limelight and Level 3 for backup if there are more streams than expected.

The simultaneous streams projection (which includes live and on-demand streams viewed at the same time) would exceed what Microsoft handled during last summer’s Live Earth concert, carried on the Web using Windows Media. On July 7, 2007, Live Earth set a record for the most simultaneous streams for an entertainment event online, with 267,000 streams served when Madonna performed, said Rob Bennett, general manager for video, sports and entertainment at MSN.

In total, Microsoft delivered more than 100 million streams during the concert.

Mr. Bennett won’t disclose expectations for the Olympics, but the Games are likely to be much more popular than Live Earth.

“Video is really one of the key pillars of the investments we are making at MSN to improve the online portal experience, and we are investing heavily in the platform and technology like Silverlight to enable rich video experiences,” Mr. Bennett said.

The player for the Olympics includes additional features such as chaptering technology to jump to different sections of the video, commentary overlaid on the video and four-screen-in-one capabilities. He expects those features will hasten the adoption of Silverlight well after the Games has ended.

Experts agree the enhanced features will boost usage of Microsoft’s Web technology. “This is an opportunity for them to showcase key features,” said Will Richmond, analyst and author of VideoNuze.com. “It will certainly put Silverlight on the map with tens of millions of downloads because of the Olympics.”

If Silverlight catches on, then incumbent Adobe could lose business.

“While Microsoft has validated our message, we remain uniquely positioned in our commitment to cross-platform technology and focus on user experience,” Jen Taylor, group product manager for Flash at Adobe, said in an e-mail interview. Broadcasters including the BBC and CBS and large video destinations such as YouTube and MySpace have chosen Flash for their video distribution efforts, she added.

The new Flash player update has achieved 82% online penetration in just six months, with more than 80% of online videos viewed using Flash technology, she said.

Ultimately, competition in the Web video business is good, said Alex Lindsay, chief architect with new-media shop Pixel Corps in San Francisco. “More important than Microsoft’s online video is the fact that four of the largest tech leaders—Apple, Adobe, Microsoft and Google—are going head-to-head to grab the video market. This ‘arms race’ will benefit both video producers and consumers immensely.”

Microsoft has an additional advantage: It’s both a technology and a content company. NBC chose Microsoft as an Olympics partner for the company’s technical “know-how” and for its online reach through MSN.com, said Perkins Miller, senior VP for digital media at NBC Sports & Olympics.

“On the technology front, there is no company that can deliver such broad, far-reaching technical expertise,” he said. “And with their launch of Silverlight, we knew we would get a next-generation video product to match our goals with Olympic video.”

(Updated to correct name of Silverlight.)