Online TV Takes Wing

May 16, 2005  •  Post A Comment

When the bottom fell out of the dot-com market a few years ago, the idea of Internet television was laughed at. Now it’s no joke: Broadband penetration is climbing higher every year.

One of the players leading the new field of broadband-enabled Internet TV is year-old start-up Brightcove in Cambridge, Mass. Brightcove has been quietly aligning with both big-name cable programmers and niche content providers to test its untethered content distribution strategy.

The company provides an online service that enables content companies to deliver video content directly to consumers using the Internet, rather than through a cable, telco or satellite provider. Think Akimbo Systems without the box.

It’s a futuristic strategy, and one that in theory cuts out the middle man by placing distribution decisions such as pricing models into the hands of the programmers. The platform also allows for interactive advertising that is integrated with the content.

Details Under Wraps

Brightcove founder Jeremy Allaire, who struck it rich with Web application software Cold Fusion, which was sold to Macromedia in 2001, has kept most of the details of the service close to the vest. However, he said Brightcove began a so-called “VIP beta test” this quarter with about 18 content providers, ranging from well-known and highly penetrated cable programmers to smaller, niche on-demand content firms. They are testing content, service and pricing models, such as ad-support or pay-per-view, he said. Names of content providers were not revealed.

Brightcove operates as an online service that includes a self-service platform for content providers, such as broadcast and cable networks, to distribute video programming to consumers via the Internet. Brightcove also handles technical issues, including provisioning, packaging of content and delivery across different devices. “We are a retail Internet TV platform for content companies,” Mr. Allaire said. “The rights holder is in control because they can set the prices; they can control how consumers can use their media, how consumers discover their media.”

For the moment, Brightcove isn’t proposing to be a replacement service to cable or satellite, but to instead route to the TV both additional content associated with established linear networks and content from niche players without linear services. “Our vision is in five years it becomes viable for mainstream programming to fully sustain a business globally through our service,” Mr. Allaire said.

Brightcove’s test and formal introduction later this year occurs in a milieu that is cozying up to new forms of media consumption because of broadband growth and because of the proliferation of technologies that give consumers more control. By the end of 2005, nearly 60 percent of Internet users in the U.S. will access the Internet via broadband, a number that should rise to nearly 77 percent by the end of 2007, according to eMarketer. That compares with a mere 9 percent with broadband access back in 2000. Add to the mix tools such as digital video recorders, iPods, satellite radio and video-on-demand, and it becomes clear that an environment exists that will be receptive to new media models.

“We are moving to a model of open television distribution because of broadband and new consumer electronics devices,” Mr. Allaire said.

Such devices include Microsoft’s well-known Media Center PC, the new version of gaming platform Xbox, which will act as a home entertainment hub, and DVD players and TV sets with ethernet connections or wireless cards that transform the TV into a viewing device for Internet content.

Many forward-thinking programmers, including Scripps Networks and Starz, have already begun to seize the broadband opportunity. Scripps distributes short-form video on the Web sites of its network brands as well as through syndicated services, such as MSN. Starz Entertainment Group markets directly to consumers through its subscription service StarzTicket.com, offering movies for broadband download.

Brightcove offers opportunities for advertisers to engage consumers in the interactive content, said Tom Tercek, president of Starcom Access, a division of Starcom that develops content for new platforms. “It’s a new model that could provide very cost-effective reach, measurement and creative opportunity,”he said.

Online and On-Demand

Brightcove isn’t alone in Internet television. Another company operating in the field is Broadline Media Corp. in San Francisco, which plans to introduce an on-demand Internet television service called Lasoo later this quarter. While Broadline is even more mysterious about how the service will work, VP Brant Smith said Lasoo will deliver TV programs, movie and other video content over broadband connections to a viewer’s TV set.

“There will be software associated with our service on a Windows XP [computer] essentially connecting the Windows XP to the TV,” Mr. Smith said. Content providers control the pricing models, which can include subscription, rental, pay-per-view, purchase and ad-supported content.

As models like Brightcove and Lasoo surface with more frequency, so will supporting technologies such as the Platform, software that lets content providers repurpose content across different platforms, including VOD and broadband. “By enabling multiple distribution paths you can give the little guys as much distribution as the big guy,” said Ian Blaine, CEO of the Platform.

Still, this democratization of content delivery won’t obviate the need for high-quality content. Instead, like anything else, the truly great content will bubble up and become linear programming, he said. “There will always be linear programming, but there will be more and more on-demand,” Mr. Blaine said.

Consumers don’t care whether their content comes from a satellite, cable, telco or broadband connection, said Lori H. Schwartz, VP and director of emerging media for MRM Partners Worldwide, a division of the McCann World Group.

“If you look at anyone under 30 … they are completely consuming content, whatever they want, whenever they want,” she said. “The role is not to advertise to, but be a part of the experience and provide content and opportunities for people to engage in your brand.”