YouTube proved that online video was attractive to consumers, but it’s big-time content owners, such as MTV and Showtime, and the promise of big-time ad dollars that have largely spurred the growth of Internet TV in 2007.
“The trend has been that content owners learned that syndication was to their benefit,” said Parks Associates analyst Kurt Scherf. “Their strategy has
been to work with all kinds of destinations.”
Internet TV startups have benefited from these deals, drawing customers with long-form, HD-quality offerings, and differentiating themselves from the
many sites serving up amateur-made content.
Venture capitalists have taken note. Most recently, Palo Alto-based Vuze picked up $20 million last week in a third round of funding.
The company, formerly known as Azureus, said it now gets 500,000 new viewers joining per week to tap into its on-demand content. More than 100
partners—including the BBC, National Geographic, and Showtime—have signed on for a cut in the revenue generated from download fees and advertisements.
Chris Moore, partner with Redpoint Ventures, which backs Vuze, said the startup aims to provide a more traditional TV viewing experience with the familiar benefits of the Internet: delivery wherever and whenever the consumer wants it.
Luxembourg-based Joost is perhaps the best known in the online TV space. This week, the startup announced that it will begin featuring content from U.S. public broadcaster PBS and the National Basketball Association. It already had deals with CNN, MTV, and Comedy Central.
Mr. Scherf said the companies that can distribute the content at high speeds, at high quality, and at prices that are attractive to the content producers will win
out.
But it’s not just companies with big-media deals that are riding this wave. Startups such as San Francisco-based Revision3 are creating and producing
their own HD-quality shows, carving niches for themselves while purposely avoiding the Viacom’s of the world.
They’re hoping to build large fan bases around alternative shows, with names such as Tekzilla and notmtv. While the plots and characters might not be as mainstream as those on Sex and the City, advertisers drawn to the site like IBM and Sony certainly are.