Want the word on the next big thing for 2006? Video on the Net.
Want examples? Telcos like Verizon
This week, we saw a new deal: AOL, IAC/InterActiveCorp, Allen & Co., and Hearst invested $16.2 million in video upstart Brightcove Networks. In fact, the CEO of IAC/InterActive, Barry Diller, will join the board of the tiny company.
Jeremy Allaire founded Brightcove in early 2004. Before this, he was an innovator in developing Web programming tools, such as ColdFusion. He sold his company to Macromedia, where he helped develop the popular graphics technology known as Flash.
Brightcove is essentially a platform to allow video creators to host and deliver content to consumers and, more importantly, get paid for it (through advertising or subscriptions). But to succeed, Brightcove needs compelling content and strong distribution. That's why the company is striking deals with giant media companies. For example, in this week's deal, Brightcove also has a distribution agreement with AOL.com. It's also likely that Brightcove will strike distribution deals with IAC, Hearst, and other media companies.
But the Brightcove system won't be only for major content providers. The company plans to launch a self-service product that allows smaller content creators to distribute and monetize their work.
So why is Internet TV becoming a reality? For starters, consumers are becoming more accustomed to getting content on demand. Think Google searches, TiVo, iPod, cell phones, computer game consoles, etc. -- though it's hard to definitively gauge whether a widespread, longer-term shift is taking place. "I can see where consumers will interact with TV as if it were a Google search, not a passive activity," said Suranga Chandratillake, the CEO and founder of Blinkx.
Next, the costs of broadband are falling drastically. According to a recent report from the Kelsey Group, the cost of delivering a one-hour stream of video on the Net is a mere $0.09.
Also, Internet television allows for much more targeted and relevant advertising. Let's say you download Live and Let Die. At the end of the movie, it gives you the times for a local showing of the newest James Bond film. And, of course, you'll be able to buy the tickets online.
"Online video permits all the varieties of targeting that the Internet permits: behavioral, local, and contextual," said Greg Sterling, the program director at The Kelsey Group.
But don't expect this brave new world to come to pass immediately. Actually, this appears to be the investment stage for this trend, which means profits are likely to be in the long term. "I think we're in the first or second inning," said Jeremy Allaire. "But there is certainly a lot at stake. After all, television is a $350 billion industry worldwide."
SBC is a Motley Fool Stock Advisor pick. For a 30-day free trial, click here.
Fool contributor Tom Taulli does not own shares mentioned in this article.