That's a wrap: Yahoo! (NASDAQ:YHOO) revealed on Thursday that its brief flirtation with the idea of developing Hollywood-style original programming is over. After setting up its media group in Santa Monica, hiring former ABC television executive Lloyd Braun, and mulling over some show ideas with a few major Hollywood players, Yahoo! now has more modest plans. The search site will concentrate on content from other media firms or content submitted by users.

The strategy makes sense, but unfortunately, Yahoo! lost time and initiative while exploring the idea of becoming the next Hollywood mogul. As far as video on the Web goes, Yahoo! is now neither a leader nor an innovator.

Going into 2005, Yahoo! had a brief window of opportunity to establish itself as a leader in Web video. Braun's hiring suggested that the firm was ahead of competitors like Google (NASDAQ:GOOG) and Time Warner's (NYSE:TWX) in understanding the growing potential of original video content. In that period, it had the opportunity to come up with something innovative, pairing Braun's eye for talent with Yahoo!'s in-house technological prowess.

Unfortunately, it's evident now that Yahoo! didn't have a unified vision for the future of video on Net. The company tried a few video programs, like Kevin Sites in the Hot Zone, that attracted some viewers. Even as these programs were released, though, Braun and others pushed to duplicate Hollywood -- and its bigger budgets -- within Yahoo!

Good sense eventually prevailed, but not before competitors caught up to Yahoo!'s thinking. AOL now boasts the largest collection of licensed video on the Internet. Meanwhile, Google has a video-on-demand site that allows users to upload and share their own content.

Web video remains in its infancy, and no company dominates the field. However, where it once had a chance to be a trailblazer, Yahoo! now finds itself following its competitors' lead.

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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.