Local Players Like the Outlook for Web Video

By Kim Hart
Monday, April 20, 2009

Online video has come a long way since kids with cameras started uploading homemade clips to YouTube about four years ago.

More households now have access to high-speed Internet. That growth has coincided with an increasing number of broadcast networks and niche cable stations that have put a larger and better selection of videos online, giving viewers the option of watching their favorite shows without having to pay for cable or satellite television service.

On Hulu, for example, viewers get to watch shows from more than 50 studios and networks in exchange for watching a few ads.

Those are favorable circumstances for several Washington firms that have been trying to figure out how to make money while making it even easier for people to find and watch online video.

"You're now seeing widespread mainstream usage of Internet video," said Derrick Frost, who left his role as executive vice president at Time Warner Cable in 2006 to start Bethesda-based Invision.TV, a search engine for online video. "Now it's not a question of if people watch it, it's how do you get high-quality video people want to watch and how do you monetize it?"

Frost has noticed that people are more willing to put up with a few ads to access high-quality shows rather than user-generated clips. But audiences divide their time between so many different sites and video portals that it's hard for any one to get enough viewers to make a meaningful amount of money with advertising.

Unlike a Web site like YouTube, Invision.TV does not host videos.

"We're connecting you to the content owners' Web site so they can profit from the traffic," he said. The company also syndicates video to other sites with revenue-sharing agreements. Users also can embed their own channel of favorite shows on their Facebook page.

Invision.TV wants to index all the video content on the Web so it's easier to find, providing a way for new viewers to find video destinations.

"It's not just cable and broadcast that have video online, but also emerging online producers looking for distribution," he said. "Over time that's going to be an area that expands and takes off."

Avail Media of Reston is taking a different approach to getting broadband-based television in front of viewers. The firm is working with content providers, such as a broadcasting network, and small Internet service providers to deliver TV shows to any device with an Internet connection.

For example, a company that provides telephone and broadband services could work with Avail Media to add a video component.

Chief executive Ramu Potarazu and co-founder Jon Romm spent many years at Intelsat, the District-based satellite company that delivers video content to many cable networks. They started Avail Media in early 2007 and now sell Internet-based video to 115 service providers, including AT&T for its U-verse TV service.

Scott Ferber is another digital media veteran trying to make Web video more profitable for both the producers that make it and the sites that share it with viewers. After selling his online marketing company, Advertising.com, to AOL in 2004 for $435 million, Ferber started putting together his latest venture, TidalTV.

The site is a video platform that looks a lot like traditional TV. It features channels that stream broadcast and cable network shows and commercials. Last year, TidalTV, based in Baltimore, received $15 million in funding from New Enterprise Associates of Chevy Chase and Valhalla Partners of Vienna.

But Ferber said the site is now used more as an "interactive lab" to see how viewers respond to different ads and formats. His real business, he said, is matching advertisers with sites that provide video content. For example, Ferber's firm finds advertisers interested in reaching women in their 20s and 30s and connects them with video-hosting sites that attract that audience. TidalTV then gets a cut of the advertising revenue.

The "massive economic pressure" on other media industries, such as newspapers and music labels, is forcing broadcast networks, cable channels and other producers of TV content to look for new ways to make money online, Ferber said.

"It's the right time; media owners are eager," he said. "Their question is, how do I reach these people who are spending a disproportionate amount of time in front of their computers?"

Kim Hart writes about the Washington technology scene every Monday. Contact her at hartk@washpost.com.

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