Yahoo! and ABCNews.com recently launched subscription-based streaming services that not only broaden the amount of content available online but also could help drive broadband penetration.
Last week, Yahoo! introduced Yahoo! Platinum, a service that offers a number of exclusive video channels, including one that has live audio and video streams of every game of the NCAA men's basketball tournament. ABCNews.com offers ABC News Live, a 24-hour service providing exclusive video from news conferences and reporters. It also has a Quad Screen feature that allows display of up to four simultaneous feeds.
ABCNews.com President Bernie Gershon points to a current broadband base of approximately 70 million (23 million home users, 50 million office users) and the ability to deliver a quality viewing experience as the most important factors in the potential success of the new services.
"Seventy million is a decent reach for a cable network," he says. "Broadband is in enough homes that it makes a difference, and the quality of the video is good enough that it's a decent experience, particularly for news content."
Gershon and the team at Yahoo! aren't the only ones thinking positively about the Internet as a video distribution tool. Movielink, the online VOD service available from the five major Hollywood movie studios, has also found decent success.
"We're becoming encouraged," says James Ramo, CEO of Movielink, the company formed by the five major Hollywood studios to provide downloadable versions of Hollywood movies. "Just putting great movies on the Internet is not going to get the public to see the Internet as a video gateway the way they look at broadcast, satellite and cable. So we need a lot of content and can't do it alone. Frankly, the more the merrier."
The Yahoo! service, in many ways, could have an outsider saying it's about time. Since the Broadcast.com purchase that almost single-handedly launched the dotcom craze, many have wondered when or if Yahoo! would offer something like its new service.
"With the Broadcast.com infrastructure, we can bring in 10 analog satellite feeds and put them live on the Internet," says Jim Moloshok, Yahoo! senior vice president of media, entertainment, information and finance. That capability enables the live feeds of NCAA basketball.
Yahoo!'s current programming includes exclusive content from Survivor and American Idol.
ABCNews and NASCAR are available on Yahoo! as well as on RealOne. Both Yahoo! and RealOne cost $9.95 a month (it's $16.95 for a package including the NCAA basketball games) and could put broadband users in a bind: Do they spend another $10 a month for more content or simply limit their intake to one service?
It's still too early for Moloshok to predict how that potential audience will react, but he points to cable subscribers who have HBO and Showtime as proof that those who have enough interest in something will pay for it: "Down the line, it could be that programming duplication will be minimal and uniqueness will be more dramatic."
Moloshok says that two other factors (along with the broadband penetration) are also important proof of the expanded market opportunities. First, he says, broadband consumers have evolved from early adopters to mainstream consumers.
Second, content companies are waking up to the potential. "Since we announced our service, we've been barraged by sports leagues, studios and TV companies because distribution on the Internet creates another business opportunity."
Movielink is an example of that. It's still too early to say whether it will be successful, but, according to Ramo, buy rates per subscriber are a little less than three a month. The site offers more than 250 titles, a mix of movies both in the PPV or VOD window and also as library content.
The Movielink experience differs from that of ABCNews.com or Yahoo! Platinum in that it's download-based, not streaming-based. The user downloads a half-Gigabyte file onto a computer and can access it in 24-hour periods for 30 days. After the 30 days, the file needs to be replaced.
"We're on the Internet side of the dial, and we think that, over time, we'll see the Internet become a viable way to get video into the home, just like satellite, cable, broadcast," says Ramo. "We think we're at the early days of the Internet's being a new channel of distribution and a viable gateway for a display device to watch movies."
Adds Gershon, "I think recently we've had irrational depression about the fate of the Internet business. I've always been mildly excited, not over-exuberant," says Gershon. "And we've tried to be sensible and measured over time."