Video Web Sites Are Ready for Their Close-Up
By Mike Freeman, The San Diego Union-Tribune
May 26–On the Web site of San Diego’s vMix, there’s a short video about a father/son trip to the Wolf Mountain Sanctuary, a nonprofit wolf rescue organization near Victorville.
Less than three minutes long and featuring a montage of video footage and still images, it has the feel of a home movie. Yet the clip also packs an emotional resonance that’s as lonely as a wolf’s howl.
The video, posted on vMix’s Web site by a Los Angeles-area man, is one of hundreds that are popping up on a plethora of Web sites that are tapping into what could be the next killer application in cyberspace.
Video is becoming an online force — and not just movie trailers and music videos. Amateurs also are finding an outlet on the Web for their digital video creations.
There are several reasons for this recent explosion of online video, experts said. High-speed broadband, which is needed to deliver most Internet video, has reached a critical mass of households. Video compression technology has gotten better. Storage systems for big video files are now cheap. And digital video cameras and editing software have become more affordable and easier to use.
While YouTube has gotten the most publicity, dozens of other video Web sites are trying to stake out a presence on the Internet these days. At least four San Diego companies are among them. Along with vMix, where the Wolf Mountain video was posted, there are Veoh Networks, eyespot and DivX.
Whether Internet video actually takes off remains to be seen. A key question for these Web sites — particularly those with a lot of user-generated content — is whether they attract enough advertising to make money.
Moreover, technical hurdles for delivering high-quality video — as well as potential legal stumbling blocks over piracy — could trip up video’s march forward on the Web.
Still, Internet video is expected to expand quickly for a while. According to industry research firm IDC, Internet video services are expected to generate $1.7 billion in sales by 2010 — up from about $200 million today.
Venture capitalists are taking notice. vMix has raised an undisclosed sum from local venture capital firms Enterprise Partners and Mission Ventures. Veoh Networks has raised more than $14 million from the likes of Time Warner and former Disney Chief Executive Michael Eisner, who sits on Veoh’s board.
Carl Eibl, a managing director of San Diego venture firm Enterprise Partners, said that in the ’90s, investor money flowed to companies that were building out the networks that powered the Internet. Today, investor money is flowing to the consumer-focused applications that run on the Web, including video.
Enterprise Partners has been targeting companies whose underlying technology powers the delivery of digital music, movies, books and games to consumers online.
Those investments include a stake in vMix.
“vMix pairs a compelling vision for user-generated video with a founding team that offers a strong mix of technology, entertainment and business experience,” Eibl said. “The company perfectly illustrates why Southern California is the creative hotbed for the next generation of digital media opportunities.”
Mike Shannon, 24, of Mission Valley recently posted a “Star Wars”-like action video on vMix that he created with his digital video camera and off- the-shelf editing software.
The video, shot at the California State University San Marcos campus, where Shannon got his undergraduate degree in computer science, is replete with editing tricks that would make George Lucas proud, including characters leaping over buildings and elaborate light-saber fights.
Shannon posted it on vMix, as well as Google video and his own Web site, to get his videos seen. “It’s basically for fun,” he said. “You get an audience and exposure. I would love to get into the movie business. But I’m not really sure how.”
vMix, founded last year by former MP3.com executive Greg Kostello, allows amateurs and professionals to easily post videos for free. The company, which employs about 20 workers, sets itself apart from myriad other video Web sites by offering tools so users can edit and improve the videos they post, including adding music, captions and soundtracks.
“We want our users to be successful in what they’re trying to do,” Kostello said. “Video is so easy now when it was hard before.”
vMix also has a filter that blocks porn and other risque content from being posted on the site. “I like to say if it can appear on ‘Desperate Housewives’ it can appear on our site,” Kostello said.
In addition to the amateur content, vMix licenses movie trailers and music videos on its Web site for users to view and share.
vMix and other video sites aim to create a community of repeat users. It has a friends and fans service, where users can sign up to receive videos from users they like.
“The MySpace.com generation is all about participation,” Kostello said.
vMix is betting advertisers will seek out vMix to tap into the hard-to-reach, technology savvy 18- to 30-year-old market.
Others aren’t so sure. Josh Martin, an analyst with IDC, said sites that rely largely on user-generated content may not be that attractive to advertisers because only a few amateur videos become “viral,” meaning they catch fire via an underground buzz.
Martin believes premium content, such as movies or popular TV shows, will draw users and advertisers. But he also thinks few users will want to view popular TV shows or movies on their computer screens.
The widespread adoption of Internet video, he argues, depends on devices that can better deliver popular shows or movies from a computer hard drive to the household TV.
But others say Internet advertising has evolved to the point where there’s room for sites like vMix to make money.
“It’s all about community,” said Eibl of Enterprise Partners. “In 2005, $12.5 billion was spent on Internet advertising. Internet 1.0 suffered from no money.
Today we’re seeing very large amounts of money spent” on Web advertising.
Veoh Networks also provides video-sharing software that allows users to post and share videos. And it tries to create a community of users by allowing them to post clips they like on their personal blogs. And with predictive software being developed by former MusicMatch chief engineer Ted Dunning, Veoh hopes to collect data on what users like and them make recommendations to them about upcoming videos.
But for the most part, Veoh is taking a different angle than other video hosting sites.
Founded in 2004 by Dmitry Shapiro, Veoh operates a proprietary peer-to-peer network to deliver digital video. Shapiro likens Veoh to a virtual cable company — but with the capability to deliver any show at any time viewers want
thus creating a new distribution system for content owners.
In addition, Veoh’s peer-to-peer network can deliver full screen, TV-quality video, Shapiro said.
The founder of instant messaging security firm Akonix in San Diego, Shapiro isn’t looking to battle content providers with his peer-to-peer network over pirated videos. What Shapiro wants is to partner with content providers, giving them another distribution outlet — besides cable and satellite companies — to get out their shows.
For example, the Time Warners of the world could use Veoh to make thousands of old TV shows or classic movies available to people over the Internet, Shapiro said.
The 30-employee company also wants to showcase the best amateur videos. It can make money in a host of ways, including advertising, pay-per-view services or subscriptions, Shapiro said. He expects content providers to decide which way is best to make money on their content.
“Video is in the new killer app on the Internet,” Shapiro said.
At the Wolf Mountain Sanctuary, Louis Friedman took a digital video camera and still camera to capture the outing with his son, Skyler, who is fascinated with wolves. Friedman, a line producer for movie companies who has worked on films including “Raiders of the Lost Ark”and “American Pie,” put together the video to re-live the day with his son, who posted it on his Web site.
But Friedman also showed it to friends, who liked it. So he decided to post it on vMix, in part because the site allowed him to take it down remotely and in part because vMix has content filters.
“We’re only seeing the tip of the iceberg of what this type of technology is going to do,” he said. “It’s very exciting, the speed it’s all growing and changing.”
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