Cisco, AT&T buy Internet video foothold

Cisco and AT&T, two of the largest US telecoms groups, are investing $15.5m in late-stage funding in Akimbo, an Internet video company.

The investments, to be announced today, underscore the excitement surrounding young companies offering films, television shows, and other video content over the Internet, as the spread of broadband drives big changes in the way people access video content.

George Hoyem, managing director at Blueprint Ventures, a venture capital group that is partnered with Cisco and AT&T in the latest round of investment in Akimbo, said the company was well-positioned to capitalise on a “huge shift” towards Internet services that allow customers to access an expanding range of video content whenever and wherever they want.

“We think Akimbo is an excellent channel,” he said. “They are way out front in terms of the technology.”

Television and film studios are scrambling to take advantage of the ongoing shift from traditional television and cable services to Internet-enabled services.

Part of the urgency stems from fears about a potential decline in cinema and home DVD sales as consumers turn to the internet for their favourite films and shows.

Moviebeam, another Internet video company, earlier this year launched a service in 29 US cities designed to compete with companies such as Blockbuster and Netflix for a share of the $10bn-a year market for movie rentals. Unlike those companies, whose models rely on distribution of physical copies of films, MovieBeam’s service offers digital broadcasts of films directly to television sets through a specially built set-top box.

Other competitors include Vongo, a subscription-based service, and Movielink, a film download service backed by several high-profile Hollywood studios.

Joshua Goldman, Akimbo’s chief executive, said the company had struck deals to distribute its video collection on a number of different platforms inside the home, such as Microsoft’s Media Center PC and other devices from Thomson and AT&T. The company is also pursuing a commercial agreement with Cisco, which earlier this year bought Scientific Atlanta, a maker of set-top cable boxes, for $6.9bn in a bid to boost its digital home offerings.

“Much like the Web changed the way we think about what we access on our computers, this in the same way changes the way people think about what to access on their televisions,” Mr Goldman said.

Charles Carmel, a Cisco executive behind the decision to invest in Akimbo, said Cisco was betting on the success of services that offer customers the opportunity to play video on different devices in the home using an Internet connection. “The more of that kind of content that flows over networks, the better it is for Cisco,” he said.

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