In 2003, Janus Friis and Niklas Zennstrom launched Skype, an online communication tool that has forced some of the world’s largest telecommunications groups to rethink their business models. Now they are hoping to do the same for television.
“At the time we launched Skype, broadband capacity was extremely ripe for communication,” Mr Friis recalls. “Now, three years later, it’s the same thing for video: you can do TV over the Internet in a really good way. TV is a huge medium – that’s something we’d like to be a part of.”
There are profound differences between Skype and the still-codenamed Venice Project, however. The entrepreneurs’ new venture is just one of many seeking to capitalise on the growth in demand for online video.
Crucially, this time they will also have to work with the incumbents whose business models have been most threatened by the Internet if the project is going to succeed.
Internet protocol television, or IPTV, is a term that still elicits blank looks from most viewers but has become a focus of media and telecoms companies’ attention in much the same way as voice over Internet protocol, or VOIP, was in the early days of Skype.
The interactive and community features of the Internet, coupled with the possibility of aggregating large numbers of viewers even for material of specialist interest, has led companies as varied as television production companies and former telecoms monopolies to launch their own online video services.
IPTV has been slower to take off than many people predicted, but the success of MySpace, on which some US studios are beginning to make full-length programmes available, and YouTube, the video sharing site bought by Google, has attracted incumbents and start-ups alike to experiment with diverse new models.
In the UK, where the Venice Project has one of its four offices, it will be competing with the BBC’s planned catch-up television service, BT Group’s new video-on-demand offering, and streamed channels from broadcasters including Channel 4 and ITV.
In an interview with the Financial Times, Mr Friis was confident about standing out in an increasingly crowded field. “The overall picture is that this is happening. Video is moving online, and people have to find strategies for that.”
The Venice Project’s blog describes its mission as “fixing TV, removing artificial limits such as the number of channels that your cable or the airwaves can carry and then bringing it into the Internet age”.
As well as exploiting new tools, it adds: “We’re also bringing something back from that old TV – of having a shared experience with your friends, something you can talk about, rally around and enjoy with others.”
Demonstrating the new service in a south London Starbucks, Mr Friis says it has to please three audiences. “It will be a success if advertisers like it, content owners like it and viewers love it.”
The service, currently being trialled by 6,000 people, is capable of displaying high-quality, full-screen video on a computer screen. Users download a piece of software to their PC or Mac (although the service can be transmitted to a TV, it is currently designed for computer screens) and can then search for channels from a menu on the left hand side of the screen.
A control bar at the bottom allows them to search for programmes and pause, rewind or fast-forward what they are watching. On the right is a menu of interactive tools, allowing users to share video playlists with friends or comment on programmes.
Skype users can also use its conference calling facility to chat with other friends watching the same programme, Mr Friis says.
Unlike YouTube or other video sharing sites, all of the content will be professionally produced, uploaded by content owners and encrypted before being sent out.
Conscious of their experience with Kazaa, a file-sharing service that was bombarded with lawsuits from music companies, the Skype founders are at pains to say they are working within the framework of the Digital Millennium Copyright Act.
Different content owners have different security concerns, Mr Friis admits, but he is confident of getting several larger groups on board.
Fredrik de Wahl, the project’s chief executive, adds that the company does not expect to be the only IPTV service to succeed: “We want to be one vehicle for them to monetise their content. We will prove we can capture more viewers, but you don’t sell just Prada shoes in Prada stores.”
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