Any schmo with a Web server can chuck video up on the Internet. The hard part? Getting people to watch it.
Dave Networks this month launched Next.TV, a 50-channel Internet video-on-demand service whose anchor content tenant is CBS, in an exclusive distribution deal with Hewlett-Packard.
The PC maker is providing Next.TV as an update to Pavilion consumer notebooks running Windows Vista — giving the Internet TV startup a potential audience of 10 million HP laptop users, according to Dave Networks CEO Rex Wong. The Next.TV player shows up as a tab in QuickPlay, HP’s multimedia player for DVDs, video and music.
And starting in December, all HP Pavilion notebook systems shipped in the U.S. — expected to be roughly 500,000 units per month — will be preloaded with Next.TV, said HP director of worldwide consumer notebooks Jonathan Kaye.
“We view the notebook as the ideal mobile-TV device,” Kaye said. “HP does not want to change current TV-viewing habits, but to enhance and complement them by unlocking the power of the Internet.”
Wong said Next.TV’s content partners include CBS, IAC/InterActiveCorp.’s Home Shopping Network, Warner Bros. Television Group, the Associated Press, Hearst, Endemol USA, FremantleMedia and international programming distributor JumpTV.
Getting Next.TV embedded into HP notebooks sets it apart from Joost and other Internet TV services, Wong said. “You just can’t get critical mass if you’re making people download and install software,” he said.
Another advantage: Users can launch HP’s QuickPlay application quickly, using a button located on the right-hand side of the notebook’s display. “The difference is really the user base and the integration with the HP hardware,” Wong said.
Dave Networks, founded in 2003, has already tried a few different business models. It attempted to launch an Web TV service that required users to install an application and also pitched a set-top device that would play broadband-delivered content on TVs. “We didn’t always find the right business model, but we’ve learned along the way,” Wong said.
That said, Dave Networks in January expects to launch its own version of Next.TV, available to any Internet user, either as downloadable software or via an embedded Web player.
The Los Angeles-based company’s other line of business is producing Web-video sites for media companies, including ABC News’ i-Caught user-generated video site. The company has about 30 employees and has raised $11 million in investment to date, according to Wong.
In early 2008, Next.TV is aiming to provide 120 different channels and plans to begin offering live streaming of linear TV, including feeds from CBS and HSN.
The live channels will be delivered using peer-to-peer networking protocols, which relay the content among users’ PCs instead of originating from servers. Next.TV’s on-demand content is delivered using content distribution networks from EdgeCast and Limelight Networks.
Advertising includes 15-second pre-roll spots for on-demand content, and the live TV channels will run 30-second ads. Wong said initial sponsors, placed through agencies, include AT&T and Coca-Cola. Ad revenue is split among Dave Networks, HP and the content providers. Next.TV at some point expects to sell commercial-free TV shows and movies, through deals with studios.
For now, Wong said, it’s too soon to tell how many HP notebook owners are watching Next.TV content. According to HP’s usage studies, at least 46% of customers use QuickPlay regularly — with about 2 million people clicking on the QuickPlay button on a daily basis.
One downside is that users must be connected to a broadband connection to watch Next.TV: There’s no way to view content offline. The service pushes out video encoded in Microsoft’s Windows Media format at between 600 kilobits per second and 1 Megabit per second, but can scale down to 300 Kbps, Wong said.
Another challenge is that “cable networks can’t give us the linear feed they’re giving to cable operators,” Wong said. “Carriage agreements are always going to be problem.”
Ultimately, in Wong’s view, production companies like Fremantle and Endemol are in the best position to create new Internet-only channels, because they’ve retained online distribution rights.
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