Skype Co-Founders Launch Internet TV Service - InformationWeek

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Skype Co-Founders Launch Internet TV Service

Companies are beginning to capitalize on the youth trend toward online communication via their television.

The co-founders of Internet telephony service Skype have unveiled the brand of their upcoming Web TV service, which would eventually join a growing list of sites catering to the younger generation's preference for watching programming on their computers.

Entrepreneurs Niklas Zennstrom and Janus Friis, who sold Skype two years ago to EBay for $2.6 billion, launched the Joost brand this week, and are seeking beta testers for the software that will be needed to access the site's video. Formerly called "The Venice Project," the new service, expected to launch this year, would offer shows from TV studios, as well as specialty programs created for the Web by professional and video enthusiasts. The site would also make online tools available for users to chat with friends while watching shows, and to create their own TV channels.

The market for Internet TV is growing as TV studios recognize the trend among younger generations to watch more video online. As an example of investor enthusiasm for the market, Internet TV company Brightcove on Wednesday said it has raised $59.5 million in its third round of funding.

AllianceBernstein L.P., Brookside Capital LLC and Maverick Capital Ltd. led the latest hat pass for Brightcove, which also included investments from The New York Times Co. and Transcosmos Investments & Business Development Inc. Brightcove's existing strategic and financial investors also contributed more money. The Cambridge, Mass., company plans to use the additional funds for international expansion and to solidify its position in the Internet TV market.

Companies like Brightcove and the upcoming Joost represent Web TV companies focusing on offering programming from established TV studios, or new producers, Gerry Kaufhold, analyst for In-Stat, said. Other video sites, such as YouTube, have built a business largely around user-generated content, but are also looking to cut deals with traditional entertainment companies.

Driving the trend is the increasing number of teenagers and young adults who are watching video online, while their parents are in the living room in front of the television.

"People over the age of 40 are OK with the status quo, but it is people under the age of 25 who are driving Internet TV," Kaufhold said. "This is a trend that's going to expand over the next 30 years, and it's basically driven by people who grew up with the Internet."

Brightcove, Joost and other Internet companies are offering TV studios a channel for following the younger segment of their audience. While Joost has yet to announce any deals with entertainment companies, Brightcove has signed the National Geographic Channel, the Independent Film Channel, Warner Music Group and Time Life. It also has a deal with business news provider Dow Jones & Co. Inc., which publishes The Wall Street Journal.

Brightcove is banking on one of its new investors, Transcomos, to help it break into the Japanese Internet video market. Transcomos is a subsidiary of Transcomos Inc., a digital marketing services provider based in Japan.

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