Streaming Video Slows to a Trickle Amid Preoccupation With Profit

jon.healey@latimes.com

To lure consumers into spending $50 or more per month on high-speed Web access, Internet service providers often promise an array of audio and video delights that dial-up modems just can't deliver.

Such promises once matched the hype from the streaming media industry, the companies that transmit music and movies through the Net. These days, though, those companies seem less interested in streaming entertainment than in paying their bills.

That was the message at Streaming Media West, a recent trade show for the online broadcasting industry. Instead of on-demand movies or TV shows through the Web, companies touted how their technology was providing employee training, CEO briefings and other corporate communications for the Fortune 500.

"These days," said Rich Seidner of Streaming Media Inc., a research and consulting group, "it really is a game of survival."

Lots of online video companies already have lost that game, including such entertainment-oriented Web sites as DEN, Pseudo and Pop.com. The technology and consulting companies that make up the streaming industry, meanwhile, have laid off thousands of workers as the industry retrenches.

Consumers can still find plenty of short films, independent movies and black-and-white chestnuts online from the likes of CinemaNow, CinemaPop, AtomFilms, IFilms and Hypnotic. But the major Hollywood studios haven't yet opened their programming spigots for the Web, so the most popular programming remains confined to the TV, theater and VCR.

One reason cited at the show by executives from media giants Viacom and Disney is concerns about piracy. But another, more basic reason is the comparatively short supply of consumers who have high-speed links to the Net.

David Mandelbrot, vice president and general manager of entertainment at Yahoo, said the 5 million homes with high-speed Internet connections is enough to start catching the attention of TV networks and production houses. Those companies are particularly interested in finding a new home for shows that established a base of fans but fell off the TV schedule, particularly if they can charge viewers to see them.

By the end of the year, Yahoo hopes to offer access to a library of TV shows and other video programming on demand for a flat monthly fee, Mandelbrot said. One hurdle, though, is making sure all the copyright and royalty issues are resolved. That might require more negotiations with the unions representing the actors, writers, directors and musicians whose works are involved, Mandelbrot said.

Viewers don't pay for much of what's on TV today because advertisers are willing to foot the bill. Online video, however, has "upside-down" economics, said Jeff Schrock, chief executive of Activate, a streaming-media company that focuses on corporate communications. As the audience grows to the size needed to attract advertising, streaming costs grow beyond what advertising can support.

Many streaming industry executives, such as Digital Planet founder Steven Chester, also argue that the Web needs new entertainment formats that take advantage of the medium's unique properties. It doesn't make sense for a studio to put a movie on the Net when it's making plenty of money selling DVDs for $20, Chester said.

Sony Pictures Digital Entertainment previewed the ScreenBlast Web site. It will give users sound and video editing tools to create their own versions of songs and movie trailers, which they can post to the site and share with other users.

But Sony also wants to deliver movies over the Web to consumers' PCs, turning the Internet into an electronic video-rental store. The company has finished the technology for its Moviefly initiative, which would offer temporary downloads of films a few weeks after they come out on video, said Ira Rubenstein, senior vice president of digital distribution for Sony Online Entertainment. Before it launches Moviefly, though, Sony is trying to strike deals with other studios to make their movies available too--something it hasn't yet been able to do.

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Times staff writer Jon Healey covers the convergence of technology and entertainment.

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