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Broadband Content: Coming to a Living Room Near You
By Masha Zager
Dec 11, 2006, 06:08

What will it take to bring Internet video to the television screen?

In the late 1990s, when we began hearing about Internet-television convergence, the idea seemed comical. Even on postage-stamp-sized players, Internet video consisted of short segments with jumpy motion and out-of-sync sound. Who would want to watch that on television?

With better software and faster connectivity, the Internet today can bring us full-screen, high-definition, long-form videos. But now that Internet video looks more like television, people are starting to wonder why they aren't watching it on television. Viewers settling in to watch a movie or TV show usually want to sit comfortably (and socially) in the living room, watch the big screen and listen to high-quality sound coming from their television speakers.

Delivering broadband content to the television screen is not a technical problem – there's no shortage of products and services that accomplish this task. Nor is there any lack of content. Film, television and music companies are all rushing to put their content libraries online, either publishing them directly to their Web sites or syndicating them to other site owners, or both. Many entertainment companies are developing video content specifically for the Web. And, of course, video isn't the only Internet service that plays well on TV – you can also read your e-mail or do your banking on the television screen. 

Why, then, are viewers still watching video clips on their laptops, propping their feet on the desk to catch a missed episode of “Lost” or downloading movies to a DVD and carrying the DVD into the living room? Though some brave souls have ventured into home networking, they're decidedly in the minority. For the rest of us, the Internet delivers content to the PC, and that’s where it stays.

One reason Internet-TV convergence hasn’t yet become standard is that no standard for it exists. Every company in the market seems to advocate a different technology and a different business model. At least for the present, there seem to be several plausible models for bringing broadband video to the television screen.

In this series we bring you profiles of two companies that have taken very different approaches to this challenge, as well as a sampling of the strategies that other companies are adopting.

NeuLion’s Walled Garden

NeuLion's set-top box and remote

Founded by a group of former Computer Associates executives and financed by the founders of Computer Associates and Cablevision, NeuLion began offering services in 2005. It operates somewhat like a traditional cable-television provider – except that it delivers programming over the Internet rather than over its own access network.

NeuLion works with several “channel partners” that aggregate content for niche audiences – either immigrant groups like Chinese or Africans, or special-interest groups like hockey fans or church members. For example, the Chinese-language KyLinTV service offers 26 streaming television channels from Taiwan, China and Hong Kong, as well as video on demand. These channels provide a full range of programming in Mandarin and Cantonese, including news, drama, movies, music shows and sports.

While the channel partners create and market their channel lineups, NeuLion provides the infrastructure and does all the behind-the-scenes work. It gives its channel partners the proprietary IPTV software and hardware platform they need to deliver programming. When a customer signs up for KyLinTV, he actually speaks to the NeuLion sales center, which takes the order and provisions the service. The customer then receives a NeuLion set-top box with KyLin’s brand on it. Since the set-top box connects the customer’s television directly to the broadband modem, the customer doesn’t have to have a PC, only a broadband connection of 700 Kbps or more. Then NeuLion bills the customer each month.

Like a Cable Service…but Portable

From the customer’s point of view, according to NeuLion EVP Chris Wagner, the service looks a lot like cable or satellite television. There are monthly or annual fees for basic service and premium service, plus additional usage fees for video on demand. The customer gets cable-quality pictures on the television screen and uses a cable-type remote control to channel-surf, record, replay shows that were broadcast earlier, or access video on demand.

One difference from cable and satellite is that the box is portable. A customer can bring the set-top box along on a business trip or a vacation and hook it up to any broadband connection, anywhere in the world. However, even though the content is delivered over the Internet, the customer has no access through the set-top box to any other Internet video – even free content – but only to the service he subscribed to.

This model has been a success, according to Alan Zhang, KyLinTV’s director of operations. In its first year, KyLin attracted 10,000 customers from all over the United States and Canada and was able to expand its programming from 19 to 26 channels and build a video library of 20,000 hours. It is even starting to work with producers here and in China to originate its own programming.

KyLin has worked hard to market its service, placing ads in Chinese-language newspapers, on Web sites like Sina.com and even on Chinese broadcast TV stations, as well as using Google Ads. It has developed reseller agreements with stores, business associations and individuals in Chinese neighborhoods; Wagner says that some resellers create buzz about the service by holding parties at their homes where they show movies on KyLin stations.
 

Finding Niche Audiences

High-quality content and diligent marketing aren't the only reason for KyLin’s success. The strategy works because it matches programming with specialized but geographically dispersed audiences. KyLin’s customers – and those of NeuLion’s other channel partners – aren't trying to watch broadband video on television; they are just trying to watch television. The content, and not the technology, is the driver for them. They subscribe to broadband TV because it has the content they want.

Of course, Chinese-speaking Americans do have other options: Satellite television offers a variety of Chinese-language channels, as do some cable systems; Chinese programming is also available on DVD. But none of these have KyLinTV’s range and diversity. For example, cable television in New York City’s Chinatown offers three Chinese channels, compared to KyLin’s 26.

NeuLion’s model is a good illustration of the “long tail” phenomenon made popular by author Chris Anderson in his recent best-selling book of the same name. Because Internet-based services can supply a large geographical area, they make it economical to sell a huge variety of niche content that appeals to narrow audiences. Just as Amazon.com can stock a far larger selection of books than your local bookstore can, and just as Netflix can offer more movies than your local video store, so NeuLion can potentially support many more television channels than a locally-based cable television company. With services such as NeuLion’s, every type of content can now find its audience, and every audience can find its content.