SAN MATEO, Calif. -- The promise of Internet-based video has long been hamstrung by copyright and piracy worries, slow dial-up connections, technical challenges, and consumer disdain for watching blotchy videos on their home computers.
But a Silicon Valley start-up is tackling those obstacles, hoping to become the first major provider of cinema straight from the Internet to the living room boob tube.
"Twenty years from now, everyone's going to be getting all their video mostly from the Internet," says Steve Shannon, founder of Akimbo Systems Inc. "You see it happening with music. You see it happening with phone service. Video is next."
With new video and copy-protection technologies, and the rapid expansion of high-speed broadband connections, the time may be ripe. Akimbo hopes to tap the vast vault of programming floating on the Internet, repackage it in DVD quality, and bring it to a set-top box so viewers can easily choose what they want to watch from their sofa -- not from their desktop.
San Mateo-based Akimbo, which delayed its launch date from the summer to October after it hit technical snags, appears poised to be the first to deliver an Internet-to-TV video-on-demand service. Akimbo is targeting an audience that craves more than the programming on conventional TV and cable networks.
But it's unclear whether even the most dedicated video junkies will be willing to buy another set-top box and pay an additional monthly subscription fee. Akimbo also faces steep competition from larger rivals in the potentially lucrative market.
SBC Communications Inc. and EchoStar Communications Corp. have teamed up to launch an online movie-on-demand service next year. Digital video recording pioneer TiVo Inc. is also working on a product that will connect Web content to the TV screen.
Video content piped into homes through the Internet does not face the spectrum constraints of broadcast television. Expanding the video catalog is relatively easy by adding more computer servers for storage.
The typical cost of transporting video data over the Internet has dropped from $30 per gigabyte in 2001 to less than $1 per gigabyte today, said Shannon, a former marketing executive at ReplayTV, another pioneer in digital video recording. "It'll be the nirvana of video on demand," Shannon said. "And the only architecture that can bring that is the Internet."
But will consumers, many of whom already have tall stacks of electronic boxes by their TVs, open their wallets? Akimbo subscribers must first buy a $229 Akimbo Player set-top box, then pay a basic monthly service fee of $10.
"You're competing against a lot of consumer electronic gadgets out there and many consumers are paying almost triple-digit monthly fees for video entertainment, so how much more are consumers going to pay for entertainment in the living room?" asked Sean Badding, industry analyst at The Carmel Group market research firm.
The company may charge more for premium services, and some shows will carry a pay-per-download fee -- as much as $5 for rare films, or $1 to $2 for a kid's show, Shannon said.