Global video boom, local underpinnings

CAMBRIDGE -- Millions of Internet videos are being recorded worldwide, from the beaches of Rio de Janeiro to the US campaign trail. They're popping up on laptops, cell phones, and desktop computers everywhere.

But much of the enabling technology fueling the online video boom -- software that lets consumers play and search for videos and allows content providers to post , distribute , and link them to advertising -- can be traced to a cluster of venture-backed start-ups operating around Kendall Square and near Fresh Pond.

"The companies in the Boston area are the power behind this industry," said Hilmi Ozguc , chairman and chief executive of Maven Networks Inc., which markets a publishing tool for online video to media customers and filmmakers such as CBS and 20th Century Fox.

Maven and several other Cambridge companies -- Brightcove Inc., which hosts video on its own and its partners' websites; EveryZing, which helps viewers scan video for specific phrases; and ChoiceStream Inc., which recommends videos for consumers -- are jockeying for footholds in what is emerging as the next big Internet industry.

Another big enabler is a well-established technology company: Akamai Technologies Inc., which spun out of the Massachusetts Institute of Technology in the mid-1990s to deliver text on the Web pages of retailers and news companies, and now also delivers videos for its customers' sites through its global network of Web servers.

While advertisers and providers of news, sports, music, and entertainment content are staking claims to the promised riches of Internet video, some analysts think the so-called infrastructure companies along the Charles River are better positioned to capitalize on the video boom, just as upstart Google Inc. came to dominate Internet search with its efficient engine. Like the sellers of picks and shovels who profited during the Alaska gold rush, the companies that provide the tools to manage video on the Web stand to benefit no matter where people watch video.

Not since the explosion of search earlier this decade, in fact, has the direction of such a fast-growing niche seemed so up for grabs. Debates rage on whether the cheaply produced amateur efforts shown on the popular video-sharing website YouTube can compete in the long run with more professionally made video clips, and whether most videos ultimately will be aggregated on Internet portals or distributed more widely through syndication.

But few would dispute the importance of the underlying technology, much of it developed in Cambridge research labs.

"There's tremendous value in the infrastructure," said Brian Wieser , senior vice president and director of industry analysis for the Magna Global research firm in New York. "Even though it remains to be seen what model will emerge on the consumer-facing side, there are major processes that still need to be made more efficient."

Those processes, such as downloading, playing, searching, and monetizing videos, are the specialty of the technology companies laboring in the shadow of MIT.

"We think video's going to become as ubiquitous as text on the Internet," said Jeremy Allaire , chairman and chief executive of Brightcove, which licenses its video technology to media conglomerates and independent producers. "We really don't care where it happens." (The New York Times Co., owner of the Globe, is also an investor in Brightcove.)

Local companies face heavy competition from a cluster of California technology companies, such as Akimbo Systems, Azureus Inc., and BitTorrent Inc., that are marketing their own content-delivery platforms for video. And some think Internet giants like Google and MySpace, which are moving to bolster their video offerings, will become important players in the fledgling industry.

"There is always going to be competition between Boston and Silicon Valley," said Michael Strickman , co founder and chief technology officer at ChoiceStream, which sells its video recommendation technology to customers like AOL, Yahoo Inc., and Blockbuster Online. "But we've got a critical mass here now."

Spending on Internet video advertising, meanwhile, is mirroring the early trajectory of search-driven text advertising. US advertisers are projected to spend $365 million to sponsor videos this year, a 55.5 percent increase from the $235 million spent in 2006, according to Magna Global. Online video advertising will climb 53.2 percent more to $560 million in 2008, the research firm estimates. For now, at least, the infrastructure companies draw most of their revenue from advertising-sharing arrangements with content companies.

But video ad spending remains less than 1 percent of the total spent on traditional television advertising. Wieser estimates online video watching will reach three hours per person a year in the United States in 2007, an all-time high. That compares to about 1,500 viewing hours per person a year for conventional television.

"The large advertisers who are putting money in conventional TV today are very interested in online video," Wieser said, "but the scale of online video viewing is still small."

That may be starting to change, however. When Google acquired YouTube last fall for $1.65 billion, it raised the profile of online video and signaled to investors and entrepreneurs that there is substantial money to be made.

" 2006 was the year of the Internet video, YouTube being the poster child," said Thomas R. Wilde , president and chief executive of EveryZing, a spinoff from BBN Technologies that has adapted its speech-recognition software, developed for US intelligence gatherers, to search for audio and video online. EveryZing customers include sports radio WEEI, owned by Entercom Communications Corp., and Boston.com (which like the Globe is a member of The New York Times Co.'s New England Media Group) .

Many of the Boston-area companies are betting 2007 will be the year that higher-quality, professionally produced content overtakes user-generated content. Brightcove, for example, is focusing on helping companies like British Sky Broadcasting, Discovery Communications, and MTV Networks distribute content on their websites, though it also aggregates content on its own site.

"In an Internet world, you have the opportunity for unlimited programming," Brightcove's Allaire said.

Robert Weisman can be reached at weisman@globe.com.