The Venice Project

Filed in archive Venture Capital on August 5, 2006

Steve Rosenbush at Businessweek reports about the Skype founders' newest baby:

Niklas Zennstrom and Janus Friis, the entrepreneurs who created the pioneering Web applications Kazaa and Skype, are working on a new communications venture, BusinessWeek.com has learned. The pair plans to develop software for distributing TV shows and other forms of video over the Web, according to people familiar with the matter.

And just as Comcast has stretched into the media-creation business, even attempting to buy Disney (DIS), Zennstrom and Friis appear to have an interest in creating or packaging content for the Web.

COMPETITION TO COME. The Venice Project may find willing partners in the TV business. While music and film executives resisted even the legal distribution of their goods over the Web, TV executives have been much more accepting of the concept. Perhaps they saw the ultimate futility of resistance. Although the music and film industries won several legal battles, they failed to stop the consumer embrace of digital distribution platforms such as Apple Computer's (AAPL) iTunes. And maybe several years of technological evolution have simply convinced the TV execs that an economically viable digital-distribution system is at hand.

Regardless of the reason, viewers can now find more than 150 TV shows, from Survivor to 24, on iTunes. CBS's (CBS) Innertube Web site has eight full episodes of Big Brother: All Stars and other shows available for free. And NewsCorp.'s (NWS) Fox unit makes shows such as American Idol and Prison Break available for free at Fox.com's Video Central.

There will be plenty of competition, though. Startups-including Brightcove, Bittorrent, You Tube, Veoh, and Video Egg-already allow consumers and professionals to distribute video over the Web. Veoh, which also uses a peer-to-peer model, has attracted major investors such as Time Warner (TWX) and former Disney (DIS) Chairman Michael Eisner. Veoh announced a deal this month in which it will help promote Time Warner unit TNT's newest horror show, Nightmares and Dreamscapes: From the Stories of Stephen King.

The most interesting competition though will probably emerge from players like Akimbo a TV over IP syndication box that appeared two years ago. It has raised enough cash to battle and has a rather stable infrastructure now. Akimbo had a hard time signing up major broadcatsers - maybe because it does not focus on single shows but on complete channels. Many broadcasters are simply not ready for this.

It will be interesting to see how "The Venice Project" fares but the timing and the publicity it already generates could make it very interesting.