A high note for streaming?
After Yahoo!-Broadcast.com deal, video streaming may really take off
NEW YORK (CNNfn) - The merger of Yahoo! Inc. and Broadcast.com signals that the burgeoning industry of audio and video programming over the Internet is about to come of age, analysts said Thursday.
Among the biggest beneficiaries of the $5.7 billion deal will be the audio and video software companies that provide the "streaming" technology which enables everything from corporate board meetings to local college football games to be broadcast over the World Wide Web.
"It's really taking the Internet to the next level," said Michael LeConey, Internet analyst at Security Capital Trading. "I think the future of those (software) companies depends on the success of these types of acquisitions, because you have to have entities that are set up to put the content together and deliver."
The merger brings the wide array of programming culled by Broadcast.com, a so-called content "aggregator," into the highly trafficked Yahoo network. The big beneficiaries include companies such as RealNetworks (RNWK), maker of the widely used RealPlayer technology used to make a lot of this programming work, LeConey said.
RealNetworks' stock was up 11-5/16 at 133-1/2 in morning trading Thursday.
Also, there are all kinds of related ventures that should benefit, such as the online music studio Sonic Foundry, (SFO) whose programs allow musicians to put their work on the Internet. Or a company like Digital Lava Inc., (DGV) which offers advanced video editing services. For example, Leconey said, the company's programs allow users to search through a video by typing in a key word. Only those parts of the video then would be played.
For such companies, the breadth of the Yahoo!-Broadcast.com merger is "a dream come true," LeConey said. "It sets up a mechanism to get their product to the consumer."
Analysts say the merger also marks a big step for the industry because it will showcase the diversity of programming available through the Internet.
When television was first rolled out, there were three major networks; then cable came -- bringing dozens more; with satellite TV, there are now hundreds of options. But with the Internet, you can stop even counting. There are thousands and thousands of choices.
The technology still may have some bugs, but consumers are willing to forego that to see one-of-a-kind programming, said Robert Martin, Internet analyst with Friedman, Billings and Ramsey. For example, a Victoria's Secret fashion show that was beamed out on Broadcast.com drew a record 1.5 million viewers.
"People are sitting there and are willing to watch a Victoria's Secret fashion show with choppy video because it's content they couldn't see anywhere else," Martin said. "Streaming media has already penetrated the mainstream. What needs to happen next is continued development of content and publishing to Web sites."
LeConey said that other problems, such as the lack of high-speed Internet access on the part of many users, is quickly being fixed.
"What's different today from nine months ago is there is visibility of a solution," he said. "The number of people with high-speed access is small, but growing at a phenomenal rate. You have all kinds of new issues coming out that are high speed modems and high-speed delivery systems."
-- by staff writer Martha Slud