Netflix, Skype Founders Dream Big For Online VideoNetflix, Skype Founders Dream Big For Online Video

Consumers have yet to recognize the shotgun wedding between the Internet and television, but that hasn't stopped companies from rolling out devices and programs that will bring the two together. Last week, for instance, Netflix debuted its streaming video service, and the founders of Skype put a brand name on their new project, a peer-to-peer "piracy-proof" streaming video platform.

The platform, called Joost and expected to launch this year, will target the younger audience more likely to watch video online. It will offer shows from TV studios and specialty programs created for the Web by professionals and video enthusiasts. Joost will have online tools for users to chat with friends while watching shows and create their own TV channels.

Netflix, which has made streamed films and TV shows available to a random subset of its customers, will extend the service over the next six months to all its subscribers. It joins Apple, Amazon.com, CinemaNow, Movielink, and Wal-Mart, which already are offering films and TV shows online. "It's going to be a big business, but it's still going to be very small in comparison to the DVD business and ... the worldwide theatrical distribution business," says Cynthia Brumfield, president of media research consulting firm Emerging Media Dynamics.

The rental and sale of movies over the Net is expected to skyrocket by 2010, with nearly 60 million in unit sales and more than half a billion dollars in revenue, Emerging Media Dynamics estimates. But those numbers are only 2% of revenue from home video rentals and sales for the movie industry in 2005.

Apple now owns most of the market for film downloads. ITunes will account for 76% of the market this year, Brumfield says. "Over time, we're projecting their sales will decline proportionately as some of these other sites gain steam," she says.

Netflix plans to be one of the sites gaining steam. It initially will offer 1,000 movies for viewing on Internet-connected PCs, from its 70,000 titles. That's four times the number on iTunes. Netflix plans to add more titles and support the Mac and other platforms.