Last week’s mega-multimedia merger between San Diego’s Intervu Inc. and Akamai Technologies Inc. has some Internet companies jumping for joy.
For example, Tom Carter, who plans to launch his own multimedia Web site this spring, says the merger will further fuel the growth of Web broadcasts.
“The Akamai and Intervu merger will create a real dynamic platform for (streaming multimedia) distribution, so companies that are looking to provide streaming video and multimedia have a larger conduit,” said Carter, the 35-year-old founder and director of InvestorVu.com, a Pacific Beach start-up that is creating a global, interactive multimedia Web portal that highlights publicly traded companies.
As a result of last week’s $2.8 billion stock-for-stock merger, Massachusetts-based Akamai, maker of technology used to speed up the delivery of Web site content, will own Intervu, the leading service provider for Internet audio and video delivery solutions.
The deal, which still must meet approval of the companies’ shareholders and the Securities Exchange Commission, will make Akamai the largest global provider of Internet content, audio and video delivery services.
Akamai, Hawaiian for “intelligent, clever and cool,” has already deployed more than 2,000 servers in more than 40 countries. Akamai will now have access to Intervu’s clients, which include CNN, Excite@Home, Microsoft Corp., NBC, MSNBC, House of Blues and Turner Broadcasting.
For the last five years, Intervu has strived to create spellbinding images and technology for its clients.
Edward Huguez, the company’s chief operating officer, recounted the events that led up to Intervu’s success.
“Back in 1995, you have to realize as a general consumer service, the Internet was still in its early stages,” he began. “The rudimentary capabilities of the Internet were just being deployed. Things like Netscape browser had been recently introduced. You then had a facility, a way to get around the Internet.”
With E-mail being the only general user application on the Internet at the time, the notion of distributing video over the Internet was way ahead of its time, Huguez said.
But the founders of Intervu always found ways to keep their multimedia dream alive , the company developed the first MPEG player as well as the first Web video banner.
Intervu raised $10 million before going public in November 1997. The initial public offering raised about $20 million. That’s when company executives knew video over the Internet would soon become an accepted medium, Huguez said.
“It’s a natural course of events that audio and video on the Internet would happen,” he said. “There’s a reason why television is so popular. People like to be entertained in the most convenient way.”
Huguez said the advancement of technology, as well as the advent of cable modems and digital subscriber lines (DSL), have also aided in the growth of Internet broadcasts.
“Virtually everybody can receive some form of video and audio today.”
Huguez said Internet-based companies also have a financial incentive to include audio and video on their Web sites.
“People stay longer, therefore Web sites are able to generate more advertising revenues,” he said.
Bill Gramas, senior vice president and technology analyst for the Irvine-based research and analysis firm L.H. Friend, said the future of the Internet is TV.
Big screen PC TV’s aren’t far from reality, he said.
“As we get better bandwidth we’re going to have better reception on our PC TV,” Gramas said. “Companies like Quest and Norfolk Southern are laying fiber across the country, and as homes get wired with fiber, you’ll have the ability to have all kinds of medium coming through on your big-screen PC TV.”
Gramas said there are even several small Hollywood studios and screenwriters producing short films for the Internet.
While the Internet video and audio market potential is colossal, Gramas said there will only be a few dominant players.
“The reason is you have to build out the infrastructure to deliver the content,” he said. “It’s not like somebody can just walk in and say, ‘I’m going to do this.’ Intervu and Akamai both have a sophisticated network.
“Intervu is in the hot seat for the future of the Internet.”
While Akamai and Intervu are in the lead, they must still keep their guard up, warns Sujata Ramnarayan, senior analyst for E digital media for Dataquest, a San Jose-based market research and analysis firm.
“It’s still early and Akamai has the lead,” she said. “But they have to worry about satellite-based delivery.”
She said Akamai will go head-to-head with companies like iBeam Broadcasting, a Sunnyvale-based firm that delivers satellite-based streaming audio and video over the ‘Net.
Ramnarayan said she wouldn’t be surprised if Akamai announced some deals and agreements that will give the company a piece of the satellite-based video streaming market.
Intervu’s biggest competitor is broadcast.com, owned by Web search engine Yahoo! Inc.
“The two companies have been very strong,” Ramnarayan said about broadcast.com and Intervu. “But from the beginning, Intervu did not push their brand name. They differentiated themselves that way. In the last year they have had a lot of success because of timing. In the last half of 1999 there was a proliferation of video on the Web.”
Intervu’s Huguez said Akamai and Intervu will keep a strong hold on the market by continuing to introduce new technologies.
“Together we’re just poised to develop new and better technology for delivering all kinds of content over the Internet,” he said. “We will be more efficient and effective in the marketplace.
“This is going to be a great company.”
Huguez added Intervu plans to stay in San Diego, and will hire more people this year.
Intervu, which has 300 employees, reported $11.8 million in fiscal 1999 revenues. Analysts predict the company will generate $35 million in fiscal 2000 revenues.
Tom Carter said continued success for Intervu could mean victory for companies like InvestorVu.com, which also plans to provide Internet broadcasts.
“We’re still scratching the surface,” he said. “I think there’s a tremendous amount of opportunity for companies out there.”
