Digital Media

Cable giant Comcast is reportedly in talks to gain a controlling stake in General Electric's NBC Universal, in a deal that would help shape Comcast's online-content strategy and help NBC Universal keep pace amid the shifting market.

According to a Wall Street Journal report, Comcast is hoping to form a privately held joint venture that would include NBC's media content. Comcast would control the venture with a 51 percent stake, and GE would own 49 percent of the new company.

Combined, the new jointly owned media company would own more than two dozen TV networks, including NBC, along with several cable stations, such as USA Network. Comcast already operates some of its own cable networks, such as E!, the Style Network, and G4. The new joint venture would also own NBC Universal studios, plus 10 local NBC TV affiliates in cities such as New York and San Diego.

This isn't the first time Comcast has gone looking for a big media company. Five years ago, the company tried to acquire Walt Disney for about $66 billion. In the years since that failed attempt, the media and video distribution landscape has changed dramatically.

Television networks are struggling to keep advertising revenues up, and movie studios are under pressure to prevent digital piracy from eating into their profits. Meanwhile, Comcast, which is facing more competition from phone companies and satellite providers in its TV business, is also trying to figure out how best to use the Internet to deliver video content.

Individual TV channels have been putting their own TV content online for consumers to access for some time. This initially troubled cable operators such as Comcast; they saw the free delivery of video content for which they pay a hefty price as a threat to their business.

NBC and News Corp., the owner of Fox, have made a splash with online service Hulu, which offers TV shows and some movies on demand. Other media conglomerates, including CNET News publisher CBS, have made similar moves.

Comcast, too, is starting to embrace online video, teaming up with media conglomerate Time Warner earlier this year to test a new service offered by Comcast called On Demand Online. The service allows Comcast cable customers to access some of Time Warner's most popular TV shows from its TNT and TBS networks at no additional charge. Its plan is to provide TV networks and movie studios a secure way to distribute their movies and TV shows to a wider audience via the Internet.

The Wall Street Journal said that talks between Comcast and GE could still fall apart. Comcast is looking to pay as little as it can up-front. And there is an issue about what to do with Vivendi, which has a 20 percent stake in NBC Universal.

This is sort of interesting. MTV Networks, which certainly has a lot of video content out there on the Web, on Wednesday released the results of an internal study to determine what kinds of advertisements are most effective and online-friendly matches for short-form online videos.

The conclusion? "Project Inform," the MTV survey, found that a five-second-long "pre-roll" ad in advance of the clip, combined with ten seconds of a semi-transparent ad unit that takes up the lower third of the video (and starts about ten seconds in), makes up "both the most effective and the most audience-friendly ad product for short-form online video," according to a release.

MTVN calls this the "lower one-third product suite." It was tested against two other ad packages, the "sideloader," which combines the five-second pre-roll with an ad that rolls out of the side of the video window; and a traditional 30-second pre-roll before the ad.

So, obviously, that's a limited number of options and certainly doesn't reflect the full range of possibilities for online ads. But it was thorough: Project Inform ran consumer survey tests across about 50 million video streams on the Web properties for media brands like MTV, Comedy Central, and Nickelodeon.

"Short-form online video consumption is exploding, but there's still a lot of confusion among marketers over which ad formats deliver for brands without compromising the user experience," Nada Stirratt, executive vice president of digital advertising at the Viacom-owned MTV Networks, said in the release. "By exploring the viability of new ad products around short-form online video, Project Inform provides the type of insights crucial to creating the innovative, custom solutions that this marketplace needs."

The catch is whether even the highest-performing varieties of online video ads still really rake in the dollars. Online video has been notoriously difficult for companies to monetize, but that's in part because the first variety of video to gain traction on the Web was amateur, user-created content (do top-notch advertisers really want their message next to a video of a squirrel on water skis?) and also because traditional, TV-style ads don't have the same impact alongside shorter Web clips.

There have been some promising signs, though. Video portal Hulu has investigated a couple of experimental video ad formats since launching last year, and has had good news to report on the advertising front--like that its inventory sold out a month after its public debut.

Viacom isn't a member of the Hulu joint venture, which now consists of NBC Universal, Disney's ABC Entertainment, and News Corp. But a limited number of episodes from Comedy Central talk shows "The Daily Show with Jon Stewart" and "The Colbert Report" started playing on Hulu last year.

(Credit: Comcast)

Cable giant Comcast plans to add movies from the cable channel Starz to its test of "On Demand Online," a new service its testing that allows Comcast subscribers to watch cable TV online at no additional charge.

Comcast is set to begin testing the service in the next few weeks with about 5,000 customers. And in addition to video content from Time Warner's Turner networks TNT and TBS, participants will also be able to view about 300 movies from Starz's lineup in standard definition. Some of these movies include Wall-E, Pineapple Express, and High School Musical 3.

High-definition versions of movies and additional content will be added later in the trial. Starz also plans to offer original series like Crash, Head Case, and Party Down.

Comcast announced the On Demand Online trial last month as well as a new partnership with Time Warner to drive the development of the service. Some of the TV shows that Time Warner plans to offer include The Closer, Saving Grace, and My Boys.

Comcast plans to make its On Demand Online service available to all of its subscribers in the fourth quarter of this year.

Instead of a bloody price war between cable operators and phone companies in the TV market, battle lines are now being drawn over who has the most compelling new features.

Digital video recorders, on-demand services, and more recently Web sites such as Hulu.com have taught people that they don't have to be beholden to a TV schedule. But the TV industry is about to be shaken up even more as phone companies and cable operators, which are all vying for your viewing eyeballs, add new features to their services to lure customers.

So what's it mean for you, the consumer? Well, it's not likely to mean lower prices on the services you already buy. Verizon Communications has already started moderately increasing the price of its service bundle for new customers. But what it's likely to mean is that consumers will get a lot more bang for their buck. When it comes to TV, that means a lot more access to the shows and movies you like, when you want to watch them, and on any device you want to view them on. At least that's the promise.

Whether the dream lives up to the expectation is another story. While some of these new services are being rolled out as we speak, some are still being tested and aren't quite fully baked. But at the very least the revolution is quietly under way and TV viewing could be a whole lot different in just a few short years.

"I think what we (Verizon and AT&T) are doing is pressuring the rest of the market to respond," said Shawn Strickland, vice president of Fios product management for Verizon Communications. "So Comcast can't just respond to what we are doing in a single market, but they have to respond to AT&T too and it drives innovation in the entire market."

For years, not much had changed in terms of the TV viewing experience. Programmers would highlight their popular shows and vie for top ratings in Nielsen surveys. And viewers would sit back and enjoy their favorite shows. Aside for some competition from satellite providers, for the most part, the cable industry had enjoyed a near monopoly on the TV market. That is until the phone companies came along with their dreams of marrying Internet technology to the TV.

Who would have thought just a few years ago that it would take the old stodgy phone companies to stir things up in TV? But that is exactly what's happened as AT&T has entered the TV market with its U-verse service and Verizon Communications has taken on cable operators with its Fios service.

In just a few short years, these phone companies have gone from playing catch up to their rival cable providers, to actually leading the industry in terms of innovation with new interactive services that leverage their Internet-based networks.

But the cable industry hasn't sat idly. The major players in the market, namely Comcast and Time Warner Cable, have been upgrading their networks to add more capacity both to their Internet services and to their video services. And they've been forging ahead with new digital video recording features and video on demand content. Now, they are about to take the biggest plunge yet into the uncharted territory of online on-demand access to TV shows and movies.

For consumers these new services will soon offer broader access to more content, on more screens and at times that are convenient for viewers and not TV programmers. And thanks to the wonders of the Internet, consumers will also be able to interact with what they're watching.

More interactivity for viewers
For the phone companies, the future of TV is also about deepening the experience and providing more interactivity for viewers. For Verizon's Fios customers this means being able to discover new shows by checking what is the most popular content being watched in their neighborhood. The company also offers sports and news widgets, and its working on social-networking applications that will integrate TV viewing with Twitter and Facebook.

For AT&T's U-verse customers it means taking a TV event and providing a deeper dive. During the PGA Masters golf and the March Madness NCAA basketball tournaments this spring, AT&T partnered with CBS Sports to provide Web-based applications to coincide with TV viewing (CNET News is owned by CBS.) During basketball games, statistics and scores were added to March Madness fans' online brackets so they could be viewed as the games were unfolding.

And Masters golf fans were able to view multiple video feeds on their TV screens to keep up with action at different points on the course. Viewers could also check the score board online to see how the leaders were shaping up. And this information wasn't just available online or on TV, but using an application for the iPhone, it was also available on mobile devices.

"With this kind of experience viewers start to have more control and a deeper engagement with the content," said Jeff Weber, vice president of video products for AT&T. "This is very clearly for customers who care about these types of events, but it gives them an opportunity to be engaged in a way they couldn't before."

But Weber also acknowledged that viewers were primarily interested in watching these sporting events. And he said there was a fine line between balancing the deeper richer experience with not interfering with the primary activity of TV viewing.

"At the end of the day, the killer application is still watching TV," he said. "So we needed to deliver ESPN with as good a quality or better than the cable companies into the living room. But now that we have done that, we are pushing ahead to make it a much richer experience for the consumer."

Verizon's Strickland said adding interactivity to the TV viewing experience also increases the opportunity for advertisers. And it offers a new way to monetize the TV viewing experience.

"The TV is the best entertainment storefront out there," he said. "People spend an average of six hours a day in front of the TV. And interactivity with that audience provides a lot of opportunity to advertisers."

This aspect of the new television age may or may not appeal to consumers. But the truth is that providing TV service and creating content is expensive. And as more people gravitate toward watching recorded TV shows and skipping advertising or even viewing video on demand content, TV providers and the programmers that create the content need to find ways to make money to augment losses in the traditional business model.

Because the phone companies have built their networks using IP technology, they've been able to push the envelope in terms of interactive features. And in the case of Verizon, its fiber architecture has also given it a considerable amount of bandwidth capacity to push the envelope in terms of on-demand services. As a result, today Verizon is offering more than 100 channels of high-definition content. And it's able to match cable competitors in terms of video on demand services.

Cable upgrades
But the cable companies haven't been sitting on their hands for the past few years. They've been upgrading their networks and innovating too. Comcast already has Docsis 3.0 technology, which greatly increases broadband speeds and network capacity, in at least a dozen markets. Time Warner Cable was one of the first companies to introduce its start-over solution that allows viewers to start a TV show from the beginning if they come into the show late and haven't recorded it.

But the boldest move by the cable companies is about to get off the ground. Leveraging existing relationships with TV programmers, cable is striking deals to put more video content online. The popularity of Web sites such as Hulu.com, which offers mostly broadcast TV shows for free online after they air, along with other free online video programming, has spurred the cable companies into action.

Time Warner Cable has been trialing a service with HBO that allows people in Milwaukee to watch on-demand HBO TV shows and movies on their laptops. And now Comcast and Time Warner, the media conglomerate and former parent company of Time Warner Cable, are working together to test a new authentication system for accessing Turner Broadcasting content from TNT and TBS.

On Wednesday Comcast and Time Warner announced their new plan to provide authentication to securely distribute video online to cable subscribers. The companies highlighted the importance of allowing their viewers to access content, which they've already paid for via a cable subscription, from anywhere, anytime and on any device.

"This a very logical next step in the evolution of TV," said Brian Roberts, CEO of Comcast during a press conference Wednesday in New York. "Comcast alone has had 12 billion on-demand streams. iTunes has had about 6 billion downloads. This is how consumers want to get their content."

Jeff Bewkes, CEO of Time Warner agreed. "Consumers have spoken," he said. Bewkes added that putting video online for viewers to watch anytime they want on any device will greatly expand the audience and actually provide more revenue opportunity for advertisers. He used HBO as a perfect example. He said that when the company decided to add HBO content on demand for free that viewership went up and people were able to follow more shows. He said he is willing to work with any TV provider to make the Time Warner content available elsewhere.

While it's important to give people a choice in where and when they watch something, Bewkes also noted that the most important thing is simply providing access to the content.

"There has been so much focus on broadband," he said. "But don't miss the importance of the video on demand aspect. Whether its over a set top box or broadband, it will have a dramatic increase in audience."

Cable giant Comcast announced that it's working with media conglomerate Time Warner to deliver cable TV shows via the Internet for cable TV subscribers.

The companies announced on Wednesday that they will be testing a new service this summer offered by Comcast called On Demand Online. About 5,000 Comcast customers will be involved in the test. And they will get access to some of Time Warner's most popular TV shows from its TNT and TBS networks at no additional charge.

The companies plan to continue to work together to get more of Time Warner's Turner Broadcasting content on the Web for on-demand viewing, Jeff Bewkes, CEO of Time Warner, said during a press conference in New York on Wednesday.

The On Demand Online trial will test a new authentication technology that will allow secured access to the content.

Comcast's CEO Brian Roberts said he expects other networks to participate as the trial expands. Bewkes also said that Time Warner will work with other TV distributors, such as telephone companies and satellite companies, to distribute its video content in similar trials.

Comcast's plan is designed to provide TV networks and movie studios a secure way to distribute their movies and TV shows to a wider audience via the Internet. The way the service works is that people will only be able to access content if they have a cable TV subscription. But the service will work over any Internet provider, so that a Comcast TV subscriber could access video-on-demand services available through his paid TV package using Verizon's DSL service, for example.

Subscribers will only have access to content that is included in their cable package. For example, this means that viewers who pay for HBO could be allowed to get HBO shows and movies on demand via a broadband connection. But if a subscriber doesn't pay for HBO, that content won't be accessible via the service.

Comcast has already been experimenting with putting cable TV shows that haven't been available online on its Fancast Web site. And Time Warner Cable has also offered some HBO shows over the Internet in certain markets for a trial it's been testing.

Bewkes and Roberts emphasized during the press conference that the new service was about giving consumers free access to content via the Web. But journalists at the event and on the conference call pointed out that the service isn't really free since users must already subscribe to a paid TV service to get access to the content.

This is different from services such as Hulu.com, which is owned by NBC Universal and News Corp, and CBS' TV.com. (CNET News is published by CBS Interactive, a unit of CBS.) These Web sites offer broadcast TV shows via the Web for free after the shows have aired. Hulu even offers some cable TV shows.

But what Comcast and Time Warner are talking about is putting premium cable programming on the Web. Networks and movie studios have been reluctant to offer their content online because they fear piracy. They also have been uncertain about how to monetize their most valuable content.

But Roberts said that the authentication technology Comcast will use in its trial helps alleviate these fears because it not only authenticates using a username and password, but it goes one step further to ensure that the user accessing the content is really permitted to access that piece of content. And Bewkes said that new advertising models will be developed to help ensure that content owners get top dollar for their movies and TV shows.

Some critics view this move as a defensive one as cable operators and cable networks fear that as more content makes its way online--legally and otherwise--that many viewers will cut the cable cord and watch TV via the Internet. But Bewkes downplayed this concern saying that paid TV subscribership has increased every year for the last 30 years and that he doesn't see this trend slowing anytime soon.

Instead he said that this new initiative is really a way to give consumers more choice to watch what they want, when they want it and where they want regardless of device. While he concedes that most TV viewing is done today on an actual TV, he also said that viewers may want to watch TV shows on mobile phones. And this new model will allow for that as well.

As part of the Streaming Media East conference in New York, Adobe has unveiled "Strobe," the "open framework" for its Flash video player that the company first announced last month. It's expected to be available in the third quarter of this year.

Since you were probably wondering: No, Adobe is not tweaking the pronunciation of "Strobe" so that it rhymes. Thank goodness.

But here's what it is: Strobe is a product and architecture for accompanying plug-ins based on Adobe's Flash technology that lets a company build a custom video player more easily, should it want to host online videos in-house rather than relying on YouTube or its ilk.

While Adobe's ActionScript language is "very flexible," explained Jennifer Taylor, director of product management for Flash distribution, "everybody's sort of had to recreate that from scratch, and as a result it's taken people longer than they've wanted to to to get their video players up to get their video online."

The meat of Tuesday's announcement at Streaming Media East is that a host of big new partners are on board, from content delivery networks to analytics firms. The full list of supporters is Adap.tv, Akamai, Blip.tv, Brightcove, CDNetworks, Digital Smiths, Eyewonder, GlanceGuide, Grab Media, Incited Media, iStreamplanet, KickApps, Level3, Limelight Networks, Multicast, Nielsen, Omniture, Panache, PointRoll, ScanScout, Thumbplay, Visible Measures, and YuMe.

Strobe is "taking the mystery out of creating video players, and also streamlining and simplifying that process, so people can do it much faster than they could before," Taylor said. She added that ComScore statistics have said that Flash is used to serve up 80 percent of all online videos.

Adobe is calling Strobe an "open framework" and is inviting developers to contribute, but has not finalized the way that it will be licensed. There may, for example, be an open source version that developers are invited to try out, test, and build on, but the version that will be downloadable at Adobe.com may haev a different license. This, Adobe representatives said in an e-mail to CNET News, would "take all the best pieces of the open source code, bundled with plug-ins," but that it would be protected to "prevent modifications, breaking plug-ins and prevent competing branding."

Company representatives followed up later on Tuesday to clarify that "the intent is to work with a license that allows for liberal use and innovation."

But regardless of license, the Strobe framework will be free, and Adobe does not have plans to charge for it. "Our intent is to not monetize Strobe directly," Taylor said. "Obviously, we anticipate and hope that Strobe will help accelerate the adoption of Flash video, and the rising tide helps all boats: it's going to help our partners and those who provide plug-ins for the framework."

This post was updated at 1:43 p.m. PT to clarify the use of open source technology in Strobe.

Disney's ABC Enterprises announced Thursday that it has entered into online-video joint venture Hulu, currently a partnership between NBC Universal, News Corp., and investor Providence Equity Partners.

This means that TV shows from Disney-owned channels like ABC, SoapNet, and ABC Family will be coming to Hulu. Among them are "Lost," "Grey's Anatomy," "Ugly Betty," and "Scrubs." There will also be Disney movies available on the ad-supported streaming video site, but a press release did not name any of them. Content will be available "soon," the press release explained.

Reports started to surface about a month ago that Disney was in talks to join Hulu.

Robert Iger, president and CEO of the Walt Disney Company, will take a seat on Hulu's board of directors, along with Anne Sweeney, co-chair of Disney Media Networks and president of the Disney/ABC Television Group, and Kevin Mayer, executive vice president of corporate strategy, business development, and technology at Disney.

ABC already streams a significant amount of television content on ABC.com, and Disney-owned television and video content was some of the first to make an appearance in the iTunes Store's video download section.

Apple CEO Steve Jobs is Disney's single biggest shareholder, having sold animation studio Pixar to the company in 2006.

This post was expanded at 8:15 a.m. PT.

Cable operators and media companies are cautiously dabbling in on-demand online video, but this is one case where caution could be as dangerous as recklessness.

Recently, the nation's two largest cable operators have been talking about offering their cable lineup to subscribers online so they can view their favorite shows on their computers. And now, YouTube, the site Viacom sued for more than a $1 billion in 2007 and threatened to have shut down, is signing deals with big studios like Sony Pictures and Lionsgate, as well as TV network CBS. (CNET News is published by CBS Interactive, a unit of CBS.)

All this recent activity seems to suggest that cable companies and big media companies finally understand that the Web is their future. People want to watch what they want when they want. And the Internet provides an ideal way to connect people to their favorite content.

While these efforts are a step forward, the cable operators and the media companies are still trying to maintain control and strike a balance between the old and the new. Their biggest fear (and a reasonable one) is disrupting an extremely lucrative business model that has served them well for the past 30 years. But experts caution that if they move too slowly, they could risk losing everything to digital piracy.

In short, do you give up some of your existing revenue and hope you can make that money back through advertising? Or do you stick with your current model and fight what could be a losing battle to protect your copyrights?

"There is no way to put the genie back in the bottle now," said Avner Ronen, CEO of Boxee, a company that acts as a sort of browser for the TV to help people find and play online video on their big screen TVs. "But if users can't easily get the content legally and reasonably priced in a reasonable amount of time, they will go out and get it some other place. That has been proven with music, and video is no different."

Appetite for online video grows
There is little doubt the online media age is upon us. Movie studios and network TV companies have been serving up popular shows online for at least the past couple of years. And now the nation's two largest cable operators, Comcast and Time Warner Cable, are testing services that allow their cable TV viewers to watch their regular cable lineup over the Net on their computers.

Time Warner Cable, the second-largest cable operator in the country, is already testing its online video-on-demand service in Milwaukee. The service allows Time Warner customers who subscribe to HBO, for example, to watch episodes of "Entourage" or "Flight of the Conchords" online through the Web site. Subscribers who don't pay for HBO, don't get access to those shows. Comcast isn't in tests yet, but the company plans to offer a similar service available through its Fancast Web site later this year.

Unlike video Web sites such as Hulu.com, which is owned by NBC and News Corp., and CBS' TV.com, the cable online video services are not free. And it doesn't sound like the cable operators have any intention of offering them for free.

"We believe we can add more value to the entertainment that people are already paying for," said Sam Swartz, executive vice president for Comcast Interactive Media. "We recognize that consumers have different ways to consume content. Some will want to view it on a PC. Others will want to see it on a TV. Our job is--for the same subscription fee--to offer it to consumers on whatever platform they want."

One thing has become very clear to be successful in offering online video: Content is king. And sites that don't have it die. Just look at Joost, which was founded in 2007 by Janus Friis and Niklas Zennstrom, the same pair who founded Skype and Kazaa. But the company had trouble landing top TV shows and films and two years later, it's on the auction block.

Meanwhile, NBC and News Corp.'s Hulu.com has flourished providing online access not only to NBC's and News Corp.'s own content, but also TV content from others, as well as some movies. CBS has also gotten into the game by offering some of its TV shows online through its Web site TV.com. And now movie studios are courting the once loathed and feared YouTube. The site owned by Google recently signed distribution deals with Sony Pictures, CBS, Metro-Goldwyn-Mayer, Lionsgate, Starz, Discovery Communications, and National Geographic.

Show me the money
Media companies plan to make money from these services through advertising, a model that has worked well in the broadcast world for more than 50 years. But making money in advertising on the Web has so far proven harder than in the broadcast market.

The problem is that media companies make more money from airing a show on broadcast than they do online, even though a lot of people who record their television shows with a DVR fast-forward through the broadcast commercials. And viewers of Hulu can't forward through the commercials offered during their shows. The other problem is that advertising firms get paid bigger budgets to develop advertising for TV spots than they do for Web spots, providing an incentive to push clients toward TV advertising rather than online advertising.

Another major problem with the current business model is that cable companies spend tens of billions of dollars each year to license content from media companies. They then turn around and sell subscriptions to their service to consumers, who view the content. Popular content, such as the sports channel ESPN or the all-news channel CNN, are very expensive. And if consumers can get the same content from those sites for free on the Web, why would they pay $100 or more a month to subscribe to cable?

Understandably, cable operators have pushed hard to keep media companies from offering too much of their content for free online.

"Media companies are getting pressure from the cable companies to not put as much content online," Ronen said. "Cable is saying, 'Why should we be helping people cut the cable cord when we're paying $20 billion a year for content.'"

Still, online distribution represents a new opportunity for media companies providing them the chance to monetize older content that sits unused in their archives as well as bringing in additional revenue from new products associated with popular shows.

As media companies try to figure out how to make more money from the Web while not biting the hand that feeds them, i.e. the cable companies, they are experimenting with which content to distribute online and how much of that content they make available for free to online viewers. For example, NBC offers full episodes of all three seasons of the show "Friday Night Lights" on Hulu.com. But the super-popular comedy "30 Rock" only offers full episodes of some of the most recent episodes.

Content owners have also restricted the use of services, like Hulu, overseas, since there are special content license deals with foreign broadcasters for TV shows and movies produced for the U.S. market.

But there have also been occasions where media companies have actually taken content off the Web. Earlier this year, Hulu.com upset fans of the FX show "It's Always Sunny in Philadelphia" when it yanked almost the entire three seasons of the show. Distraught users sent angry messages on Twitter and Hulu was forced to post a response in a blog saying that it was FX's decision to pull the show and not Hulu's.

The situation demonstrated that it is the media companies, and not video-playing Web sites, such as Hulu, that have control of the content.

Media companies, likely nudged by the cable companies, have also tried to keep the online video viewing on the PC. For much of this year, Hulu has been blocking Boxee, a software application that provides an easy way to discover and view online video on the TV.

While the media and cable companies may be merely trying to protect their copyrighted content and existing business models, they may find their attempts to control the distribution of their content fruitless. Boxee CEO Ronen said that these companies are risking losing complete control of their content through piracy.

"Piracy will become an even bigger concern for them if they don't give viewers what they want," he said. "It's already happening, especially overseas where you can't get access to most of this content legally."

But Comcast's Swartz said that the online video market is still young. And experimentation is necessary at this stage.

"We are in the bottom of the second inning when it comes to putting content online," he said. "Content owners are realizing that they put some content out there and they aren't making money. Now they are at the point where they are trying to figure out which business models will work."

Of course, the big question is whether they will figure it out in time. The game may only be in the bottom of the second inning, but it could be over a lot quicker than Swartz or any of the other cable and big media execs realize.

Joost is actively seeking a buyer and the beleaguered video service has told cable and satellite providers that it could be their online video solution, said sources close to the companies.

Time Warner Cable is one of the companies that has expressed interest in Joost, the sources said. Spokespeople for Joost and Time Warner Cable said they don't comment on rumor or speculation.

Joost is a story of missed opportunities, bad luck, and the folly of thinking whiz-bang technology alone is enough to forge a winning entertainment site.

Joost launched in 2007 with seemingly everything going for it. The company's founders are Janus Friis and Niklas Zennstrom, the same pair who founded Skype and Kazaa. The thinking in the media was the site couldn't lose with Friis and Zennstrom's peer-to-peer technology, which was supposed to be more efficient and provide higher-quality video.

Two years later, and after the company struggled with management shakeups, technology setbacks, as well as a failure to land top TV shows and films, Joost's traffic and content library are mediocre at best. In the Web video sector, Joost has fallen far behind the leaders: YouTube and Hulu, the site formed by NBC Universal and News Corp.

The latest setback came earlier this month when Sony Pictures did not renew its licensing agreement with Joost. At about the same time, Sony Pictures was striking a licensing agreement with YouTube, the much larger and more successful Joost rival.

It should be noted that CBS, which owns CNET News, is investor in Joost.