Flash cashing in on growth of Web video

Flash cashing in on growth of Web video

By John Boudreau

Adobe Systems, known among creative professionals for its suite of image management software, now has another billing: backstage player in the New Hollywood.

The San Jose company's Flash Web site development software helps bring some of the Internet's hot entertainment shows — “Commander in Chief'' on ABC.com, a Green Day-Oasis mashup on YouTube.com, the “video shoutout'' on Grouper.com — to the PC screen.

Adobe, which acquired Flash creator Macromedia for $3.4 billion in stock in December, is banking on the “lean-forward'' generation, those who want to upload their own creations to video-sharing sites like YouTube. It's also hoping to cash in on the explosion of online advertisers, who are using video, as well as Web entertainment sites that post TV shows embedded with commercials — and the next frontier, content on mobile devices.

“If you could have told me Google Video, YouTube and all these others would use Flash as their technology 10 months ago, I would have said you are crazy,'' NPD Group analyst Chris Swenson said. “I'm amazed at how quickly Flash has become dominant in video.''

Flash has soared from zero to No. 2 in its market in just two years, according to Paul Palumbo, research director for Accustream iMedia Research. Microsoft's Windows Media format is the leader, handling 60 percent of all streaming video in 2005; Flash has 19 percent of the market, jumping ahead of RealNetworks at about 10 percent and Apple's QuickTime, with about 8 percent.

“Flash is going to be dominant,'' Palumbo said. “You can embed this into the Web page and it's instantly `on.' It's a seamless process. It has tremendous visibility and adoption among the creative agencies and artists.''

The success of Flash is part serendipity, part strategy.

Ubiquitous high-speed Internet access and the proliferation of social networking sites, among other developments, has given Flash momentum.

“To get Flash widely adopted was a challenge in the early days,'' said Kevin Lynch, Adobe's chief software architect. “You have to have enough content out there (using Flash) to drive adoption of Flash player, but you have to have Flash player distributed enough for people to make content for it.''

Macromedia developed partnerships with Netscape, Microsoft and Apple to get Flash included in the companies' respective Internet browsers and operating systems.

“Now it's everywhere,'' Lynch said, noting that virtually everyone using the Internet has access to Flash.

Josh Felser, chief executive of video-sharing Web site Grouper, said his Web site uses Flash for its new Webcam feature that allows people to communicate with each other through video posts. It's used for streaming some video features, as well. Grouper Networks also employs Windows Media Player so visitors can download video to their computers or other devices. Flash is a streaming-only video experience; a person doesn't download a file.

YouTube, where more than 50 million videos are viewed a day, credits Flash with helping the San Mateo start-up become one of the Web's hottest destinations after officially launching in December.

“Flash is what makes it so ubiquitous,'' said Julie Supan, YouTube's senior director of marketing. “It's not the highest quality video.'' But, she added, “It's a way we can very quickly stream the video.''

Adobe Chief Executive Bruce Chizen said he'd like to see the company develop download and Digital Rights Management software, as well, so it can provide the backbone for delivering movies online.

“We are working on it,'' he said. But, Chizen added, the company faces a minefield of Digital Rights Management patents. “We don't want to enter it unless we are comfortable we are not infringing on'' other patents.

Still, Chizen sees plenty of opportunities for Flash and Flash Lite, its streaming software for mobile devices. “There are more people connected to the Web with non-PCs than with PCs,'' he said. “And that's just going to explode.''

And Adobe hopes to provide the stage for this unfolding Internet drama.

“I don't know if it was a result of YouTube, but everyone has seen this shift in how people are consuming media,'' said Chris Hock, group manager for Flash video. “We haven't even touched the surface of where this is going. We are still early.''

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