A little more than a week ago, Intel shuttered its Internet Media Services, a dedicated network for media companies interested in streaming content on the Web. Intel was unable to break into the market, forcing it to scrap the project after opening its doors less than a year ago.
But none of that has scared Activate from its plans for a similar center. Activate Grand Central, as it is called, will focus on streaming corporate content such as executive communications, training and marketing--an area widely perceived as the most promising use of running video and audio on the computer.
"Intel was going after the major media companies, and that's a horrible, horrible market," said Jeff Schrock, Activate's chief executive. "We're still keeping a foot in the media market, but that's not where our focus is."
Activate's scaled-back ambitions highlight the risks of venturing into streaming media, a sector that must overcome serious hurdles before it takes off. For one, viewing video or listening to music and other audio online requires high-speed Internet connections, which only about 5 million people have.
The streaming business in general hasn't flourished as fast as expected. Last year, media analysts predicted that streaming-for-hire services would become a $2.5 billion business by 2004.
Entertainment companies in particular have struggled during the past year to sell content to a paying audience. Digital Island, one of the larger streaming services companies, saw losses in its most recent quarter partly because of increasing costs and a decline in dot-com customers.
In previous interviews, Intel executives acknowledged the company could not score enough clients to keep its $200 million center afloat.
Activate's Schrock said he's not worried. "We saw a demand last year for streaming corporate content, and we see a demand again this year," he said.
Activate Grand Central, based in Seattle, is a 20,000-square-foot facility that includes a satellite downlink and is entirely digital, able to manage thousands of simultaneous audio and video signals over the Internet, Schrock said.
Partners of the center include Microsoft, Compaq Computer, Cisco Systems and CCC Network Systems.
In its quest for clients, Activate will have to compete with streaming broadcast centers operated by companies such as RealNetworks, Akamai Technologies and iBeam Broadcasting.