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Video email reborn with high-speed Net

Companies are showing renewed interest in video email, encouraged by faster Internet connections and cheap digital video cameras that promise to transform the home-movie market.

Video email was hot four years ago, so much so that at least one Silicon Valley hospital began offering new parents the chance to zap movies of their newborns to family and friends via the Internet.

But the plan showed little success as it struggled with slow Internet connections and the enormous file sizes of even short digital video clips. The hospital does not use the video email equipment anymore, citing the shortage of hospital workers to run the equipment and an increase in digital camera users.

"It was more of a novelty," said Judy Twitchell, a spokeswoman for El Camino Hospital in Mountain View, Calif., who says the video email service "tapered off...and stopped suddenly."

Undaunted by such false starts, companies are showing renewed interest in video email, encouraged by faster Internet connections and a new breed of cheap digital video cameras that promise to transform the home-movie market. Much as digital cameras have given rise to Web sites for sharing still photos, some analysts see a big consumer opportunity for video swapping--and some believe the technology is close to prime time.

Companies to date "may have been ahead of the curve," said Lyra Research analyst Ed Lee. "The curve, in fact, is starting right now."

A slew of companies are unveiling technologies aimed at delivering video clips via email. Most are counting on consumers signing up high-speed Net connections to bridge long download delays, but several say they have developed ways to pipe video through ordinary dial-up connections.

Companies including CyberTainment, RadicalMail and Digital Media Works say they offer compression technology and streaming video techniques to push fat files through narrow Internet pipes.

Last month, CyberTainment began selling digital cameras and software kits that compress image files up to 900 times, allowing large files to be loaded quickly via standard dial-up connections. The Virginia-based company said its technology, Squeeze-Play, can reduce a 30-second video file to 400K so it takes less than a minute to download using a 56K modem. The same video file in the standard Windows AVI format would take 12 minutes or longer to download using the same modem.

"If you record something using Squeeze-Play, you can send it in minutes instead of an hour," said CyberTainment marketing director Scott Walker. "This technology will have a huge impact on the use of email for everyone, from grandmothers who can now get video of the new grandchild to businesses that want to send video product demonstrations to customers."

Analysts, however, are skeptical of CyberTainment's technology in an industry that has attempted to take video email to a different level.

"CyberTainment is making claims that it would work at the extreme, but you couldn't count on it for the average baby video or industrial video being sent over the Web," said Richard Doherty, analyst for the Envisioneering Group, a Seaford, N.Y.-based technology testing and market research firm. "I think there's a lot of interest in the whole industry and from investors to see these efforts succeed and make nice, lean, small videos instead of some of the big ones that require some special software."

Broadband free
Other companies have attempted to offer video email without requiring broadband connections such as cable, digital subscriber line (DSL) or satellite, which provide faster download speeds than dial-up modems.

Unlike CyberTainment's video email, which is sent as an attachment, Santa Monica, Calif.-based RadicalMail delivers video through the body of an email without using attachments.

RadicalMail streams content directly into emails, using technology that determines the receiver's connection speed and software configurations. If a recipient's email client does not support HTML for direct streaming, a text message with a link is launched.

RadicalMail has been used only in the business sector, however, and has yet to offer home customers its service.

"It's taken a while to do...and for the market to mature," said RadicalMail marketing director Jay Stevens.

Digital Media Works also offers streaming video email by using a small link sent in an HTML text message through conventional email. This system lets anyone receive video email messages without requiring special hardware, software, plug-ins or applications.

Screen test
Analysts say the biggest market for video email in the short term will probably fall to business computer users, who are more likely to have high-speed Net connections.

But they also point to trends that could push home customer demand as more people turn to digital cameras.

"It's going to be the kind of thing that Generation X or Generation Y will love," said Gary Arlen, president of Arlen Communications, a research firm specializing in interactive media.

In the past year, more than 2 million digital cameras were shipped in the United States, and the growth rate each year has been at 29 percent, according to Lyra Research. The market for digital cameras is expected to grow to 7.3 million units in five years.

By 2004, 97 percent of digital still cameras will offer video clip capabilities, Lyra added.

"It's going to be a standard feature on all cameras," said Lyra's Lee. "Over time, people are going to get used to using it and looking for it in any camera they buy."

Taking notes
Analysts said companies offering videos need to take a page from a mushrooming group of companies that offer services for still images, such as Zing Networks, Ofoto, Club Photo, PhotoPoint and Shutterfly.

Video email companies "need to take a look at what's going on today already on the still imaging side of the world and seeing what kind of infrastructure they have and what kind of offering they're putting together," Lee said." If the market is going to progress into the next stage, you've got to get people out there used to using the product and the concept."

Excite@Home recently took a step toward making digital video more accessible to the mainstream market. Last week, the company launched an Internet video broadband application to create online videos. Using the offering, people can create, edit and show their own Internet videos online.

As software engineers diligently work to develop email video services for consumers, analysts say technology companies face another challenge: lack of content.

"In order to make (something) into a mainstream product, you have to give the consumer a reason to get it, and if that doesn't exist, no matter how good the technology is, they're not going to go for it," said Cyber Dialogue analyst Ed Lopez. CyberTainment's "technology itself is very compelling, (but) just because you've got a great product doesn't mean that it's going to succeed."