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Riding the wave of video downloads

Start-up TotalVid targets niche customers who have fewer channels to turn to for specialty content. Photo: Surfing for video

Sick of watching the same two windsurfing videos over and over, Karl Quist decided to make his own waves by producing daredevil content aimed at his kind of people--avid sports enthusiasts.

"I was the target customer--someone with an interest in a specific topic but starved for content," said Quist, general manager of Norfolk, Va.-based start-up TotalVid. "So starved, I was driving my wife nuts by watching the same videos like 1,000 times. I figured if someone is that immersed in a topic, they'll go crazy when they find a place that offers content they're looking for."

So a little more than a year and a half ago, Quist started TotalVid. The 10-employee company owned by Landmark Communications sells specialty videos--extreme sports, anime, martial arts and home improvement--for download to PCs.

News.context

What's new:
Start-up TotalVid, which sells specialty videos for sports and home-improvement enthusiasts, is tapping into growing consumer interest in easily distributed downloadable video.

Bottom line:
As consumers become more familiar with downloading video off the Internet, services such as TotalVid could be on the cusp of a big swell. But their success depends on the breadth of their content, as well as how fast it can be downloaded.

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Though not as ambitious in breadth of titles as more mainstream movie download services CinemaNow or MovieLink, Quist's service targets niche markets with customers who have fewer channels to turn to for content. At the same time, it taps into the increasing number of home-broadband customers eager for content and the growing consumer interest in easily distributed downloadable video.

"There a big trend toward more people producing video for smaller audiences--locally produced video for whatever target audience you're looking for," said Gerry Kaufold, an analyst with researcher In-Stat.

As consumers become more familiar with video off the Internet, services such as TotalVid could be on the cusp of a big swell. The download video service market is expected to grow in revenue from $1 billion in 2004 to about $5 billion by 2008, according to In-Stat. And though that number pales in comparison with the nearly $50 billion in annual revenues enjoyed by the movie industry, the download video market's growth is happening faster.

As home broadband connections proliferate, digital-content companies are chomping at the bit to offer broadband customers content such as movies. The challenge? Many consumers are used to buying their content through other avenues.

"There are already so many ways--DVD, VOD, P2P, cable TV, broadcast TV, satellite TV, pay-per-view, home video rental--1,001 ways to get the same mainstream movies easily and cheaply that the services are offering," said Todd Chanko, an analyst with Jupitermedia.

"I figured if someone is that immersed in a topic, they'll go crazy when they find a place that offers content they're looking for."
--Karl Quist
TotalVid founder

TotalVid's advantage is that it provides obscure content, such as movies on mountain biking, to a neglected part of the market. TotalVid offers more than 1,000 titles, which cost up to $4 and expire after seven days. In a classic up-selling move, consumers can also purchase a DVD and permanent digital version of a movie and have the rental cost subtracted from the DVD buy.

"TotalVid addresses an underserved market in a fairly accessible manner (downloads over the Internet)," Chanko observed.

But can "sustainable" be used to describe a business that offers titles such as "Concrete Secrets--Sidewalks and Driveways"? And can TotalVid set itself apart enough to make it a site consumers come back to?

"Nonconsumption is our biggest challenge," Quist admitted.

Speed is another. Downloading a movie to a PC can take about as long as viewing the film over a broadband connection--not exactly a big draw.

Partnerships will play a significant role in helping alleviate that problem. TotalVid recently signed a deal with Comcast for the cable operator's high-speed Internet service. Starting this summer, Comcast subscribers will be able to download one free video per month from TotalVid's library. The deal benefits both companies: Comcast shows off its high-speed bandwidth--download is 4 megabits per second and upload is 384 kilobits per second--and TotalVid's library reaches a large audience. Billabong Odyssey

Quist also expects to make content deals with producers, focusing on content that's not available for free download elsewhere.

Negotiating with producers can be tricky, especially since TotalVid and downloadable video content are relatively new services. The company shares revenues with producers on a per-download basis, but Quist declined to offer more financial details.

"We're bringing them a new slice of the market, and for them it's incremental," Quist said. "They view this market as a pyramid, with DVD buyers at the top and viewers of stuff like XGames (an extreme games event) at the bottom. In the middle are those who will pay for limited access to content...We're more of a complement (to DVDs) than a substitute."

Quist wouldn't reveal the number of customers who have used TotalVid's services, but he said growth has been in the 50 percent range month-to-month and about 25 percent of customers are repeat users. The majority of the start-up's customers fall into a key demographic for advertisers: 18- to 35-year-olds, and more than 95 percent of them downloaded video for the first time when they came to TotalVid, Quist said.

A subscription business is on the way.

"We will do a subscription offering, but we wanted to build up sufficient depth in our catalog to offer a compelling service," Quist said. The subscription service will be available in the coming weeks with fees in the $5- to $7-per-month range, according to Quist.

TotalVid's sports content will be a popular draw in the market, according to In-Stat's Kaufold.

"Over the next two to three years, sports-related content sites stand the best chance in the content download business," Kaufold said.

With the right wind at its back, TotalVid may have found a wave it can ride for a while.