There was a bit of buzz a couple of days ago about MobiTV raising another $30 million in capital, adding to it’s already whopping $70 million from previous financings. That’s a lot of money for a startup that lets some people watch a few TV shows on their cell phones. It’s effectively a cable television service that only does business with people who have 2 inch TVs, and journalists like Mathew Ingram are openly questioning why MobiTV needs this money.

But there may be more to it than that. The entire TV world is being turned upside down. And I’m wondering if MobiTV has a major announcement to make in the near future.

YouTube set a price point for a service allowing consumers to watch TV clips online. Most popular TV shows are now available for legal download at iTunes, and Apples’ upcoming iTV device will allow consumers to watch those shows on their normal televisions. A ton of startups are trying to conquer online TV by starting niche. The networks all have their own online products. Even the online TV guide space is hot, and investments are pouring in.

I think the real win isn’t to distribute TV over mobile devices – that’s a niche service that isn’t likely to morph into a massive consumer market. But giving people TV over the Internet generally, where they can consume it on a normal television, a PC and/or a mobile device? That’s a killer product. We’re tracking two startups, The Venice Project and TIOTI, who are addressing this. But no one besides MobiTV has an existing, battle-tested platform, with distibution deals and relationships already in place. That is a large competitive advantage.

MobiTV has a little know product that allows users to watch TV on computer without a tuner (or “cheating” via slingbox or Orb). You can watch 24 channels on a PC, but only if you are accessing the Internet from an AT&T Wi-Fi hot spot. Thats a product of little use. But if MobiTV can negotiate with the cable companies and networks to expand the service and let people watch those shows from any broadband connection, they have a disruptive product on their hands.

So what’s the $100 million for? Maybe its to pay off the people who need to be paid off. They have a big valuation now, and giving stock away is an option. This is how Netflix was able to create a new type of movie rental market (by giving studios stock), and YouTube did something similar. If the incuments see the writing on the wall, knowing their days are numbered, they’ll take the profitable route to inevitability.

As a follow up to our previous post on TV network activity on the Internet and through iTunes, we’ve further explored television programming and how it’s playing out on the web beyond the major networks.

I will steer clear of yahoo, google, youtube… all the sites that have been covered extensively on this site. Instead, I want to highlight a few of the less covered services.

It’s hard to draw a line between the sites I just mentioned and those I’ll discuss below, as they share many features (and many use Flash as the underlying technology). One difference is the sites above don’t make programming decisions for users. The sites below do offer some form of programming – there are decisions made by someone about what to present on these sites and when to present it. There’s room for both approaches online and while most eyes and venture dollars are flowing to video portals right now, I believe we’ll eventually see a similar interest from the startup community in programming.

I’m Too Old For This!!!

Not surprisingly, much online programming, like MTV Overdrive, caters to an under-25 crowd, but there’s a selection of good stuff for the rest of us: BloombergTV and MLB.tv, for example, offer relevant content and strong channel-like experiences online.

In the youth market, the influence of MTV is unmistakable. ManiaTV, Fuse.tv, MusicplusTV, and CurrentTV, while each certainly different in its own right, believe that some combination of music, reality, edginess, and/or political and social awareness, are the keys to success.

ManiaTv

So this is what happened to Tom Green? Maybe I’m not too old for this, because I like ManiaTv. Check out Freak Show! There’s enough good stuff to watch on here that I’m actually surprised it doesn’t have a bigger audience, particularly given the explosion in video sites in the last 6 months. I think there’s room for this kind of programming and while the Alexa numbers don’t suggest a flop, it’s certainly not booming. Whether or not their audience is sufficient for profitability, I don’t know. At least they don’t have to worry about huge production costs.

CurrentTV

Best known as the Al Gore vehicle, Current is for those a bit more politically minded and socially active. There’s a good lineup of original programming, there appears to be pretty strong community participation, and I find it to be a nice usable site, but it hasn’t taken off. Perhaps the Al Gore movie will provide it a shot in the arm, but as of yet it’s showing no signs of relinquishing its bear hug on its negligible traffic rankings. Will it heat up during the next presidential election? Who knows? I’d have already bet it would have had its day with the many significant polarizing issues in American politics. Perhaps its greatest problem is its more intellectual leanings. It’s not hard to get your friends to watch a horny donkey video, but try getting the same group to watch a video on teaching abstinence in schools.

iBlueTV

Another interesting programming concept with a bit of a different twist is iBlue. IBlue streams several different channels from their site. It seems to range from motorcross to sci-fi to independent filmmaking. There’s some decent time-killing content here. At the very least, I can see it finding an audience with the same college students that like laser shows.

I’m NOT Too Old For This!!!

Classic television programming and old movies (which have been non-primetime TV fodder for years) have also found a home on the web. Recent deals, like Guba’s with Warner, will give added life to the retro movement. Today, AOL leads the pack with In2TV. You can watch 42 “classic” programs from Batman cartoons to Eight Is Enough (it was enough then). Programs can be either streamed in relatively low quality or you can have content pushed to you in a higher resolution format (Hi-Q), which allows a full screen view. With some of the older shows’ bad lighting, the Hi-Q format is necessary. I watched an episode of “Spencer For Hire” through the regular stream and couldn’t tell Spencer from the bad guys when night fell.

Along the same lines, if you have a soft spot for guerillas, you might want to check out Retrovision.tv and AmericafreeTV (and there are others), which offer old television programs and movies. Remember, you get what you get here – hobbyist sites that rely on advertising dollars – so don’t expect perfection.

Aggregators

There are also sites aggregating content and are starting to resemble traditional cable channels. While there are many free sites like MeeVee that direct you to free streams, sites like MobiTV, VDC (Windows only) or JumpTv are offer a hub through which to view many channels through subscription:

VDC

VDC basically takes the cable model and moves it to the internet (and combines it with the worst logo ever). The sound and picture quality are pretty good and it’s easy-to-use. But at 11.95/month, the channel lineup isn’t there yet. Its 20 or so channels are mostly a mix of news and shopping, although they did recently add TLC, Discover, and Animal Planet (all for mobile only right now). They make note of their interest in improving the lineup on the site, so I’m sure more is in the works. While that will increase their chance of success, I believe the bigger issue with VDC is in the model of porting cable to the web. I’ll ask you: Is there any real advantage to a second cable TV subscription, when there are options like Slingbox and Orb that can give you your home cable lineup on your computer or mobile phone? I’d love cheaper cable and I don’t mind getting it over the web, but without an equivalent lineup to my TV, I’m not adding or switching.

JumpTV

JumpTV aggregates hundreds of channels from around the globe. At 9.95/month per channel, it could get expensive, so Jump offers packages, like an Arab language package of 20 channels for 22.95/month. I suspect this particular niche will prove profitable for Jump in the long-term. Thought it’s not the sexiest television offer over the web, it clearly fills a need for consumers, with so many people living outside their birth country these days. While currently ranking around 13,000 in Alexa’s traffic rankings, its steady traffic uptrend suggests some demand is there. The World Cup will probably further increase it’s reach.

MobiTV

MobiTV may eventually have the most compelling offering in the space. They offer 50 channel, cable-like television subscriptions for mobile cellular devices and, more recently, for any device accessing AT&T Wi-Fi Hot Spots. If and when their service can be accessed over the web from any ISP, the need to continue a traditional cable or satellite television subscription comes seriously into question.

Summary

The great content revolution the Internet has wrought is seen in exactly the kind of sites I said I wasn’t going to talk about earlier, like Youtube. Anyone can now inexpensively upload, share and potentially alter content in minutes. As a result, we amateurs are producing and watching video content on a scale we’d never imagined a few years ago. At least 100,000 videos are uploaded daily on sites like YouTube, and this is increasing at a rapid rate.

But this does not mean that television programming as we know it is about to disappear. In fact, I’d argue that the overall quality of programming is higher now than it was a few years ago, perhaps because of the competition for mind share from the web. And some television producers are reaping enough benefits from the web between broadcasts (e.g. Lost) that I believe the next phase will mean altered programmed content, as TV continues its migration from passive to some level of interactivity. It’s already commonplace in TV advertising, so how long before it’s commonplace in programming? Check out “In Men We Trust”. If it will work as advertised, then we’ll watch the show while watching a show within it, and we’ll determine the arc of the story. That’s programmed content adapting to its medium. Interactivity and social networking – two things the web does well — will drive it.

Downloadable television, first made popular by Tivo and its competitors, is compelling stuff. As consumers become accustomed to watching a show whenever they choose, pausing at will and fast tracking through commercials, tuning in to a station at a scheduled broadcast time seems quaint at best. Today, 7% of U.S. households have a digital video recorder, or DVR and most cable companies offer a DVR as an option.

File trading networks, such as bittorent, are also extremely popular (if sometimes illegal) choices for consumers wanting access to time-shifted television content.

While DVRs are great, content producers and distributors are less than thrilled by the loss in revenue from all those skipped commercials. Also, DVR’d shows cannot be easily transferred to mobile devices or otherwise viewed away from their home television. Some consumers want more flexibility and options.

Enter downloadable television, spearheaded by iTunes.

On October 12 2005, Apple introduced iTunes 6.0 which added support for purchasing and viewing of video content from the iTunes Music Store. iTunes initially offered a selection of several thousand music videos and five TV shows, including most notably ABC’s Lost and Desperate Housewives, as well as the collection from past seasons. New shows are available 24 hours after the initial broadcast. Since that time, the collection has expanded with NBC Universal, USA Network, Sci-Fi Channel shows, and Viacom, in addition to further Disney-owned networks’ shows. iTunes also gives the ability to view Apple’s large collection of movie trailers. Format for purchased Videos is 128 kbit/s Protected MPEG-4 video.

By January 2006, iTunes offered over 40 television shows for download, including, most recently, additions from Nickelodeon, Comedy Central and MTV with episodes of such shows as the Daily Show, Spongebob Squarepants, South Park, and Punk’d. Showtime added some content in February.

The networks, though, are hoping that iTunes will not be the only way people watch TV on their computers. CBS, Fox and ABC are all experimenting with their own direct downloads or streaming.

ABC

ABC is offering streaming versions of a number of its hit shows to viewers within the U.S. for no charge: Lost, Desperate Housewives, Alias, and Commander in Chief. The shows are viewable in 400×700 Flash format. On the plus side, ABC’s offering is browser and platform agnostic, and are free. On the minus side, and these are big ones, you must be online to view the show. You can’t take these with you on a laptop or other device and watch them while on a plane, or otherwise offline. Also, There are a number of short commercials that cannot be skipped. So in the end, ABC is offering a nice way for me to watch time-shifted shows on my PC-enabled living room television, but not much else. See Mike Davidson for more on this.

CBS

CBS is going with downloads, through their CBS On Demand project. Only a single show is currently offered – Survivor – and you must be in the U.S. to use the service. Quality is 640×480 pixels. Shows cost $.99 and must be watched within 24 hours of downloading (again, not a very good option for travelers). You must have a Windows PC to view the shows. They cannot be burned to dvd. Frankly, with all of these limitations I’m surprised they even let you watch the show, period. It’s like they’re begging to fail so that they can say “hey, see, we tried, people don’t want this.” Note that CBS is also experimenting with shows on Google Video.

NBC

NBC is offering a number of shows through iTunes, but has no direct to consumer offering. They offer thirteen shows on iTunes, including The Tonight Show, Late Night with Conan O’Brien, Saturday Night Live, The Apprentice, Law and Order, Scrubs and The Office, as well as a number of vintage shows.

FOX

Fox is shaking things up a bit. In April they announced a six year deal with their affiliates to allow them to show back catalog shows on the internet. They are also starting to roll out downloads of the show “24″ through their Myspace property, but I am unable to find much information on it yet.

SUMMARY

It’s going to be a while before the service models are compelling enough for the world to turn away en masse from today’s TV, but it’s clear we’re at the start of a major disruption that will shake content producers (the networks) and the distributors (cable) to the core.

Nothing is close to challenging iTunes yet for downloadable tv dominance (well, except bittorent and DVRs), and it’s unlikely a single network will be able to do much to overcome them. People want to be able to consume their content in one place, and iTunes does a very good job of allowing that. It’s simple, has some flexibility with regard to moving to a device and the shows do not “expire”. The real competition to iTunes is still to come: Yahoo, Microsoft, Google and Amazon, among others, will have product offering in this space sooner or later. (Note: AOL is already streaming a number of vintage television shows to users).

Business models need to change. Content producers cannot rely on network deals, 30 second advertising and, later, dvd sales, to pull in the revenue. Shows will have to stand on their own, and will probably need to be free for the first few episodes to pull in viewers who may eventually be willing to pay. Frankly, I look forward to the day that a show, ignored by the networks, first decides to launch itself on iTunes and go straight to consumers. The press around it would be overwhelming. The first to do it will have a big advantage.

There is a market for third party service providers, too. Services like Meevee are starting to bridge the gap between providing online television listing information and allowing people to actually view the content on their computers. Cozmo.tv and Brightcove are allowing people to control their Tivo’s through their browser. And how long will it be before MobiTV, which currently streams television to mobile devices, is able contractually to simply flip a switch and offer streaming television direct to a PC? They are already making moves in that direction, and Orb offers a similar, free service.

Note: This article was written with my friend Neil Kjeldsen, a new blogger but longtime writer, and someone who knows the television and film space well. Look for more posts by Neil here on TechCrunch.