While the market is crowded with sites fed by user-generated video, decentral.tv is building a service that mixes shared media and real-time communication for a service that stands out in the video world in much the same way Skype Ltd. did as a communications service.

Decentral.tv's service, called kyte, has been under wraps and is still only in beta testing. But Daniel Graf, a founder of decentral.tv, gave Light Reading an outline of what kyte is aiming to do.

Kyte provides tools for users to create broadcast channels that can be played on any Website anywhere, and the channels can be viewed on several newer models of mobile phones. What's more, the channels can be "programmed" by any user on any PC, if that user has permission from the channel's owner. The same goes for mobile phones -- if the phone is capable of running kyte, any user with permission can be constanly uploading photos and video to add to the "broadcast".

As if that weren't enough to keep everyone busy, kyte's tools include an IM application so that producer and audience can chat during the broadcasts -- and so that anyone seeing the content will know exactly how many other people are seeing the content at the same time.

The service, with the ability to give the content creator a real-time feedback loop from a widely distributed group of viewers, does everything TV can't do. Say you're on your mobile and "broadcasting" snapshots of a beach from your vacation. Want to create a poll to allow viewers to guess where you are? Go ahead. And while you watch the guesses roll in, a full-blown discussion might erupt on the IM client just below your snapshots. [Ed. note: Can life get any more exciting?]

For now, that's where the story ends. For iterations of the service, and the software powering it, the possibilities are endless. "Our background has been in television," says Graf. "We have the right experience to get kyte on a TV."

In addition to having a service that seems to marry the best qualities of the Web, video, and mobility, decentral.tv has a solid roster of backers that have built cutting-edge media companies before.

Founded early last year, decentral.tv scored a $2.25 million Series A round led by Draper Fisher Jurvetson in July 2006. DFJ managing director Tim Draper sits on decentral.tv's board.

Moreover, Kazaa and Skype Ltd. founder Niklas Zennstrom is an investor, too. As is Howard Hartenbaum, partner at Draper Richards.

Kyte hasn't been widely deployed as a mass market service yet, but it will get its chance to shine soon. The company says it already has a European operator ready to roll out a kyte-branded service to its subscribers. Over time, mobile operators could charge for a service like kyte, or they might subsidize it with targeted advertising -- which has a special appeal given how mobility is a huge part of kyte's cachet.

In the investment world, folks are still cautious about mobile video, but, all the same, they realize its an idea whose time has come. "Bringing video to the mobile has made sense based on early trials, pilots, and experiences," says Rutberg & Co. digital media analyst Peter Daley. "But obviously there aren’t any proof points yet as to whether it's really taking off."

Daley also raises questions about the scope of companies like decentral.tv. He reckons that kyte's mobile video product is probably broad enough to carry the company through its formative years. "But as it matures, when that company grows up, that could be a different question."

— Mark Sullivan, Reporter, Light Reading