Can video sharing sites really help carriers make money?

It's possible. Already, some are looking to provide a way for carriers to differentiate their video offerings, as shown by AT&T Inc. (NYSE: T)'s reported discussions with video sharer Eyespot Corp. (See Is AT&T Eyeing Eyespot?) But there might be some network services bucks to be made by the carriers, too, according to executives in the video sharing space.

blip.tvCEO Mike Hudack points out that carriers should be figuring out a way to tap into and distribute online video and consumer-generated content as they have with major entertainment channels like ESPN and MTV.

“People should be able to watch video when and where they want to watch video,” Hudack says. “And that means it shouldn’t have to be viewed on a 320-by-240 Web browser on a computer. Video should be viewed on a big TV in a living room where people can gather around and watch it. It’s a social event.”

But there's no straight line between serving content on the Web and making it available to living rooms all over the country. Nearly every company listed in Light Reading's Top Ten Video Sharing Websites has a different plan and timetable for life beyond the Web.

So are business models possible? Interviews with many of the leading Internet video companies indicates that they have identified five ways that carriers and consumer electronics companies could make IP video a mass-market affair:

1) Carriers could provide Ethernet-enabled set-top boxes so that consumers can access and watch Internet video from their TVs;

2) Set-top makers could include media RSS software that lets consumers browse, subscribe to, and collect online video blogs and shows. And, of course, those videos should be saved on a DVR;

3) Carriers could include Internet video distribution into their plans for building and managing home networks. Right now services such as Verizon Communications Inc. (NYSE: VZ)'s Home Media DVR don't allow for video file sharing between set-tops and home PCs (see Verizon Hones Home Networking );

4) Set-top makers and device makers could make the video more portable -- for example, USB ports in set-tops could enable downloads to portable devices such as video iPods; and finally,

5) Carriers could offer premium fee services such as caching so that content could be located closer to a consumer on a carrier's network. (See Video Caching Steps Into the Limelight.)

Items 1 through 4 are in the beginning stages now at some carriers, sources say. Item 5, which is probably the most lucrative one for carriers, hasn't been brought up as much. Analysts say the reason may be that many broadband providers just don't see a clear business case for embracing such a budding market just yet.

"I think the issue is much more of a business issue than anything technical," says Heavy Reading analyst Sterling Perrin. He adds that, while there have been some flirtations with the video sharing market, most of the cable MSOs are comfortable keeping things the way they are. "There may be some lip service in public forums, but I don’t think cable’s anxious to alter business models and the ways they make money -- unless change is forced by consumers or advertisers or competition."

But even if cable companies and carriers are hesitant, several sites say they are willing and able to strike deals.

"The opportunity to cache content, to be on the consumer's set-top box, to have a media RSS reader on that set-top box, and get into people's living rooms is compelling enough that we, as a video service, would bend over backwards to take advantage of it," says blip.tv's Hudack.

But video sharing sites aren't waiting for incumbent wireline carriers -- they are already taking their content to mobile phones and devices. "If you're sitting next to someone and you want to show them a picture of your son, it'd be great if you could pull out your cellphone and access your online video collection," says Fliqz founder Benjamin Wayne. "That probably takes precedence today over set-top box and television penetration."

Wayne says that within the next two months, anyone with a WAP-enable device will be able to browse videos on Fliqz. Sites like blip.tv are testing email to mobile phones. VideoEgg and other sites can accept videos from mobile devices, but many don't allow publishing to those gizmos.

So while mobile video is coming along, other video sharers are having mixed reactions to the thought of working with carriers and other companies to get their online video content into consumer living rooms.

iFilm, is looking at its living room potential. But, as spokeswoman Karin Olson puts it, the company has “no plans we can discuss.”

YouTube wants to stay on smaller screens for now. “YouTube has no current plans to produce content for television,” writes spokeswoman Christine Schirmer in an email to Light Reading. “Instead, our goal is to work with professional content creators who are discovering YouTube to reach new audiences with short content."

— Phil Harvey, News Editor, and Mark Sullivan, Reporter, Light Reading