AT&T, Cisco Elbow Into Akimbo

Two of the central players in the telco TV world are participating in a $15.5 million funding round for the Internet video provider Akimbo Systems . (See Akimbo Raises $15.5M.)

AT&T Inc. (NYSE: T) and Cisco Systems Inc. (Nasdaq: CSCO) are new funding sources for Akimbo, as is San Francisco-based venture capital firm Blueprint Ventures . The three throw in with existing Akimbo investors Draper Fisher Jurvetson , Kleiner Perkins Caufield & Byers , Sprout Group , and Zone Ventures.

Akimbo's hardware and software combination provide a service that aggregates Internet video content from about 200 sources and affords consumers a way to enjoy the content via their TV sets, as opposed to their computer screens.

The Akimbo announcement may signal that companies like AT&T wish to augment their IPTV content packages with Internet video. Telco TV operators might use the Akimbo content to provide obscure, specialized, or just wildly unpopular content. But because storage and distribution costs are cheaper than ever, venture capitalists have dubbed this unpopular material "long tail" content, and they've invested in several ways to sell it.

“Akimbo stakes out this sort of ‘long tail’ video content space, where it’s not The Da Vinci Code but rather an old interview or a rerun of Seinfeld,” says Blueprint Ventures partner Bart Schachter. “In terms of the long-term potential of the company, we believe that people want this sort of very specific content that they like, and they are willing to pay for it.”

Right now, Akimbo delivers its service to homes with a set-top box that connects to a consumer's TV and to a broadband pipe. But, as Akimbo’s marketing VP Jim Funk explains, the company never wanted to be “in the hardware business.” So this fall, Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) will launch the RCA Akimbo Player, a new Internet video-on-demand set-top box.

New investor Cisco wants a piece of that action, too. “Over time we think there are opportunities to have that Akimbo service live on a Linksys or Scientific-Atlanta device,” says Cisco business development team director Charles Carmel.

Consumers can also find Akimbo pre-loaded on Microsoft Corp. (Nasdaq: MSFT) Media Center Edition 2005 PCs. They still must sign up for the $10 a month service to begin streaming Akimbo content.

Funk says Akimbo will use the new funds to pay for “partnership integration” costs, to enhance its video library and to further develop its video management infrastructure and Website.

AT&T announced in April plans to integrate Akimbo into its HomeZone service, which bundles DISH Network satellite TV service, a DSL broadband connection, a DVR, and on-demand Internet content into a single set-top box. The service is currently in trial and is set for launch in late summer. (See AT&T Adds Akimbo VOD.)

AT&T says its investment in Akimbo is all about the future of the HomeZone product. “It’s a new technology and an important element of HomeZone, so it’s the same as AT&T making an investment in one of our suppliers,” says AT&T spokeswoman Anne Vincent. Vincent compared her company’s investment in Akimbo to its investment in the residential gateway company 2Wire Inc. last year.

AT&T Project Lightspeed spokesman Wes Warnock says there are no plans to build the Akimbo service into the carrier’s new U-Verse IPTV offering. (See Is Lightspeed Slowing?)

AT&T has long stressed that its definition of IPTV is definitely not “Internet TV.” Instead, the company delivers IPTV as a service across a managed connection to the home, as if it were a VPN or some other service that runs atop a broadband link.

— Mark Sullivan, Reporter, Light Reading