LIVE! TV on PC

Ann Arbor firm plans to put live TV online in U.S.

November 25, 2007

BY JUSTIN HYDE

FREE PRESS WASHINGTON STAFF

For all the countless hours of video available on the Internet, you can't watch many live events on your computer, and what you can watch -- such as congressional debates -- usually isn't worth the trouble.

But an Ann Arbor start-up may have an answer for what could be a billion-dollar problem.

Zattoo, founded in 2005 by University of Michigan computer science professor Sugih Jamin and Swiss software marketer Beat Knecht, has built a growing video service of live video streams in Europe with 1.2 million users. Its free software lets users watch live events such as soccer matches on their computers with far better quality than what has been available before.

Networks "have so many years of practice at producing live TV. It's a multibillion industry, and we're not going to replace it overnight," Jamin said. "There will always be people interested in live TV."

Launched with $350,000 from friends and family, Jamin said Zattoo just closed a $10-million fund-raising round led by venture capital firms in Switzerland, with another $20 million planned for next year. The company has grown to 25 full-time employees, including 20 in its Ann Arbor tech center. It also has an office in Zurich.

Zattoo's software, developed by Jamin and his students at U-M, uses a technique pioneered by Internet file-swappers known as peer-to-peer networks. Instead of relying on one central computer to broadcast data to thousands of users, peer-to-peer systems make each user's computer handle part of the workload, swapping data among themselves.

While developed mostly for pirating software and music, peer-to-peer has emerged as the best method of sending large files and streaming data over the Web. Internet phone service Skype is a peer-to-peer system, and its founders have launched a video service called Joost using the same technology.

Founded in 2005, Zattoo -- which means "crowd" in Japanese -- focuses on streaming live TV channels, a bigger technical challenge than offering recorded videos such as YouTube or Joost.

Using its software, viewers in Europe can choose from a variety of channels in their countries. Zattoo's technology allows it to respond quickly when a user changes a channel, with a lag time of a few seconds, similar to everyday television. The service is free for viewers, who have to watch a short ad when they change a channel.

Jamin said Zattoo's software offers several benefits to media companies. It's a cheaper way to get on the Internet than other systems. Zattoo blocks its video from being recorded, a key concern for media outlets worried about piracy. And by focusing on live video, Zattoo avoids some problems that competitors face, such as ensuring enough users are online to share data.

Though the company is based in Ann Arbor, Zattoo is available only in Europe today. Jamin said that is due to the ease of reaching deals with TV channels for transmitting their video there vs. the hurdles for doing so in the United States. But the service already has carried big events, such as the 2006 FIFA World Cup soccer championships, and has deals with foreign units of U.S. broadcasters. The service hopes to expand to Asia and the United States in 2008.

"The vision is that everybody will watch live TV on the PC someday," he said.

Contact JUSTIN HYDE at 202-906-8204 or jhyde@freepress.com.