The search for an audience for web-based television is gathering pace.

Two small European companies, Joost and Babelgum, have developed full-screen, high-quality video services as they look to exploit nascent demand for TV programmes and films from broadband users.

This week, they were joined by a third, Blinkx, a joint UK/Californian company listed on Aim. The spin-out from Autonomy, the search software specialist, launched Broadband TV - known as BBTV for short.

However, in spite of the early hype around Joost in particular, the challenges all three companies face are considerable in the face of stiff competition from some of the world's biggest broadcast networks.

The BBC's iPlayer and Hulu, a joint venture between NBC and Fox, the US media groups, have experienced greater success in the first few months since they launched.

Joost claims more than 6m downloads of its software, although it has not revealed how many people use the service. Babelgum said that it had "hundreds of thousands" of testers until it released a new version of its software in March, and now has 10,000-15,000 daily users.

By contrast, the BBC claims 2.2m people watched programmes such as Eastenders and Doctor Who on the iPlayer in January, with a total of 17m shows watched by mid-February.

While YouTube has cornered the market for short clips, advertisers and investors see greater commercial potential in the full-form, TV-quality programming these services provide.

Joost and Babelgum pioneered the "peer-to-peer" video distribution technology needed to keep costs down and improve reliability. Niklas Zennstrom and Janus Fris, Joost's founders, launched Skype, the web telephony service, and Kazaa, an online file-sharing application, while Silvio Scaglia, the Italian telecoms entrepreneur behind Fastweb and Omnitel, put about €10m (£7.8m) into Babelgum.

But Joost has discovered the TV industry is harder to conquer than music and communications. The appeal of searchable content, in-show chatting with friends or recommendations of similar shows have to be set beside the technical challenges of installing players and limited content.

"Although you could criticise the major broadcasters of being a bit slow . . . in setting up internet TV platforms, there has been plenty of opportunity for Joost to get into the market ahead of them," says Adam Baum, an analyst at Gartner, a research group.

Broadcast networks have far greater reach for marketing online services, he adds. And content owners are reluctant to license programming because it might diminish their own online properties.

That has not stopped investors pouring money into independent web TV providers. Providence Equity Partners made a $100m (£50m) equity investment in Hulu for a 10 per cent stake in the US company, which launched in March.

Veoh, a US-based web TV aggregator, has raised $39m and plans to raise more soon. Blinkx is one of the few publicly listed groups providing full-screen TV online. Autonomy, its former parent, holds a 9.9 per cent stake and Mike Lynch, Autonomy chief executive, owns 8.6 per cent.

Joost raised $45m from Sequoia Capital, Index Ventures, Li Ka-shing, the Hong Kong tycoon, and CBS, the media group, in addition to early funding from founders.

Danny Rimer of Index Ventures is "very bullish" about professional online video, though he admits "it will take a while before we get massive adoption".

"The jury is still out for any of the companies as to whether they will be successful in leading the charge," Mr Rimer says, although Joost is "well positioned to be a front runner".

Few, if any, web TV services are profitable. But Suranga Chandratillake, Blinkx chief executive, says companies such as his can charge more for video adverts than text-based web ads because they "combine the targeting, accuracy and accountability of online advertising with the emotive, visual power of TV advertising".

As such, it is unsurprising that commercial broadcasters are preparing their own services. Project Kangaroo - a joint web TV platform between the BBC, Channel 4 and ITV - expects to begin public testing this year.

The lumbering broadcast giants may yet outwit the new media upstarts.

The picture goes fuzzy as viewers go online to play catch-up on content

The BBC allows licence-payers to watch seven days' of "catch-up" TV on its iPlayer, though only BBC-commissioned content.

Even with more than 17m programmes viewed online by mid-February, the backers of rival service Joost are not convinced.

"By no means has the BBC demonstrated mass mainstream adoption," says Danny Rimer of Index Ventures. "I'm not convinced anybody has figured out what the right content is that people want to watch."

Joost made a strong start in persuading media groups to show their programmes on its service, attracting the likes of Viacom and CBS, but in spite of a recent trial of live college basketball, momentum has slowed.

Babelgum targets 1m active users by the end of 2008, focusing on niche content in four or five areas including travel, sport and independent films. It is curating an online film festival, with Spike Lee, a film director, among judges.

Joost and Babelgum garnered most early headlines, but the market for TV-quality streaming video is crowded. Blinkx's BroadbandTV launched with a handful of smaller content partners, offering independent films, comedy and car shows.

Livestation, a peer-to-peer service based on Microsoft technology, focuses on live TV news. Vuze, which allows shows to be downloaded or streamed online, says 7m people visit its site every month, with sci-fi shows the most popular.

Zattoo, with 2m subscribers in continental Europe, is running tests in the UK, with content from UK terrestrial broadcasters expected soon.