Supplying more air for online TV's bubble

Silvio Scaglia, the Italian telecoms entrepreneur behind Fastweb and Omnitel, is two months away from launching Babelgum, a global internet television service.

Babelgum, the latest attempt to profit from the boom in online video, promises to combine "the lean-back experience of traditional TV with the interactive and social power of the internet".

The advertising-supported service will offer a free, personalised, full-screen video service to PC users.

The test launch, expected in March, will pit Mr Scaglia against the founders of Skype, the internet calling service, who are developing an internet protocol television service codenamed the Venice Project.

"When I started work on this a year and a half ago I was afraid we'd end up with five [competing IPTV services]," Mr Scaglia says. "The fact it's still two probably gives us a good lead."

Many established media groups are launching online video-on-demand offerings built round their popular programming.

But Mr Scaglia is confident Babelgum will attract "millions" of viewers from the 300m English-speaking broadband users globally.

Mr Scaglia has invested about €10m to develop the peer-to-peer streaming technology and digital rights management software behind Babelgum and expects costs to escalate with the launch.

His new company, Babel Networks, will break even in "a couple of years", he says.

"If my paradigm is true, which is that this is the most effective, efficient platform to deliver video, I think there is no doubt advertising will come massively," he says.

Viewers will be invited to personalise channels by highlighting their interests and rating programmes so Babelgum can recommend similar shows. Advertising will also be tailored to viewers' interests.

Mr Scaglia will avoid competing directly with the world's largest networks and production companies by seeking niche content providers rather than blockbuster programming. He hopes to benefit from the "long tail" theory that there is unexploited value in less popular content.

"We believe there is an opportunity in the tail end of the content," he says. "Normal TV is constrained by the need to make a large audience with everything they broadcast."

Babelgum's focus on independent producers who struggle to find a mass market for programming contrasts with the positionof other online networks, which offer mainstreamprogramming.

Online music distributors that focus on independent labels have grown fast but taken only a fraction of the market share controlled by iTunes. Apple's service offers a less eclectic collection but it has signed up the hits of four music groups.

Mr Scaglia, who has signed up mainstream content from providers including Reuters and Associated Press, predicts that other large media companies will provide content for Babelgum. "Large media companies love the idea of having several distribution channels," he says, whereas smaller independent producers see it as a "chance to make their content visible".

Babel Networks based its offices in Dublin and London because "we needed anEnglish-speaking management and culture rather than an Italian culture"says Mr Scaglia, citing the technical skills both cities offer.

Having developed the technology, Mr Scaglia says his focus is on attracting content partners.

The company will rely heavily on viral marketing to attract viewers, he says, before launching aggressively to advertisers by the end of the year.