Microsoft Aims to Outshine Adobe's Flash

In a bid to capitalize on the burgeoning online video market, the tech titan is launching Silverlight, its new video-player software

by Aaron Ricadela

The explosion of Web video has opened a new front in the battle between Adobe Systems (ADBE) and Microsoft (MSFT), each shooting for a bigger share of software that can create and serve up clips. For companies that publish online videos—and the advertisers who sponsor them—the result could be new technology that squelches piracy, cuts download times, and lets consumers watch programs even when they're offline.

Microsoft and Adobe will both unveil new video-playing software at the National Association of Broadcasters conference in Las Vegas on Apr. 16. Both companies are aiming to capitalize on a growing market for Internet video ads, expected to grow from $1.5 billion market in 2007 to $4.2 billion in 2011, according to market researcher Yankee Group.

Dueling Debuts

Adobe's Flash Player, installed on more than 700 million PCs, has become the de facto standard for multimedia that runs in a browser. Google's (GOOG) YouTube and News Corp.'s (NWS) MySpace are heavy Flash users, and the Flash Video format has supplanted media players from Microsoft and RealNetworks (RNWK) as developers' target of choice.

In a bid to extend its lead, Adobe will preview the Adobe Media Player, due for release later this year. The product is based on new technology called Apollo and can play videos written with the company's popular Flash technology on a Web browser or on a desktop player when users aren't online. With a feature sure to appeal to content creators intent on fighting piracy, the new player can also bar copying of clips as they stream over the Internet, unlike Adobe's current Flash Video format.

Not to be outdone, Microsoft is releasing software called Silverlight, which can be used in Microsoft's Internet Explorer Web browser as well as Apple's (AAPL) Safari browser and Mozilla Foundation's Firefox. Silverlight will be released this year for Windows PCs and Macs and will let users trigger videos by clicking in a browser window, an easier method than the one now required by Windows Media Player. Silverlight also includes copy-protection technology called PlayReady. Microsoft has signed up Major League Baseball, Netflix (NFLX), and others to test the software. Down the road, videos created to play with Silverlight could also run on Microsoft's Zune digital music player and Windows-powered cell phones, says Forest Key, a director in Microsoft's developer division.

Demand for Web-based Tools

Underlying the new technologies is the recognition that graphics designers and video producers want to publish their work in a variety of media: TV, DVDs, the Web, and print, using common tools and technical skills they've already mastered (see BusinessWeek.com, 2/13/06, "A Flashy New Adobe"). At the same time, the explosion of video on sites such as YouTube and MySpace has led users to forsake clunky desktop video software for user-friendly click-to-play tools on the Web.