The highly anticipated deal between portal power Yahoo! (Nasdaq: YHOO) and leading streaming media aggregator Broadcast.com (Nasdaq: BCST) was made official Thursday, when Yahoo! agreed to buy Broadcast.com for $5.7 billion (US$). The deal, which is expected to close in the third quarter of this year, is the second biggest Internet deal ever, behind only America Online’s purchase of Netscape.
This could be a major move toward widespread pay-per-view on the Web. Last month at his keynote address in South by Southwest in Austin, Broadcast.com president Mark Cuban predicted that the major television networks would all die within seven years.
“TV stations won’t need networks with so much digital content available on the Net,” Cuban said.
High-Quality Video on Demand
What Yahoo! could be banking on is a future where a majority of Internet users will use their computers to watch and listen to high-quality video and audio on demand.
Cuban said that pay-for-view of high-profile events, such as a wrestling match, can work, and he also thinks that subscriptions to specialized content could be a good business model. In fact Broadcast.com has made a deal with film studio Trimark Holdings, to transmit movies straight from the studio to the Web.
More Merger Mania? No More MP3?
It should take a while for the technology to make high-quality video content accessible to a mass audience, but high-quality audio already exists in the MP3 format.
But Cuban said he doesn’t think MP3 will last, and that it will soon be absorbed by Microsoft or RealNetworks. He also added that RealNetworks would probably be bought in the next 12 to 18 months, most likely be a telecommunications company. However, he wouldn’t rule out Broadcast.com purchasing RealNetworks, which raises an interesting question: might Broadcast.com be the company that ends the reign of MP3?
Not so fast. RealNetworks’ CEO Rob Glaser told CNBC on Thursday that his company has no plans to be acquired.
Of course, 12 to 18 months is an eternity in the wild Web world. There’s plenty of time for the plans to change. Shares of RealNetworks were up nearly 30 percent on Thursday as Wall Street tried to figure out which streaming media player would be bought next.