JumpTV, having failed to achieve profitability on its own after achieving scale through a number of acquistions is merging with well-funded set-top box manufacturer turned online video services company Neulion. It’s a deal that makes a lot of sense.

NeuLion, aided by the close ties of its CEO Nancy Li (her husband is Charles Wang, Computer Associates founder and now owner the New York Islanders) has signed a deal as the NHL’s online video provider, and has had some success in selling a set-top box solution for delivering niche content directly to the TV.

NeuLion is privately (and well) funded by the founders and other unnamed investors; unconfirmed reports say Sky Angel, the televangelist programming network which NeuLion partnered with to deliver IPTV services last year is a major funder.

JumpTV had been on the ropes, losing money at a rapid rate after purchasing a number high value streaming properties, most notably the Broadband Network division of XOS last year for $60 million.

But scale alone does not guarantee success in digital media and the company has been slow to integrate their worldwide properties and find a focus which could drive it toward profitability. Earlier this year the company announced they were exploring the sale of their in-house CDN to lower operating costs.

The combined entitry should be able to capitalize on NeuLion’s smart management, powerful backers, and the combined strength of both companies’ existing infrastructure and content partnerships to create a leaner and more efficient digital media leader.

A call is scheduled for 4PM Eastern today to discuss the deal.

A year ago at this time I was splitting time between Light Reading’s Future of Broadband conference and Streaming Media East. I barely covered the conference at the time because it was so technical, laden with acronyms like GPON, EPON and FTTH, but I came away with the following thoughts:

We aren’t there yet but networks are moving toward smart gateways and routers that will personalize the digital media experience for each user across platforms and standards.

The future is a universal cross-platform personalized media experience allowing users to consume content on any device combined with relevant advertising based on their history.

Last year’s conference focused on video as the future of broadband because as Light Reading Chief Analyst Graham Finnie put it this morning “it’s a much more flexible means to deliver video.”

This year, Finnie spoke more about the two way experiences that can be delivered (think applications) as well as the emergence of mobile broadband. Video has not taken a back seat, but it’s no longer the end all of broadband.

Above: Broadband Penetration, EOY 2007 (Source: LightReading)

Taking place parallel to advancements in digital media content delivery is development of the next generation of cable set-top boxes. While there have been a number of short-term solutions for getting online content to the TV, in the long run the cable box is stiil the best way. Google knows this and it’s only a matter of time before they’re involved.

Last year Google hired OpenTV CTO Vincent Dureau to lead their Television Technology group, and they have made no secret of its intention to become a major media/advertising company. The TV set its their last frontier. Access to the TV will enable them to build on their ad-targeting ability to make advertising across all mediums more efficient.

But access does not come cheap. MSOs have close relationships with the current leading set-top box manufacturers and want to maintain as much control over what’s inside those boxes as they can. As we have seen before, Google’s size puts it at a rare advantage, enabling them to exert real force to change industries. As they did with mobile, Google could bring about changes in the cable industry.

Microsoft continues to add content to its XBox Live offering, today announcing a deal with ESPN to offer select NCAA basketball and football games on-demand within 48 hours of completion.

The Xbox is increasingly being used as a media extender, capable of delivering HD content to the TV, and competing with cable set-top boxes. Microsoft’s content lineup now includes more than 1500 hours of video and an IPTV edition of the 360 is in the works.

At a price of $3 for in standard definition or $4.50 in HD it’s hard to imagine they sell many games two days after they air, live content is still where the money’s at. But once IPTV capability is rolled out to the more than 11 million and counting Xboxes, live content may not be far behind.

“Delivering content through Xbox 360 is another way that we can connect fans with the sports they have such passion for,” said Matt Murphy, SVP of digital video distribution for Disney and ESPN Media Networks. And ESPN’s digital media offerings continue to grow.

While smaller networks might face repercussions if they attempted to circumvent cable operators, ESPN continues to go around them, offering additional live video to a growing audience by forging new relationships with ISPs. In recent months ESPN has expanded their online content, renegotiating for additional live streaming rights and redesigning ESPN 360.

As Microsoft continues to grow their content library, Xbox 360 is becoming far more than just a gaming device. Microsoft has experimented for years with ways of delivering IPTV, and the Xbox may be the future of their strategy.

It’s not much of a stretch to imagine slightly scaled-down Xboxes rebranded and sold as strictly IPTV devices. Building on their current technology and Xbox Live library, Microsoft could likely offer a lower cost AppleTV competitor with more content.

The BBC and Adobe have entered into a strategic relationship where the British Broadcasting Company will use the Adobe Flash Player to power its iPlayer across PC, Mac and Linux platforms.

Erik Huggers, BBC future media and technology group controller said, “It is important to ensure that BBC iPlayer is available on as many platforms as possible. It will offer our audiences increased flexibility as to how and when they consume our content, both live and on-demand.”

Currently, the BBC’s iPlayer enables viewers to download and view around 400 hours of television programs from the last seven days and store for up to 30 days.

George Kliavkoff, Chief Digital Officer

On Hulu vs. syndication partners:
- Premium content is valuable, “there is a huge value in aggregating content, we believe in ubiquitous content.” If people are interested in multiple content providers Hulu destination site & syndication channels will reach 98% of users.
- Hulu will offer higher quality video, full screen video, possibly a way to take a piece of it with you which you won’t have at syndication sites. NBC is re-skinning the Hulu player for each distribution partner. There are constraints on what can be done on distribution partner sites, no constraints on Hulu.

On Hulu promotion:
- We’ll probably ourselves be promoting for people to go to two places. NBC is giving users the option of where to view content… A recommendation engine will create a loop where someone will watch additional content.

On the Apple fallout:
- We still have a contract with Apple and we were required in the contract to send a notice that we would be leaving or it would have automatically renewed, it’s unfortunate that Apple released a press release, it shouldn’t have become a public thing.”

On targeting:
- The technology is just starting…it’s a little bit difficult because to do that you have to collect a lot of information and you have to be very careful about how you use that information but for us it’s sort of the holy grail and we’re working to get there.
- Web 2.0 has been all about community and social networks, for me the long term of web 3.0 is about predictive marketing. At the end of the day folks don’t want ads that are not relevant. When I’m not in the market for a car I don’t want to look at car ads, if I am in the market for a car I will.

On Long-form content:
- I disagree with the premise that online is about short-form only. The great news is that [users] they sit through the full episode they retain the advertising.

On cannibalization:
- 83% of the people who start watching an hour long episode online get to the end of the last chapter. When people started putting full episodes online there was concern over cannibalization, it actually drives incremental viewership, it’s actually being used as a DVR.
- If we don’t put it online someone else will. If people are going to watch it anyway why not give them a better choice and a fair choice and a legal choice. “Our first run will be successful for a long time but our syndication business may be a point of exposure”

On original web content:
- We actually have been incubating in my group for two years now a digital studio and they sell those in a similar way that TV studios do, we distribute it through portals. I think more and more as we think about how we have to invest in that business…over time we really have to be a content factory that creates content for three screens.

On mobile:
- The revenue distribution model for mobile phones is just broken. The carriers take about 70%, the content aggregators take about 21%, there is no standardization, that leaves 9% for content providers.
- You think about how people consume media on that mobile device and what that device means to you versus what your television means to you…people spend $3.99 for a ten second ring tone that for a computer download would be $.99 for the full song.

On online strategy:
- In the digital world everything you launch is not going to be successful so we need to get comfortable that some things will not be successful, trying to set up the kinds of processes that allow you to fail fast, don’t want to sink a lot of money into it.

On IPTV:
- The promise of IPTV is instant channel change for purposes of our conversation, unlimited channel capacity, highly personal.
- Unlimited programming options. “Shame on us as an industry if we re-purpose our linear channels…we have to embrace all the things these channels can do and program differently for them”

Gavin O’Malley at Mediapost is reporting that WebTV company Joost has bought OnTheToob.com, a digital programming guide provider.

OnTheToob’s technology enables users to create their own customized channels and RSS feeds based on the programming they watch.

Both companies are still in beta, but there has been increasing concern about Joost’s chances for success given its current business and operational models. Most vocally, Henry Blodget at the Silicon Alley Insider has repeatedly - and quite strenuously - questioned some core components to Joost’s plans for WebTV dominance.

The world of original content and branded video channels got a little bigger with the announcement that Tyler Perry will be launching his own WebTV channel, TPTV, on Narrowstep’s telvOS platform.

A spokesman told OVW that TPTV will offer fans exclusive access to Perry’s new Internet talk show The Tyler Perry Show—in high-quality and full-screen on the pc.

TPTV is the first project resulting from the recently announced partnership between Narrowstep and the William Morris Agency,which represents Perry. Narrowstep and WMA are working together to develop broadband-based celebrity TV channels for the agency’s clients that will offer fans hours of high-quality original content and the best viewing experience available of their favorite celebrities on the Internet.

Adobe today announced a new release of Flash dubbed Moviestar which includes H.264 support, strengthening Adobe’s already entrenched position in online video.

Since NAB back in April when Microsoft first introduced Silverlight to the public, there has been increasing debate over whether Microsoft can convert more users by gaining professional acceptance of Silverlight and its VC-1 codec as a more powerful rich media technology.

Microsoft is starting from the top, Signing on the MLBs of the world, pushing the high quality endgame and hoping users will follow the content. Adobe is working from the ground up to make Flash the most effective solution for the greatest number of people and developers.

While adding H.264, a strong and widely used codec, makes Flash a more useful product there is a strong argument to be made that VC-1 is a better high-bitrate solution, and may be more effective as an IPTV solution.

Microsoft with their existing corporate partnerships has been able to sign on some large partners for Silverlight. At the same time, Adobe is moving quickly and their recent introduction of live flash is beginning to pick up steam.

Online video is moving so fast that in addition to straining infrastructure it is putting stress on decision makers. Silverlight is looming and as Adobe’s Tinic Uro writes:

What was unexpected was how impatient a lot of our customers are :- ) It seems many are trying to make choices when it comes to video technologies right now.

Silverlight has been slow to roll out working solutions and Microsoft will need to prove its advantages soon. We are emerging from the low-quality era of the first half of this decade and there is a great deal of money being spent transitioning to the next generation of online video delivery.

Internet TV platform provider Narrowstep completed a private placement of 42,040,000 shares of common stock and warrants raising $10,510,000. RENN Capital Group acted as lead investor in this transaction.

Narrowstep currently has more than 180 niche channels on its platform including Telefonica, Virgin Media, and SCI FI.