Does the Future of Video Production Belong on the Web?

For some production facilities, the Web might just hold the key to futuregrowth. iXL, blossoming from a small video production company and a tinymultimedia design firm, proves that thinking big in today's Internet agecan pay substantial dividends.

An increasing number of production companies, it seems, attempt to straddleWeb design and video production services for top tier Fortune 1000 types.Armistead Whitney, senior VP of video services, claims that iXL takesleadership by combining a wider-ranging marketing strategy, more savvyproduction management, and the most technically advanced distribution.(Another angle: The company now designs and develops "spec" products forinteractive TV interfaces.)

iXL grew its in-house video capability with last year's buyout of NewYork-based 601 Design and Flame boutique Wissing & Lawrence. "We're in thebest position to offer clients the tools and service for convergence-theone that's happening between traditional television companies andinteractive TV," Whitney says in a perfectly executed soundbite. Whilethere's some hyperbole in Whitney's statement, the company does haveextensive Avid and Flame suites, as well as multi-format digital componentediting, and sports any number of production awards to support that claim.

In addition to its new Silicon Alley-based Video Lab, iXL also has otherfacilities in its Atlanta headquarters and a small video operation in LosAngeles. The Video Lab, set up to investigate both video and metadatastreaming over the Internet, claims partnership with Microsoft,RealNetworks, Sun, and Oracle, among others.

So how did two small, rather run-of-the-mill business communicationscompanies, get so big? In the mid '80s, Atlanta-based FLOYDesign andCreative Video, with their multimedia and corporate video clients, did notseem unique. Then in 1996, CEO Burt Ellis (now CEO of iXL) merged the twocompanies to form iXL Holdings. He partnered with a young, aggressiveventure capital company (Kelso & Co.), which quickly raised 25 million ofcapital. Ellis began buying various Web design and production servicescompanies and raised investments from solid players, including GE Capital,Mellon Bank, and Chase Capital Partners.

Today, the venture capital money still pours in-well over $60 million.iXL's cheeky stance and Kelso's aggressive growth plan-not the value ofEllis' initial companies-paved the way. iXL now sports offices around theU.S. and in Europe and continues to buy Web and video services one afterthe other. The results? iXL's graphics talent is now seen on ABC Sports,Viacom, Sesame Street, VH1, and Nickelodeon. MTV's wildly popular CelebrityDeath Match finishes at iXL.

But video remains the smaller part of the company's strategy. The realfuture growth: Web design and implementation, streaming video services,Internet/intranet development, and interactive TV and CD-ROM development.There's even an elaborate multimedia laptop presentation hardware/softwareproduct designed for the traveling salesman. While video production helpscreate a well-rounded company, the Web-oriented work tallies up 70 percentof revenue. The client list includes General Electric, Merrill Lynch,Chase, and a major ("I can't name it") cable company.

Future plans include development of the Video Library, one of the largest,online stock footage houses (the Library just acquired 52 years of film andvideo from The CARE News Library). Beyond that, the company is pushingproduct development through its eTV group. The idea? Create the nextgeneration of interactive controls and Web TV interfaces, even whilebeating out the likes of Microsoft and Oracle, among others with the sameplan. Also in the works: a net-based, interactive audio catalog of a topinvestment bank's weekly chat sessions with traders and analysts. Want tocheck if Wall Street is worried about the repercussions of the Kosovosituation? Type in "Kosovo" and instantly pull up the relevant phrases inthe discussion. If this is tomorrow's video company, it's different by far.

(At press time, the company was in "stealth mode" and tight-lipped over itsdisclosures, as it was pre-IPO.)