Microsoft's Silverlight heats up fight for online video players

— -- In a flash, Adobe Systems adbe now has real competition for video- and graphics-intensive websites.

If you watch video online — on YouTube, MySpace, CNN, Hulu or elsewhere — you're viewing in Adobe's Flash, a software plug-in that's on 98% of computers.

But Microsoft msft hopes to change that with a new version of its Silverlight plug-in and software, designed for higher-quality online video and snazzier graphics on websites. The software giant has signed up some big partners to help show off Silverlight, including online movie rental service Netflix nflx and rival Blockbuster.

"There's no question this is the biggest threat to Adobe in years," says Michael Olson, an analyst at Piper Jaffray. "But the market for online video is massive. There's room for both Silverlight and Flash."

Online viewers will undoubtedly be the winners of this video battle, as the goal of both companies is to dramatically improve video and audio quality.

"Our ultimate goal is to get Flash to look as good as broadcast TV," says Jennifer Taylor, a director at Adobe Systems, which introduced a new version of Flash in October. "That's what people have come to expect of the Web, and that's what we're aiming for."

Many people first encountered Silverlight in August, when Microsoft teamed with the Olympics to present international sporting events via the technology. So many people downloaded the Silverlight plug-in needed to watch the events, that "one in four people now have Silverlight on their computer," says Brad Becker, a Microsoft Silverlight director.

Microsoft has competed with Adobe products before, with short-lived alternatives to Adobe Acrobat PDF file creator and Photoshop photo-editing software. With Silverlight, Microsoft may have staying power.

"It's a sign we're doing something right, if you have a company like Microsoft chasing your tail," says Taylor.

Since Silverlight was first announced in 2007, online video usage of Flash has risen from 66% to 80%, she notes.

In its online video war, Adobe (2007 revenue: $3.1 billion) is facing a much larger competitor in Microsoft, which had revenue of $51 billion last year.

The push for better viewing

With the new versions released in October, both Adobe and Microsoft say they offer better viewing experiences.

The new Flash offers 3-D-like video possibilities, with crisper video quality, says Taylor. Beyond video, Silverlight offers a "zoom in" feature for graphics, similar to what's seen in photo programs. Hard Rock Cafe is showcasing it on its website,, with its offerings of rock 'n' roll memorabilia.

Last week, Netflix expanded its online movie rental service to its subscribers who have Apple computers. Netflix chose Silverlight because of its "better video quality," says Netflix spokesman Steve Swasey. He says Silverlight also has better copy protection, as well as fast-forward and rewind tools that aren't available in Flash.

But not everyone is sold on making the switch. "Flash is the industry standard," says Jason Hirschhorn, president of Sling Media, which is launching a website devoted to online TV viewing later this month. "We're very comfortable with it."

While it is widely used, Flash video has become known for its grainy, sometimes fuzzy viewing experience. Just think YouTube, where videos are automatically displayed in lower resolution as a tradeoff for faster-loading clips. (Not all video sites do this. Hulu, for instance, displays Flash at higher resolution.)

To provide a technology showcase for Flash at its best, Adobe earlier this year released the Adobe Media Player.

Adobe's player — available as a download at— is positioned to view Flash video offline and as a DVR of sorts for online viewing.

But so far Adobe's content partners haven't gotten the message about downloads.

Adobe boasts of more than 25,000 TV shows available for viewing in the Media Player, including high-profile offerings from Comedy Central, CBS and PBS, but virtually none can be viewed offline.

Adobe says offline- vs. online-viewing decisions are made by the content provider, and for now, the producers mostly have opted against downloads.

Still, Taylor says, "The player is a concrete example of what's possible."