The new video players: Kyte, DimDim

There are a ton of “video player” companies out there, and they’re starting to blur.

It takes a lot to impress these days. A video player in 2007 should be able to upload any video file — from your desktop or from the Web — and then have it run from any Website from a widget.

Just when we thought innovation was running out, we hear about Kyte, a video player that allows live video and chat communication over the Web and mobile phones, and is quite unlike anything we’ve seen before.

It is the latest investment by Howard Hartenbaum (pictured left), the early investor in Skype (see our blog about him here, and Mercury News story here). Hartenbaum has been on a tear recently. We mentioned his investment in the new behavior advertising engine, Wunderloop, yesterday. He’s also an investor in DimDim, the new open source competitor to WebEx, which we’ll get to in a sec.

We first heard of Kyte a couple of weeks ago. We followed up with Daniel Graf, founder and chief executive of Decentral.TV, which owns Kyte.

Graf, who is jealously guarding Kyte’s distribution, until public launch sometime this quarter, has delayed release. The product is in closed testing, so we haven’t gotten our hands on it. You get an idea, though, by perusing examples on the Web (click on image below, for example. There are others here, here and here.)

These Web examples are just half of it. The other half is mobile.

Here’s how it works: The Kyte player is your own interactive TV channel. You can distribute it on the web, or through the mobile phone. On it, you can host videos and photo slide-shows — uploaded from your computer, or elsewhere on the Web, such as YouTube. The most recent content shows in the player, but you can use a back arrow to see earlier content. The example above is player of MySpacer Justin, 26, of San Francisco, and his videos are interesting.

Ok, so what? Well, Kyte appears to do everything. It lets you brand the player as your own. It gives you drag and drop tools to make uploading files easy. You can overlay questionnaires on the player’s screen. Friends can follow your channel on their phone. There’s an IM mashup, too, so friends can respond with messages instantly, and other people watching the video see those messages in real time and can respond. Photos are transferred real-time, says Graf. In other words, if I have Jason’s player on my phone, and he has it on his phone, we can not only live chat about it — more significantly, if Jason turns on camera and takes photos, I can see his surroundings live. “If you see a hot girl on the beach, boom, you can ask him take more shots,” says Graf. [Clarification: He wants to make videos live, too, but that will take some time]

Graf stresses the significance of Kyte as a “full-blown interactive application on the phone.” While Skype, and IM work real-time on the web, this is a real-time, or live video and chat over the phone and the Web. The players get their own URL. You can also open your player channel, so that others can load information too.

Kyte has just signed a deal with a major European carrier, which makes this easier; but it can work without a carrier. The big question remaining for Graf is whether he can actually get this product out of the door!

For now, Kyte supports Java-enabled phones. The product is developed on Flex2 and the latest versions of Flash.

We’ve talked about other mobile video players, including Radar, which transfer mobile videos and photos on mobile phones, but none do this live.

Graf raised $2.3 million from Draper Fisher Jurvetson, Hartenbaum’s firm Draper Richards, Skype co-founder Niklas Zennström and several others.

DimDim, meanwhile, is an open-source version of Web conferencing software WebEx.

It is Hartenbaum’s other investment. DimDim is free, and so plans to disrupt WebEx — just as Skype undercut telecom providers. WebEx charges a significant $39 a month, which is out of reach for many cost-conscious companies. DimDim is still mulling its business model, but plans to place ads in the video, and/or offer premium services. (If you’re an employee being forced to watch a boring training video by your company, perhaps ads might break the monotony?) There are other competitors in this area, but DimDim is the first to go open-source.

It is the second startup of CEO Deb Dutta Ganguly. He founded Advanced Internet, which he sold to Computer Associates in 2001, and built a team of 1,000 people. DimDim is ready for use now, though your firewall may get in the way (DimDim is fine-tuning some of these compatibility issues). This month, downloads are reportedly hitting 2,000 downloads a day.

DimDim has raised $2.4 million in a first round from Hartenbaum’s Draper Richards, along with Index Ventures and Nexus India Capital. The DimDim financing was first reported by PE Week. WebEx controls more than a third of the Web conferencing market, according to research by Goldman Sachs cited by PE Week. Microsoft follows, with 13 percent.

The company is based in Burlington Mass. Our big question for this company is, how do you make money?