• Fortune, Thursday, December 18, 2008 12:01 PM

Online video is most definitely a crowded field. At the top, there's YouTube and Hulu, and then a "passel of upstarts" like NextNewNetworks and Revision3, says Fortune's Jessica Shambora. None of these have cracked the advertising code, she says, giving newcomers like On Networks hope.

On's business model is slightly different from YouTube and Hulu. It creates and produces original shows with specific advertisers in mind, posting these shows to its own Web site as well as distributing them to others. The idea is to lure a single sponsor for each show by emphasizing the quality of On's network (which includes Buzzwire and Apple's iTunes). Shows fall into advertiser-friendly categories like family, travel and food.

As yet, On doesn't disclose audience sizes and usage numbers are too small to be tracked by Nielsen Online. But On chief content officer Jen Grogono claims that broad distribution is a key piece of the revenue puzzle for the video startup. As is star power: former SNL cast member Amy Poehler is creating an original series called "Smart Girls at the Party," as is "Twin Peaks" creator David Lynch. On is backed by AT&T and Accel Partners.

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