Service: Overlay.TV

What it does: A software tool that lets producers place overlays on video clips, which can then be spread across the Web. The overlays let viewers interact with the video content by providing external links that are relevant to objects in the video, or to terms brought up in the video.

Why it will succeed: Interactivity is an evolutionary step for online video, which until now has mimicked the linear television experience. The capabilities of Overlay.TV make its service attractive to advertisers, producers, v-loggers, lifecasters, and other content creators who want to leverage Web distribution. Some of Overlay.TV's capabilities can be applied to clips that can be viewed offline, such as on an iPod.

Why it hasn't succeed yet: The advertising industry is still experimenting with online video formats. Overlay.TV presents an affordable alternative to other services that have high prices for branding video. Outside of advertising, Overlay.TV can be used for mashups, but it is going up against a handful of established tools such as Jumpcut.

'Net views:

InsideOnlineVideos: "I'm going to make a prediction. I have a horrible feeling some of the mashups from this thing will be hilarious viral hits."

VentureBeat: "The big video sites haven't adopted pre-roll ads, and for good reason: They don't work, and neither have contextual banner ads so far. Enter Overlay.tv."

HD Productions & Training: "It is definitely great as a peer lead marketing and sales tool as well as a consensual viral sharing platform making use of free video from the many sites currently available."

Management: Rob Lane, President and CEO. Backed by Celtic House Venture Partners, EdgeStone Capital Partners and Tech Capital Partners for a total of $4.6 million.

Related prediction:

• Prediction: Overlay.TV comes out of beta on or before June 30

Other related content:

• Slideshow home: Opinion: 10 'Net services that will succeed (and 10 that will probably fail)

Note: Anonymous comments on The Industry Standard are disabled. To leave a comment and participate in the Standard's prediction market, please register first.