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Netflix (s NFLX) and YouTube (s GOOG) have teamed up to launch DIAL, a protocol that helps developers of second-screen apps to discover and launch applications on smart TVs and connected devices. The effort is already getting support from a number of notable players, including Samsung, Sony, (S SNE) Hulu and the BBC. DIAL could become a key piece in efforts to establish an open alternative to Apple’s (s AAPL) AirPlay.

YouTube and Netflix have been collaborating quietly on these efforts for months. Word first got out when some inquisitive users discovered traces of DIAL back in December. The DIAL website publicly launched with little fanfare and a brief mention on Engadget earlier this month, and now, Netflix is for the first time sharing some key details of the project with GigaOM.

The partnership: Why YouTube and Netflix teamed up for DIAL

Both Netflix and YouTube have been working on second-screen apps for some time. Netflix launched a limited second-screen integration in October, and YouTube released its first Android remote control app all the way back in 2010. The Google-owned video site has since simplified that experience, and Google product manager Timbo Drayson told me in November that YouTube’s goal was to partner with others on these efforts. “We really want to move the whole industry forward,” he said.

Turns out that one of these partners is Netflix. “We realized in the fall of 2011 that we could create some potentially useful 2nd screen experiences,” Scott Mirer, director of product management at Netflix, told me via email this week, adding:

“At about the same time, we learned that the YouTube team was interested in much the same thing – they had already started to do some work on 2nd screen use cases. And so we approached them on collaborating… We also felt that having two major video services define and promote DIAL would help get it more widely adopted as a common solution to a common problem, vs. taking a proprietary approach. It’s been a productive partnership and we’re confident that we’ll get wider adoption because of it.”

The technology: What DIAL is all about

DIAL stands for “discovery and launch,” which pretty much sums up what the protocol is meant to do. DIAL-enabled second screen apps will be able to discover DIAL-ready first-screen devices in the same network and launch apps on them. That may sound trivial, but it’s actually solving a big problem for second screen app developers.

Take Netflix’s current second-screen experiments, for example. PS3 owners can already browse Netflix’s catalog on their smartphone and then launch those titles on the game console, but they have to first manually launch the app on both devices. And using your phone as a remote control doesn’t make all that much sense if you still need to use that other remote control (or gamepad, in this case) as well.

With DIAL, the Netflix app on your phone will automatically discover that there is a device with a Netflix app connected to your TV. It will fire up that app, and then the two apps are free to do whatever they want — which presumably involves some healthy binge-viewing. (For the more technically-minded readers: DIAL is using UPnP multicast for the discovery piece of the puzzle, and a REST-service to launch apps on discovered devices.)

The competition: How DIAL compares to AirPlay

AirPlay is often thought of as a way to mirror content displayed on your iPad or iPhone on your Apple TV, but that’s only part of the puzzle. One key part of AirPlay is device discovery. Any iOS device will immediately discover any AirPlay-capable speaker or Apple TV in your local network. It just works, which is one of the big advantages of AirPlay over competing solutions, and one of the things that DIAL wants to achieve.

AirPlay can also send URLs from your iPad to your Apple TV to initiate playback of remote content, and of course it can mirror your iPad’s display on your TV screen. DIAL doesn’t do any of that, which was a deliberate design choice, Mirer told me:

“Once apps from the same provider are running on both screens, there are several feasible methods for implementing control protocols either through the cloud or on the local network. And not every service or application is focused on the same kinds of use cases. Rather than try to get universal agreement on these protocols and use cases, it seemed best to leave room for innovation.”

But there are other areas where DIAL actually goes beyond AirPlay’s capabilities. First, the obvious: AirPlay can’t launch any apps on your Apple TV. DIAL will also be able to detect whether an app is installed, and redirect a user to a smart TV’s app store in case it’s missing. Also cool: DIAL will be able to launch web apps on your TV, if the device supports it, which should add a whole lot of new functionality to connected devices.

The future: Where DIAL goes from here

One of DIAL’s little secrets is that parts of it are already out in the wild. Current-generation Google TV devices already support DIAL, and I’ve been told by third-party developers that some 2012 Samsung and LG TVs also already incorporate some DIAL functionality.

Netflix didn’t want to go into details about unannounced products or features from hardware partners, but Mirer told me that many vendors have DIAL-compatible devices or software updates that would add this functionality to existing devices in the works. “Expect to start seeing them in the next several months,” he said.

Two high-profile CE vendors in particular seem to be heavily invested in the future of DIAL. Samsung and Sony were both mentioned in the protocol’s specs. Mirer said that the companies helped a lot with practical feedback:

“Both Sony and Samsung generously invested some effort and their feedback really helped us tighten up the protocol and make it compatible with their existing software. We fully expect them to include DIAL in many of their products going forward.”

DIAL is also getting some support from content services and app makers. The project launched a registry on its website for companies that want to take advantage of DIAL much in the same way Netflix and YouTube want to, and the first ones to sign up include the BBC, Hulu, Pandora (s P)and Flingo. There are also efforts underway to bring dial to Chrome, which would make it possible to launch apps on your TV straight from your browser.

In recent conversations at CES, I’ve heard some considerable interest from others as well. And with enough support, DIAL may not just be able to take on AirPlay, but eventually reshape how we interact with digital media in the living room.