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THE EXPLOSIVE GROWTH OF STREAMING MEDIA

A New Market Takes ShapeWith the speed of a runaway train, the Internet is fast becoming a respectable medium for video delivery. Today, most anything that can be broadcast can be streamed as full-motion video. Though television broadcast continues to enjoy a significant advantage in image quality, the unique strengths of the Web as an outlet for video are pushing this new medium rapidly up an astounding growth curve. Tools for streaming media abound. “Webcasters” devoted solely to webcasting over the Internet are springing up everywhere. And already many traditional television stations have jumped on the bandwagon and are providing webcasts for the Internet.

While streaming media technology attained its first significant use on corporate and educational websites, it’s now being used for all kinds of entertainment content, including magazine style shows, radio, short films, movie trailers, comedy, extreme sports, and more. Increasingly, fresh, original video programming targets Internet audiences in order to reinforce or supplement mainstream television fare and channels.

The Internet offers many advantages over traditional broadcast channels. In the same way that people access information interactively, they are able to view video on demand. Because it is a free, open, limitless environment, there are few barriers to getting good ideas for video shows “on the air.” And, the economics of Internet broadcasting make it conducive to narrowcasting to a global audience.

“Streaming media empowers the individual to create one-man television stations,” says John Molinari, CEO of Media 100, a vendor of video editing software based in Marlboro, Massachusetts. “There’s a clear trend away from watching television and cable stations to watching Web-based programming. The Internet won’t replace the old guard media, but it will succeed in relegating them. This is a tough time to be a traditional broadcaster because the signs are clear that Internet broadcasting will erode their audience,”

The streaming media market is one that Molinari has studied very closely. So excited is he about its potential that he’s betting the future of his company on it. Once focused on providing video editing tools for video users who were going out to air or tape, Media 100 is now zeroing in on streaming media opportunities with laser-like intensity. Last year the company changed the name of its FINISH line of software to iFINISH to reflect the new focus. It also acquired Terran Interactive, makers of Media Cleaner Pro, the premier video compression tool used by folks putting video on the Web, and it has been hard at work tightening the integration between the two companies’ product lines. More recently, it’s also acquired Wired Inc. for its MPEG technology as well as Digital Origin, a maker of low-cost, DV-based video-editing software that has strong applications for the Web.

So far, says Molinari, the new strategy is paying off with spectacular results. In its First Quarter Revenues Report, issued March 22, 2000, Media 100 announced net sales of $14.5 million for the first quarter, an increase of 19-percent over the $12.1 million reported in the first quarter of fiscal 1999. And Media 100’s Internet streaming media business grew more than 402-percent year-over-year, and now accounts for approximately 27-percent of its net sales.

Spreading Like WildfireMolinari is not the only one who describes the growth of media streaming as “exponential” and “explosive.” The same terminology is used by start-up vendors that are just entering the market, as well as by long-time players in the broadcast space, such as Grass Valley Group and Chyron, that are now focusing heavily on streaming media opportunities.

Meanwhile, the number of websites making use of streaming video is clearly on a rapid rise. “In 1998, nine percent of businesses surveyed reported using streaming media on their websites,” says Sujata Ramnarayan, senior analyst for E-Digital Media at Gartner Group, a market research firm in San Jose, California. “In 1999, the number of companies streaming media nearly doubled to 17 percent. And in the year 2000, the number of streaming media users is expected to double again.”

Molinari agrees. “The growth of streaming media is essentially growing 100% from year to year,” he says. “At the end of 1999, there were roughly 150,000 bona fide websites where you could go and see streaming media of audio and video. And we expect this number to double to 300,000 websites by the end of 2000.” Moreover, he points out, this estimate only counts URLs. Some URLs, like www.broadcast.com and www.real.com, offer access to multiple Internet broadcast channels from within one portal.

Another key indicator of just how fast streaming media is catching on is the growing installed base of media players, the software that facilitates the viewing of video programs on the desktop PC. For example, RealNetworks, the Seattle, Washington-based vendor of media players, introduced its first RealPlayer in 1995. Since then, Real reports that more than 95 million unique users have been registered, and the RealPlayer download rate exceeds 175,000 per day, an increase of more than 270-percent since the beginning of 1997.

“We estimate that Microsoft has 50 million users of its MediaPlayer and that Apple has 25 million users with QuickTime players,” adds Molinari. “And the fact that Bill Gates gave the keynote speech at Streaming Media West `99 says that Microsoft considers streaming media to be a vital growth market affecting the company’s future.”

Birth of an IndustryIn 1998, the buzzword “streaming media” was just beginning to gain traction. But if there is one event that can be credited with really putting a spotlight on the term and defining it as a unique industry unto itself, it is probably the Streaming Media Conference sponsored by First Conferences of San Francisco. The Streaming Media Conference offers a perfect analogy for what’s happening in the streaming media industry since, like the industry it represents, it’s a show that’s growing at a phenomenal rate.

The first Streaming Media Conference was a private event held in San Francisco in November 1998, with only 28 exhibitors and 800 attendees. But just six months later, in June 1999, the first public event, called Streaming Media East `99 was held in New York City, and it attracted 50 exhibitors and 3,500 attendees. In December 1999, at Streaming Media West `99 in San Jose, there were 120 exhibitors and 7,500 attendees. At Streaming Media East 2000, to be held June 12-14, 2000 in New York City, there will be 130 exhibitors and attendance is expected to top 10,000. And, at Streaming Media West 2000, to be held in San Jose, December 12-14, 2000, there will be 250 exhibitors and attendance is expected to top 15,000.

In just two years time, the Streaming Media Conferences have become a pivotal force in shaping and propelling the streaming media industry. They are, without question, the premier forums for showcasing the latest in streaming media hardware, software, networks, content, and business solutions.

“The streaming media industry doubles in size every six months. Attendance at our shows is indicative of that growth, as is the growing number of exhibitors who are qualified enablers of streaming media technology,” says Richard Bowsher, CEO of First Conferences. Headquartered in San Francisco with an office in London, First Conferences is a private company founded in 1990 that began by producing business events related to “Technology and the Internet.” Today, First Conferences produces more than 80 annual events in more than 25 countries, many of which focus on webcasting, the delivery of audio and video via the Internet.

“We recognized the potential of this business early on, and created a forum where vendors of streaming media products and services could meet prospective customers who were looking to create and distribute media rich content via the Internet for corporate, entertainment, educational, and e-commerce applications,” says Bowsher.

So influential has the show become that at Streaming Media West `99, held last December in San Jose, it attracted both Microsoft’s chairman Bill Gates and RealNetworks CEO Rob Glaser as opening speakers. Both companies have also purchased Platinum corporate sponsorships for the show, though Bowsher stresses that corporate sponsorships represent only an additional revenue source sustaining the conferences but do not in any way give the sponsors influence over the show’s programming content. “We are strictly independent and we are not influenced in any way by technology companies other than in a way that we consider newsworthy or important,” says Bowsher.

Arrangements for the next show, Streaming Media East 2000, weren’t quite finalized at press time, but it is clear that, like the conferences before it, the event will feature an extensive exhibit area and a large number of conference sessions that will span a spectrum of business, content, and technical topics.

Not surprisingly, perhaps, given the entrepreneurial nature of this nascent industry, many of the business seminars will focus on investment issues and business model development while technical sessions will focus on the details of building a streaming media infrastructure. While a full list of the session topics can be viewed at www.streamingmedia.com, here’s just a sampling of some of the sessions attendees will be offered:

– Venture Initiation: Venture capitalists discuss what they look for in broadband companies.

– Equity Markets: Industry analysts discuss where the value is in becoming a B2B (business-to-business) or B2C (business-to-consumer) organization.

– Making streaming content for consumer electronics devices.

– The business of syndicating content on the Web.

– What works online? Successful broadband content business models.

– Discussion of audio and video pre-production for optimal quality.

– Tracking, measuring, and reporting streaming media usage for advertisers.

– Building the broadband infrastructure.

Despite the fact that other major television trade shows like NAB and NATPE have recently added exhibits and seminars related to webcasting, all of the Streaming Media shows held so far have sold out. “At NAB and NATPE, traditional television broadcasters and producers look at the new streaming media phenomenon to determine how it will affect their future. But at our Streaming Media shows, our approach is that widespread use of streaming media is inevitable, and that Internet broadcasting will grow to eclipse the existing media,” says Bowsher. “Instead of the 500-channel universe that cable companies are touting, the Internet promises a 100-million channel universe, where video programs can be viewed on demand rather than according to a program schedule.”

Focusing on Streaming MediaAmong the many vendors who see the Streaming Media Conferences as the ideal way to promote their streaming media businesses are Sightpath, Intervu, and e-StudioLIVE. All three exhibited at last year’s NAB and NATPE shows as well as at the Streaming Media shows. And while NAB and NATPE are larger shows, these vendors feel strongly that the Streaming Media show is a worthwhile marketing investment, and that participation is vital to the growth of their companies.

“At the Streaming Media shows, attendance has been steadily increasing, but beyond quantity, we’re seeing very qualified buyers,” says Jim Melvin, vice president of marketing for Sightpath, (www.sightpath.com), a company based in Waltham, Massachusetts. Sightpath offers the Sightpath Studio, which streams media to Sightpath Appliances (essentially plug `n play hard drives for caching up to 30 hours of video) for display as full-motion, TV-quality video at the receiving locations. Not only has the company seen its sales double in just a year’s time, but at press time Cisco Systems had announced plans to purchase the company for $800 million.

According to Melvin, “People who stop by our booth often say, `I’ve been charged with an e-learning initiative for my company,’ or `I’m interested in developing more effective sales communications with my partners worldwide. How can I do that?'”

Melvin explained that NAB and NATPE draw people who are already communicating with video but want to develop a distribution channel to the Internet. But, Streaming Media draws people who often have their Internet channels in place and now want to begin communicating with video.

“The Streaming Media showgoers have a communications problem they are trying to solve. They feel that visual communications could be effective for them, but don’t know how to put it all together,” says Melvin. “They come to Streaming Media to find out how to best integrate video with their website efforts.”

Brian Kenner, chief technology officer for Intervu (www.intervu.net) of San Diego, California, agrees that the Streaming Media shows produce the right kind of crowd relative to older shows like NAB. “A large percentage of the people visiting the Streaming Media shows are associated with `wired’ entities already successfully running their own websites. They find Streaming Media to be a perfect environment for them because, with all the products and services on display, it’s easy to put together an end-to-end solution,” says Kenner.

But, more importantly, Kenner adds that the Streaming Media shows are invaluable for forming strategic alliances and partnerships with other vendors to further develop their product offerings in an effort to provide a complete solution. Intervu offers full service outsourcing of Internet video and audio management and delivery solutions to websites utilizing a patented, automated, distributed network and operating system to ensure optimized bandwidth and high-quality delivery.

As for e-StudioLIVE, it tried to get booth space on the show floor at Streaming Media West `99 but by the time they inquired about it, the space had already been sold out. Undaunted, it booked a suite near the show and found that it still had a steady stream of people, some of whom even stopped by after the exhibit hall closed.

Based in Chelmsford, Massachusetts, and formerly called ECHOlab, e-StudioLIVE, is another company, like Media 100, that has long focused on the traditional video and broadcast market but has recently become convinced that streaming media is where the opportunities of the future lay. The company offers a family of production switchers that are based on a Windows NT workstation and allow a single user to easily manage a live broadcast – complete with wipes, graphics and effects – that can be output simultaneously over-the-air or over-the-Web.

According to Ken Swanton, president and CEO of e-StudioLIVE, the company has seen a phenomenal surge of interest in its products from people eager to get into webcasting. The types of customers they are attracting, he says, run the gamut from corporations that see webcasting as an ideal tool for conducting “Monday morning meetings with the company president” to adult entertainment sites that see webcasting as the perfect technology for enhancing their offerings. “There are all kinds of fascinating things that people are doing,” says Swanton. “It’s very exciting.”

As for Streaming Media 2000, e-StudioLive has already made sure it will be a booth holder at that show. Indeed, the company is also planning to exhibit at Streaming Media Europe 2000, scheduled to take place October 10-12, 2000 in London, and it is also considering exhibiting at Streaming Media Asia, the first Asian streaming media event, to take place sometime next year.

Streaming Media Problems and OpportunitiesOf course, as we mentioned earlier, one of the main problems that streaming media still faces is image quality. While new technologies seem to be emerging everyday to help alleviate that problem, there’s no denying that video delivered over the Web is still far inferior to what you can see on your TV screen.

Because of that, many of the exhibitors at the Streaming Media Conferences still see the corporate customer as their primary goal. Corporations, especially those in the Fortune 1000, typically have enterprise-wide, T1-quality connectivity and high-speed local area networks. That broadband capability makes it immediately practical for them to view full-motion video on a PC screen. In the corporate sector, demand for media streaming is brisk as companies see it as an ideal tool for handling corporate announcements, product launches, sales training, sales presentations, and other business-to-business communications.

As a prominent exhibitor at all the Streaming Media shows, Instant Video Technologies focused its presentation at the show last year on how its patented Burstware enterprise class client-server software would help corporations optimize the bandwidth they have available to produce uninterrupted full-motion, full-screen video and CD-quality audio across the network.

“At the Streaming Media show, we could not find a single company, other than our own, that was actually streaming video over the Internet [at their exhibits during the show]. Everyone else, including two market-leading companies, played video from local hard drives to avoid showing bad quality video at a public streaming show,” says Richard Lang, co-founder, chairman, and CEO of Instant Video Technologies (www.burst.com) in San Francisco.

“An interesting statistic is that while huge market share is claimed by a couple of high-profile companies, less than 5% of websites are actually streaming video or audio. We believe that this has a lot to do with the unreliability and poor quality of the video and audio that is streamed,” says Lang. The reason for the bad quality is that real-time streaming is a narrowband technology that exposes the streaming to network disruptions (latency, breakdowns, etc.) for the duration of the program.

“In an environment where the bandwidth exceeds the current demand by even a small amount, we feel it makes much more sense to manage the delivery of faster than real-time `bursts’ into the local cache, where it can be viewed in isolation from network disruptions,” adds Lang. “We would expect that as reliable, high-quality video becomes available, much more of the remaining 95% of websites will begin to deploy video and audio. Many of these new applications may involve e-commerce or other `mission critical’ quality criteria, so we’ll see a huge increase as these reliability and quality issues are addressed [and resolved]. “

As for Richard Bowsher of First Conferences, he’s convinced that the lack of universal, high bandwidth is just a temporary problem because of the number of companies actively investing in the Internet’s backbone infrastructure. “With all the recent advancements in streaming media technology, even those limited to 56K modems are having an easier time today accessing video on the Web. And since audio requires far less bandwidth, Internet radio is white hot right now. Despite the temporary bandwidth constraints worldwide, we believe that compelling content will propel Internet broadcasting faster than increased bandwidth.”

Clearly Bowsher is excited about streaming media. But it’s an excitement he shares with many others. As Microsoft’s Bill Gates said in his keynote address at Streaming Media West `99, “Streaming Media is the next major wave of computing and will bring entirely new benefits to consumers worldwide as digital audio and video become as mainstream as text and graphics are on the Web today.”

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