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compressed, streamed, digital audiovisual media were required, this is it. A DVD player and a streaming media player differ only in that a DVD gets its media stream from a disk, whereas a streaming media player receives its stream from a broadband network connection. Presentationally, the DVD platform is more limited and less standardized, in terms of authoring interactivity and synchronizable media elements, than the Web stuff that can be created to run with streaming media, as part of the same stream. Indeed, Microsoft has developed Windows Media for DVD players. Leading chipmakers for DVD players will support the technology in systems shipped in 2002. With Windows Media s four to one compression ratio advantage over MPEG2, the current compression technology used in DVDs, studios could put all the Godfather movies or an entire musician s discography on a single CD. The chipmakers signed up to support Windows Media for DVD include the big five, who supplied 90% of the DVD processors shipped last year. Today there are over 200 million people communicating with each other using instant messaging services. Streaming media makes it possible for instant messaging to include audio and video. There can be little doubt that this is a strong growth opportunity for the streaming media industry. Digital media has already achieved widespread consumer acceptance. Digital cameras and portable audio and video devices have all experienced strong growth. Consumers love to play around with digital media. Sales of CD burners, which many use to create personalized music selections or to store pictures they like, have outpaced sales of DVDs and digital cameras. The success of DVD and instant messaging and the growth in digital media consumer devices proves that streaming media, delivered through IP carriers, can succeed, provided the streaming media industry, as a whole, gets the system-level offering right.
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Even though 50 percent of Web users have seen streaming media on their PCs, the audience for sustained viewing needs to be built. The average number of hours per week that consumers spend watching streaming media programming is minuscule, compared with television viewing hours. This necessarily means that devices other than the PC for receiving media are required, since the PC is not a platform that the family can gather around in the evening and view from the comfort of soft chairs. Most PCs are not situated in the living room like this anyway.
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Content producers make content with mass audience assumptions in mind, right down to the pace of the narrative, the structure of the story, the editing, and so on. To create audience critical mass, producers will have to create for niche interests, with individualization and interactivity in mind. Because each additional viewer costs as much to support as the first, since they all use the same amount of bandwidth, there are no economies of scale with achieving a larger audience for a scheduled program, as there is with digital television. With television, once you have paid for the transmission bandwidth, the more viewers that watch, the less each effectively costs to serve with that bandwidth, since no additional bandwidth is required for each additional viewer. With streaming media, unless it is multicast, the economies are only in spreading the cost of production over a larger audience. The cost of transmission scales linearly with the number of viewers. The streaming media industry needs enough people watching streaming content enough of the time to make it viable. Today, individual consumers only rarely access streaming content.
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Unfortunately, the streaming media industry is littered with casualties. Companies with very good ideas have gone out of business. Big names like Pseudo, Hollywood.com, Digital Entertainment Network, and DemandVideo are no longer with us. Why The economics of bandwidth provision are often based on phone call pricing, when voice traffic is fast becoming an irrelevance, compared to data. Advertising revenue from streaming media presentations is very small. The content available still mimics television and fails to exploit the exciting features of the streaming medium. The end-user experience is not acceptable, in that it doesn t feel as responsive and seamless as television. All these factors serve to keep audience numbers low. Low audience numbers mean low revenues. With the end-to-end system in its current state, it is very difficult to make money. The ills of the economy have only served to exacerbate the situation. Until it becomes possible for streaming media service, content, and technology providers to make a profit, streaming media will remain a curiosity, interesting only to technophiles. The economics of serving media will need to change. Most importantly, for streaming media to be profitable, companies need to find ways to add value to the end-user s experience and charge appropriately.
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