An overview of Streaming Media (v1.0)
As a new visitor to this SI thread, I would like to offer up my own take on the streaming media market. I have personally researched the market for some time and felt it might be helpful to share some of the conclusions I've found. It is aimed primarily at those just getting acquainted with Streaming Media but will hopefully be of interest to more seasoned readers as well.
The internet can be thought of as plumbing, a digital pipe leading into everyone's homes that is steadily growing bigger and faster. Streaming media is the name given to the technology that allows this pipe to be used for video and audio broadcasting. Taken to its logical conclusion, the internet becomes a global cable tv and entertainment network that anyone can use. The opportunities for content creators are superb - it's the beginning of television all over again.
The empowering part is that anyone can become a broadcaster. This 'democratization' of broadcasting will be fascinating to watch. Mega media corporations will attempt to claim the territory as their own but startups will have an enviable advantage. Without long standing ties to existing distribution agreements or indeed methods of production, startups will be able to concentrate solely on the business of online delivery. Nimbleness and creativity will enable them to outshine their competitors and some genuinely new ideas will appear. Many of these smaller companies will be gobbled up by the big boys, many will be unable to survive the heat and a couple of new entrants may just remain independent long enough to become household names.
So who are the players?
THE TECHNOLOGY:
Real Networks (RNWK)
For those unfamiliar, Real Networks (formerly Progressive Networks) make the freely available Real Player software that allows a computer user to watch or listen to an internet video or audio broadcast. For the last five years they have been quietly etching out their market, waiting for bandwidth (and to some extent computer power) to catch up with their technology. (It is important to note that these two variables determine the quality of an individual internet broadcast.) Over 50 million unique users have downloaded the software since 1995 representing 85% of the streaming media market.
Microsoft (MSFT)
Microsoft's effort to create a streaming media solution has been hampered by a somewhat sloppy approach. Their product (also free) has been variously called NetPlayer, NetShow and now Windows Media Player. It's good technically but the marketing has clearly been botched. They have failed to strike a significant number of high profile partnerships, unlike Real Networks, and almost seem resigned to being in second place. They've had plenty of time to do something about it but it seems as if it's never been a priority. They shouldn't be written off (who would anyway?) but nonetheless, this time it looks like Microsoft has missed the boat somewhat. Expect some hefty acquisition moves instead.
Both companies make money by charging for the 'broadcast' side of the equation. As a commercial web site operator it costs several thousand dollars for the Real or Net Show Server package. Real Networks also sells a deluxe version of their consumer software called Real Player Plus.
InterVU Inc. (ITVU)
InterVU is a one-stop facilitation solution for companies looking to deliver large-scale video broadcasts over the internet. They have established a powerful network of Real and Net Show Servers in geographically diverse locations, by partnering with key internet service providers such as Digex, UUNet, GTE and others. Why operate your own broadcasting server when you can rent theirs? They are part owned (8.9%) by NBC and companies such as CNN and Bloomberg turn to them when they are expecting large numbers of viewers for a live event. This company knows what they're doing.
INFRASTRUCTURE:
For streaming media to take off, it's imperative that a critical mass of consumers begin accessing the internet at high speed. Present figures indicate around 5% penetration in the U.S. This is expected to rise to 25% by 2002 according to an October ‘98 Forrester survey. The race to build bigger pipes is on and there are a number of players in this highly prized market.
@Home Corporation (ATHM)
For a pure high-speed cable modem play, At Home Corporation can't be beat. They supply the technology to cable companies that allow those cable companies in turn to offer high speed internet access to their customers. The deal they strike includes a portion of the consumer's monthly subscription cost being siphoned back to @home. Nice arrangement. The share price has rocketed from around $25 back in November to $165 today. A merger with internet portal Excite is largely responsible.
Rhythms Netconnections (RTHM)
Covad Communications (COVD)
Both these companies specialise in providing high-speed DSL service to small and mid sized businesses. DSL (and its many variants) is basically the telephone companies' answer to cable modems. Covad went public in January, Rhythms went public on April 7th. Both are enjoying a large runup as are nearly all streaming stocks.
There are many other companies in the high speed internet business – Nortel, Cisco, Paradyne, Alcatel, Motorola, Bay Networks, Pairgain to name a few. Continuing battles over proprietary versus open systems and the additional inclusion of practically every telecommunications company make this a complex market to analyse. The big battle will be cable modems vs. DSL technology. From a pure electronics theory point of view, cable modems offer a higher ultimate speed potential than DSL. (You can cram a lot more information down a co-axial cable than you can a twin copper wire). This won't stop the telcos though from ruthlessly applying their marketing and financial resources to make DSL the market leader. The real winner, however, will be the company/companies that take the next step up and lay fibre into the home. Watch for these people carefully…
CONTENT:
With streaming technology freely available and high speed internet connections on the rise, who will be the content providers in this brave new world of broadcasting?
Broadcast.com (BCST)
These guys are the most well known and are a pure streaming media content play that have benefited from being first on the block. With their recent merger with Yahoo!, many more analysts are now taking this sector seriously. The service which started in 1995 with college football radio broadcasts (originally called Audionet) has grown into one of the most traveled entertainment destinations on the internet. The service is very U.S centric however and hampered by an annoying broadcast.com announcement every time you select a clip. Criticisms aside the company is well placed to become a major video-on-demand player in the years ahead, assuming they forge the right licensing agreements.
Audiohighway.com (AHWY)
As its name suggests, Audiohighway is concentrating on being an audio-on-demand site. They are taking a different approach from broadcast.com in terms of technology. Some of the content on the site is available for instant listening through Microsoft's Windows Media Player but the majority is in a proprietary ‘download first' format that requires you to install their own ‘Audio Wiz' software. The advantage of this they say is that you get to keep copies of the audio you've listened to on your hard drive. The disadvantage is that everybody else in the world is using a completely different format. The software works reasonably well however and installed for me first time without a hitch. It is NOT available for Macintosh and no mention, apology or explanation for this is even made. The company made a mistake before with proprietary technology (the aborted ‘Listen Up' player) and it seems they may be making a similar mistake again. It's not hard to fix however.
Entertainmentblvd.com (EBLD - OTCBB)
This OTC company runs five separate streaming content sites – Vidnet (for Music videos), Screenclips (for Movie trailers), Netfomercial (for Informercials), Pro Sports Net and Comedy Net. The entertainmentblvd.com site is thus a launching pad to these five individual services. Confusingly, out of the five sites, two use Real Player while three of them use the now basically defunct Vivo player (acquired a year ago by Real Networks). This is easy to change however and only marginally detracts from an otherwise excellent business.
Visual Data Corporation (VDAT)
If you want to see cutting edge web design, look no further than www.videoviewer.com, the streaming media service from Visual Data Corporation. Their web site is truly spectacular, assuming you have the high-speed connection and flash enabled browser to enjoy it. Top marks for their design team. On the video content side, their plans are ambitious to say the least. The majority of their vast array of channels have a ‘NOT YET AVAILABLE' tag and the question begs, why advertise this? The three services they are really offering (aside from acquired PR Newswire footage) are Hotel View, Resort View and Attraction View. These are excellent ideas and the company has clearly expended considerable resources running around shooting numerous hotels, resorts and attractions and editing the footage into palatable three minute shorts. What they need to concentrate on is fleshing out these three services rather than spreading their resources too thin in an effort to be all things to everybody.
Pay for View (PAYV - OTCBB)
This Canadian company is impressively priced considering the fact that its web site has no content. They are aiming to be a major video-on-demand player offering movies, music, sports, business and education. They have a very nice interface up-and-running and plenty of background information for investors, but the site barely makes demo status without any video content at all. They have announced licensing agreements with a couple of small/mid sized content holders and a curious foray into the record industry. Research thoroughly, approach with caution.
Ampex (AXC)
The venerable Ampex Corporation is making a highly inspired foray into streaming media. They have invested in two leading web sites and are constructing an internet video production facility in Los Angeles. The two sites in question are aentv.com and tvontheweb.com. Alternative Entertainment Network is an excellent offering and quite possibly the best independent service of its kind on the net. It has been around longer than most and has used the time to build up a library of content, which is easy to access, and actually interesting to watch. TV on the WEB is also a great offering and appeals to niche audiences through its diverse range of community channels. Ampex definitely know what they are doing here and look like a very good investment. Expect some healthy movement on this one.
ALSO OF NOTE:
NBC has recently launched videoseeker.com to leverage its vast library of television content. With resources like those, it is as you might expect very impressive. Clearly they're betting that as tv viewers migrate to the internet, they'll catch them on the other side sitting at their computer. Expect the other networks to launch similar offerings very soon.
ITV.net are a private Vancouver based outfit who have been playing around with streaming video since 1995 (the beginning basically). They have made quite a name for themselves facilitating the online broadcasts of events such as the Cannes Film Festival, Grammy awards, Tony awards, Banff Television Festival and many others. They have attracted sponsorship from Microsoft and are an enthusiastic bunch of west coasters who like experimenting and pushing the limits of the technology. They recently made a deal with Pay for View to provide PAYV's streaming services.
Pseudo.com is a privately held operation out of New York. Run by the former publishers of hip-hop oriented Streetsound magazine it features a wide selection of original content. Naturally there is a large hip-hop section but there is also a poetry channel, a business channel and a healthy dose of NY music and culture.
Spinner.com is a very flashy music-on-demand service catering to a wide range of tastes. The implementation is excellent if a little heavy on your computer (it tends to crash browsers) but the service works and many people are using it.
Gaialive.co.uk is a music-on-demand service out of England that concentrates on dance music. It is simple, easy to use and they have attracted several name DJ's to contribute.
TheWomb.com is a very popular (among dance music fans) internet radio station out of Miami. They were one of the pioneers in broadcasting over the internet and continue to grow from strength to strength.
ACTV Inc. (IATV) are borderline streaming media. They have been working on proprietary interactive television systems for some time, have some pretty hefty alliances (Fox for one) and recently announced a product called HyperTV which is pitched as a kind of Pointcast for streaming media. The problem has been their focus on set top box technology. The future really lies with no set top box technology. HyperTV is a step in the right direction but they are going up against Real Networks and Microsoft. Am not convinced.
Hope all this is helpful. Feel free to e-mail me at alx@worldtv.com with your comments or suggestions. Please note that I do not have any stake in any of the companies mentioned, instead I'm ploughing into my own project not a million miles away from those detailed above... Good luck everyone and enjoy the ride!
Alx Klive
Founder - WorldTV
April 9th 1999, Toronto. |
