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This paper will examine the current issues and opportunities of streaming video, highlighting both recent technical breakthroughs and key players in the market. An emphasis will also be made on audience behavior including what early adopters expect from the medium and the role of the users as co-producers of the streaming media content. Audio-only applications will be excluded from the scope of this paper. The focus will be made on the U.S. market with some reference to the global market.
The growth of streaming media (i.e., video accompanied with audio) from a statistical viewpoint is astonishing. The number of Web pages transmitting streaming video grew from 30,000 in mid-1998 (Schiller, 1999) to 400,000 by third-quarter 1999 (Vision, 1999). Each week 45,000 hours of live content was webcasting by October 1999. There were 58 U.S. TV stations webcasting live, 34 on demand, and 69 international TV stations (Vision, 1999). The NetAid concert in October 1999 set a world record for the largest Internet broadcast event for a single day -- 2.5 million streams (Cisco, 1999a). The BBC Online's European solar eclipse site served a million streams in a day in August 1999. The BBC last year estimated that its streaming audience was growing by 100% every 4 months (Vision, 1999).
At the same time, "fast access" has become increasingly popular in recent months. The high-speed access to the Internet promises less wait time and better video quality compared with a dial-up line. The Yankee Group predicts that U.S. residential subscribers to fast access will grow to 3.3 million by the end of this year and 16.6 million by 2004, up from 1.4 million at the end of last year (Reuters, 2000). Leading telecommunications carriers have been heavily investing in their network infrastructure to build broadband networks, which will be an integral part of the future Internet backbone. Some carriers have also begun implementing Dense Wave Division Multiplexing (DWDM) for their fiber networks, which dramatically increases network capacity. Currently the performance of the Internet is on a best-effort basis. In the near future, carriers may be able to guarantee quality-of-service (QoS) levels of nearly 100% to customers.
Those who currently use streaming video regularly are considered to be early adopters of this new technology. Early adopters of any new technology tend to be well-educated, young, and affluent, and have a more favorable attitude toward change and science as well as greater exposure to interpersonal and mass communication channels (Rogers, 1995). Not only social economic status but also personal traits are predicting factors of whether an individual adopts a new technology. Examining aggregate behavior of early adopters of streaming video may help the industry determine its strategic direction. Relative advantages must be visible for individuals to adopt streaming video. The failure of push technology clearly demonstrated the need to understand the user's attitude. This paper will argue that ultimately appealing to user gratification is the key to success for the streaming media industry and broadband providers. The recent America Online (AOL) acquisition of Time Warner signifies the beginning of new developments in the Internet and media. It is unclear whether all these trends are fundamentally user-driven, technology-driven, vendor-driven, or a combination of these, but it is clear that Internet users will see more and more video content on the Internet.
From a number of Internet user surveys, we know the extent to which the Internet has been adopted. The Yankee Group estimated that 25 million U.S. households were online at the end of 1998 and that the number would rise to 50 million in 2002 ("Taking Stock," 1999). Pew Research Center's Internet survey in late 1998 concluded that 41% of adults (18 or older) in the United States used the Internet, and that about 12% of Americans (22 million) went online everyday (Pew, 1998). Nielsen Media Research in June 1998 indicated that about a third of the U.S. population of 202 million people 16 years and older are Internet users (Ducey, 1998). Thus, various sources have suggested that millions of people in the United States alone currently use the Internet. However, a question remains as to how fast the new broadband technology will be adopted by the general consumer market due to economic, social, and psychological variables.
Even though the quality of video viewed on the Internet today is considerably inferior to television, some webcasting events have already attracted a huge number of viewers to the extent that the Internet experiences traffic congestion. An oft-quoted example is the Victoria's Secret fashion show broadcast in February 1999. Clearly, early adopters endorse streaming video.
The idea of convergence has existed for decades, and some people are speculating that webcasting is going to replace, at least to some extent, traditional media such as television. Contrary to such displacement theory, Fidler's (1997) coevolution and coexistence principle says that all forms of communication media coexist and coevolve within an expanding, complex adaptive system. Indeed, the current development of streaming video seems to influence and be influenced by other communications technologies, media, and phenomena. These include television, radio, movies, DSL (digital subscriber line), cable modems, much improved CODEC, increased personal computer (PC) ownership, fast-growing Web surfers and Netizens, and nationwide broadband deployment.
In a few years, the number of streaming video users will reach a critical mass. Paul Kagan & Associates predicts that 18 million people in the United States alone will have access to streaming audio and video from their home PCs in 2001 (Shachtman, 1999). The technology and cost issues we see today, such as poor picture quality and relatively high fast-access cost, will, no doubt, be mitigated over time. However, the impacts of social and psychological factors on the development of video content on the Internet are much harder to predict.
The author's own Web-based survey on streaming video use (81 users and 33 nonusers) found that what users expect most from streaming media is something that the traditional audiovisual media cannot provide: that is, the ability to view what they want when they want it. Freedom in the time- and distance-independent cyberspace appeals to users. Over 44% of the streaming video users in the survey think that time independence is the most important advantage of this medium, while 19% like the fact that the streaming technology has made highly specialized or unique content available to them, which rental video/VCR simply cannot offer. Also, 10% feel that the most important reason for using the medium is to simply enjoy viewing. Moving pictures have, in certain situations, more powerful effects on audiences than text-only or non-streaming format. Emotional appeal -- arousing feeling of being entertained, pleasure, excitement, and so on -- will be a critical element of streaming video, although the majority of users at present seem to use the medium for its utility (i.e., user control) and not for aesthetic reasons.
Nonusers of streaming video, in the same survey, think that system performance is bad for such an application (24%), see no value (21%), and need no more technology (14%). A few say that there is not much content worth viewing. Most (70%) would rather wait to see how things evolve and to ensure there are no significant issues before they use streaming video regularly.
In terms of user profiles, only fragmented information is available to the public. Table 1 below is an example available from RealNetworks Web site (RealNetworks, 1999a):
| Average Age | Male Ratio | Annual Income | |
|---|---|---|---|
| RealPlayer (overall) | 34 | 74% | $50,000 |
| LiveConcerts.com | 23.4 | 65% | $32,000 |
| Film.com | 34.2 | 61.4% | $70,000 |
| Source: RealNetworks | |||
The author's survey sample was also in line with this: 33% in their 30s, 30% in their 20s, 23% in their 40s, and 62% have annual household income of more than $50,000. However, there was no significant difference in age, marital status, income, education, and length of Internet experience between the user group and the nonuser group in the survey. All of the respondents in the nonuser group are Internet users. They just don't use streaming video, and 85% don't listen to streaming audio, either. Interestingly, 65% of the streaming video users in the survey don't use audio/radio on the Internet. More research is required to identify characteristics of streaming video users in a much larger population.
On the corporate side, Dataquest estimated that only 9% of businesses in the United States had implemented streaming media on their Web sites in 1999 and that the number would grow to 29% by 2001 (Glascock, 1999). Benefits of deploying video on corporate networks range from improved internal communication to increased sales, including faster communication, cost savings, more effective information sharing, flexible training, shorter cycle time, greater customer service, and more compelling advertising. Hewlett Packard (HP) is an example of a success story. Aberdeen's case study of HP concluded that HP saved about $1.2 million in the first year (1999) with a return on investment of over 1,800% by using streaming media, instead of traditional communication methods, for various marketing activities (Aberdeen, 1999). Another example is Merrill Lynch's new multimedia online service that provides its clients with daily updates on financial markets (First Conferences, 1999a). Clients can see and hear Merrill Lynch analysts 24 hours a day. Although one may not be able to measure the effectiveness of such service in terms of dollar figures, this value-added service is a competitive edge.
Back in 1998, when streaming video was largely seen as a potentially useful technology -- but not yet a reality -- people were concerned about some significant technical deficiencies. ComputerWorld, for instance, in July 1998 described, "The compressed image received by a 28.8K bit/sec. Modem...arrives at a jerky four to five frames per second vs. television's 30 frames per second. And the credit-card-size image that appears on the PC is no fun to look at" (Thibodeau).
Technologies have significantly advanced over the past two years. About 60% of the users in the author's survey say that their views of streaming video have changed since they started using the medium. Of these respondents whose views changed, almost 80% feel that their experiences with the medium have improved, while only 4% have been disappointed with the medium. In terms of overall system performance, however, 54% are dissatisfied and 25% are satisfied. Major issues of streaming video for many users are bandwidth/speed, picture quality, frame size, and audio quality. Although 58% of streaming video users in the survey have high-speed access from home, there is no significant difference in the level of satisfaction between the fast-access users and the dial-up users. Many fast access users say that, even with cable modems or DSL, download time seems long and quality is poor. The reason why respondents complain about these issues may be because many streaming media sites do not offer broadband options yet and therefore quality is poor anyway. Whether people have fast access or not may make little difference.
On the other hand, both end-users and content/service providers tend to think that the bandwidth issue will likely be resolved as more broadband infrastructure is put in place. Also, people generally think that the medium will become more popular in the future. For example, over 91% of the users in the same survey indicated that they would likely use more streaming video in the future, and 74% said that they would likely recommend the medium to other people.
While telecommunications companies are adding more broadband and higher capacity networks, the bandwidth issue can be also worked around by using one or more of the following:
Applications with Internet Protocol (IP) Multicast, a set of protocols defined by the Internet Engineering Task Force (IETF), send data from one server to many receivers or from many to many simultaneously (Quinn & Almeroth, 1999), thus reducing the number of streams transmitted over the Internet. Although there are still challenges in deploying this technology, more and more webcasters, Internet service providers (ISPs), and network providers are likely to adopt IP Multicast.
Multimedia data caching is on the way. Inktomi's solution, for instance, is designed to minimize redundant traffic by storing frequently accessed information in dedicated, local storage systems closer to the user (Inktomi, 1999). If a stream requested is not cached, the requester receives it from a remote server.
QoS is another set of IETF protocols being implemented into routers, switches, and operating systems. The QoS Forum, an industry organization, is working with the IETF and other standards organizations to accelerate the adoption of QoS standards among ISPs and corporate information technology (IT) groups (Lucent, 1999). At the implementation level, QoS is a group of many functions, such as congestion avoidance, admission control, and configuration management (Cisco, 1999b).
Indexing streaming video does more than provide end-users with convenience. It can also minimize wasted bandwidth by not requesting or sending unwanted video streams. Streaming media portals such as FasTV.com and StreamSearch.com have already implemented search functions on their Web sites. Several companies, including Virage, Excalibur, and MediaSite, market various flavors of searchable video software packages.
Encoding video at various bit rates (e.g., 28.8 kbps, 56 kbps, 300 kbps, 750 kbps, 1.5 Mbps) allows people who do not have high-speed access to view video (though quality of images may be unsatisfactory to them), while offering better-quality, larger-screen video to high-speed users.
Satellite webcasting could resolve traffic bottlenecks on the existing terrestrial network. iBeam and Cidera are major players in this arena. Although their strategies differ, both use a similar delivery approach -- sending frequently requested objects to a server near the end-user (iBeam, 1999; Cidera, 1999). Both companies at their Streaming Media West '99 booths told the author that packet loss and latency were almost nonexistent with satellite. According to Frost & Sullivan, the value of the market for transmitting Internet data by satellite would increase from $200 million in 1999 to over $3 billion by 2004 (Roberts-Witt, 1999).
In addition to the above, some content delivery companies have devised innovative ways of avoiding network congestion and improving picture quality and, consequently, users' media experiences.
Akamai's solution, FreeFlow, is based on its proprietary network algorithms. The customer may retain control over serving the initial hit of each page request by maintaining the hypertext markup language (HTML) portion of the pages in its own server and offloading embedded objects to Akamai's servers. Popular files are replicated on multiple servers on Akamai's network and dynamically delivered to requesters (Akamai, 1999).
Digital Island/Sandpiper's Footprint employs a similar approach but uses different algorithms than Akamai's. The company has acquired Stanford Research Institute's algorithm that calculates the fastest path to get to a destination and is working toward implementation.
Burstware from Burst.com is yet another software designed to beat the bandwidth issue. The technology assumes that the user has high-speed (1.5 Mbps) access to the Internet and a large buffer. Instead of transmitting media in a stream at a constant bit rate, Burstware delivers data to the user's buffer in large bursts at a rate faster than the play rate (Burst.com, 1999a). Since content is played from the user's local buffer all the time, the user is not affected by network congestion (Burst.com, 1999b).
Since businesses do not have all components, the knowhow, or resources to take advantage of streaming technology, they are likely to outsource some or all of content delivery activities. A rapid growth in this market is therefore expected over the next several years. According to the Internet Research Group, the content delivery industry is estimated to be worth more than $2 billion by 2003 (Luh, 1999).
RealPlayer from RealNetworks and Microsoft's Windows Media Player are the two most widely used streaming media players. As of December 1999, RealNeworks had over 80 million unique users of RealPlayer and its download rate exceeded 175,000 per day (RealNetworks, 1999b), while Microsoft claimed that the Windows Media Player was the fastest-growing media player in the market with more than 50 million user bases (Microsoft, 1999).
Although some industry analysts and technically savvy people debate which player has the richest set of functionality or which one is the most popular, it does not matter to average end-users. What matters is content. People decide to view video based on what the content is and not on which player format is used.
Identifying the types of content viewed by early adopters is obviously a key issue. Among streaming video sites, Internet users probably encounter entertainment-oriented content most frequently. Entertainment covers a wide range of content including movies, music, and TV shows. Some people view news stories as entertainment.
Entertainment was the most popular content type in the author's survey. Almost 68% of the users see entertainment content. The second- and third-most popular content types are domestic news (41%) and international news (41%). Two-thirds of respondents who selected domestic news also chose international news. Viewers may not be consciously differentiating domestic news from international news, as most news sites have both domestic and international news stories. When consumers visit these sites, they may click on interesting video clips whether they are domestic or international. About 54% of the users are satisfied with the content they view, while 19% are not.
There has been some integration of over-the-air and online entertainment programs recently. For example, in November 1999, ABC.com and Warner Brothers Online hosted a simulcast of an episode of the Drew Carey Show. This episode portrayed on TV Drew's daily activities, whereas the Internet audience saw footage of what was happening in his home when he was out at work. ABC declared that nearly 650,000 streams were served (First Conferences, 1999b).
A study conducted by DFC Intelligence on 125 top interactive video events for 1998-99 found that large broadcast network (Nielsen) ratings did not necessarily reflect online ratings and that some special or niche cable TV news attracted more online users than broadcast networks did (Palumbo, 1999). Examples included:
People generally seek to watch what they are interested in or what satisfies their needs. Webcasters, therefore, need to listen to viewers' opinions. Viewers have a greater control over content of streaming video sites than over television programming because feedback can be sent to the content providers more easily via the Internet. What are users' favorite sites? Here is some indication. Voted by more than 7,000 people, the winners of the first-ever Streaming Media People's Choice Awards (Business Wire, 1999) announced in December 1999 were as follows:
It will be interesting to see how long these sites will keep up their reputation and what other webcasting sites will offer this year. Viewers are empowered and, therefore, in a way co-produce content.
E-commerce is another key area in which streaming video will be widely utilized. Forrester Research predicts that global spending for online advertising will reach -view growth will far outpace ad spending growth (Pastore, 1999). It is imperative that advertisers understand how to increase consumers' brand cognition and recall rates. It is not surprising that some retail sites webcast their products in an attempt to attract more people.
These days, not only relatively inexpensive items (e.g., books and CDs) but also pricey goods, such as European haute couture clothing and designer shoes, are available online. Marketers think it is easy and convenient to shop for clothing online as long as the shopper knows the brand and his/her size. Video seems to contribute, at least partially, to public recognition of virtual fashion. Live fashion shows of Yves Saint Laurent and Jean-Paul Gaultier, for example, received up to a million hits a day (Echikson, 1999). Further, people can view unusual items being marketed online, such as Keeneland's thoroughbred auction sales (Keeneland.com, 1999).
Banner ads have also added video elements. The major form of advertising in 1998 was banner ads (56%), according to the Internet Advertising Bureau. The UK-based Web Marketing Ltd. last summer introduced video banner ads, whose technology involves a small "sniffpush" program detecting whether the PC has a streaming media player, and if so, what type, before the user clicks on the page with the video ad. Video is played using the media player on the PC. If no media player is detected, an ordinary GIF file banner ad appears. Web Marketing found that video raised click-throughs by 400% to 1,000% (Nuttall, 1999)!
Web Marketing's claim was in parallel with Millward Brown Interactive's brand impact study results. Millward, in conjunction with RealNetworks, tested streaming media advertising from 800.com, an online consumer electronics retailer, in 1999 and concluded that recollection of the brand increased significantly after people were exposed to a streaming ad just once (RealNetworks, 1999c).
Even though streaming video is still a novelty, some content providers have already begun offering broadband services for users with high-speed Internet access. Pixelon.com registered more than five million hits in the first 36 hours after it launched full-screen, high-quality programming in November 1999 (Pixelon.com). ChannelSeek, Microsoft, and RealNetworks announced addition of their broadband Web guide sections in December 1999. MeTV.com is planning to make 750 full-length, TV-quality, feature films available by mid-2000 (MeTV.com, 1999). In the meantime, infrastructure, delivery service, and content providers are partnering to get ready for user demand for better media experiences. Examples include Telocity and NBC Internet, Go.com and Earthlink, and RealNetworks and Covad. It is going to be a trend for the next few years that a number of sites will make broadband content delivery available for high-speed users, while retaining low bit rates for dial-up users.
Early technical and market developments as well as initial user reactions already indicate that streaming video has a significant role to play in the advancement and evolution of the Internet. Streaming video appears to have broad utility in terms of enhancing user experience of Web-based products and services. Early signs are that streaming media could attract millions of viewers. The streaming media audiences in turn influence the content that webcasters produce. In addition, individual consumers have begun to produce their own content and to share it with other Internet users thanks to more affordable webcams. Further, the medium has great potential for corporations, including but not limited to advertising and corporate communications.
Deployment of broadband networks promises massive bandwidth at low cost. When the last-mile problem is mitigated with fast access technologies, the end-to-end infrastructure will be in place for explosive use of streamed content. Early experiments with Internet II have indicated impressive technological gains. What is not clear are the types of applications and users that will exploit these gains. Streaming media is an obvious candidate. The availability and low cost of broadband are essential for streamed content to be more widely used because streaming media is the major consumer of bandwidth.
The streaming video market is moving inexorably towards better quality, more efficient use of available bandwidth, and increased video content -- in both volume and category -- on the Internet. Webcasters and content delivery venders use catch phrases like "TV-quality video" and "CD-quality audio." There has been little direct head-to-head competition because each streaming media provider developed a niche market or had a different market positioning and because the market has been growing so rapidly to absorb all entrants. It is too early to tell if the existing proprietary technologies will be merged into a few sets of industry standards in the future. Mergers and partnering are expected in the coming years, and the streaming media industry may be transformed accordingly. We are at the beginning of a major development that may lead to surprising outcomes and therefore requires an ongoing study. The user must be viewed as integral partner with infrastructure and content providers in the streaming media market.