Streaming media: not just for online porn

COMMENTARY--Streaming media is undergoing a much-needed change of image. Best known for consumer applications--Internet-based music delivery such as Napster and adult video--it will soon find its place as an important business tool, as companies seek more effective ways to use the Internet to cut costs.

Streaming media has moved beyond a corporate fad, to a point where companies can see the real benefits. It will help them to disseminate information, run virtual meetings and train employees.

Technology companies already make heavy use of streaming for training that is delivered to the desktop on demand. Companies are also increasingly turning to video conferencing as the result of concerns for safety plus pressures to reduce travel costs and the loss of productive time.

However, for businesses outside the technology sector, streaming has an image problem to overcome. For most people, it means tiny sound and postage stamp-sized video images on corner-cutting consumer sites.

Those applications are not representative of the power of streaming but they have set a low level of market expectation. Advances in compression technology are continually reducing the bandwidth needed to deliver audio and video at any defined quality. But suppliers of media players will still need to come up with business-quality interfaces.

As costs fall, quality improves and broadband IP services become widespread, streaming media will evolve into a general-purpose business tool. For the first few years it will be mainly limited to trading partners, but by 2006, Ovum believes that streaming will be in everyday use, complementing e-mail and the phone as an interpersonal communication tool. Companies will adopt streaming on a large scale for promotions, as teasers in banners on web pages, or in e-mail attachments for direct marketing.

Survivors struggling to come back
Times are still tough for streaming media companies. Even Akamai, one of the largest providers of streaming services complained the worsening of this market in its recently posted 3Q statement. The survivors were on their way up again before the majority of IT companies entered the worst of the downturn. Kerbango, Eyada, Broadcast America, Pseudo and DEN are just some of the names that disappeared from the market in the first half of 2001.

Before there was any economic case for streaming, the amount of cash burned in this market was incredible. Some 10 months ago, a massive wave of bankruptcies began but now it's easing.

We will see streaming media employed to cut costs and reach customers and partners, rather than as a way of distributing entertainment. The revenue for consumer services wasn't there before, and it isn't now. But the development of the market is still going on and the technology still maturing.

Of course, some things won't change. Adult entertainment will remain the most lucrative application for streaming, growing globally from $0.7 billion now to $5.8 billion dollars in 2007.

Dario Bettiis an analyst at Ovum, a consulting and market research firm.