Streaming Media May Drive Future Net Growth

Streaming media, a method for transmitting multimedia files so that playback occurs upon arrival of the first data packets, will be a driver of Internet growth for years to come, according to a report by U.S. Bancorp Piper Jaffray.

In an industry report on the future of streaming media, Gene Munster, senior technology research analyst for U.S. Bancorp Piper Jaffray, said that streaming media will be the next “macro-growth driver” on the Internet.

“We expect significant growth drivers in the streaming media sector, including the availability of broadband, simplified ease of use, the availability of content, and the convergence of the TV and the PC,” Munster said. “We believe the Internet of tomorrow (two to five years from now) will resemble the television of today in terms of audio and video quality, while enabling users to control the media viewing experience.”

According to the report, the shift in distribution of content from a static, analog channel to a more dynamic and robust digital channel has led to the creation of many new digital distribution channels, including digital television, cable, satellite, and the Internet. It took just four years for the Internet to reach 10 million households, while it took the telephone 38 years.

The report also projects that Internet penetration into households will grow at an annual rate of 20 to 25 percent for the next several years. In 1999, total Web streaming media spending was $9.7 million and in 2004, the report predicts it will be $21.6 million.

There are six main growth drivers for streaming media mentioned in the report:

  1. Demand for Interactivity
    Streaming media technologies will enable the delivery of enhanced and interactive content that new media users demand.
  2. More Effective Advertising
    Streaming media enables an advertiser to place targeted ads within a media experience that is one click away from commerce. The report says that consumers may be more likely to conduct transactions due to the improved convenience and timing offered.
  3. B-to-B Broadcasting
    B-to-B broadcasting includes events such as earnings calls, annual meetings, sales and training seminars, product launches, trade shows, industry seminars, telemedicine, and distance learning.
  4. Improved Content Distribution
    Streaming media would enable content owners to electronically distribute this digital content at a much lower cost compared with traditional distribution methods.
  5. Availability of Content
    Using streaming media, content owners can repurpose content into a form that could be streamed in order to generate incremental revenue from that content.
  6. Innovative Applications
    The report found that streaming media will lead to innovative and exciting applications, which will improve the way people interact with commerce, content, and advertising.

Streaming media technology is still suffering from growing pains, and the quality still trails that offered by TV and stereo. Internet performance measurement firm Keynote has begun the Keynote Streaming Index, a statistically quantifiable benchmark that creates a standard for streaming media quality and vendor performance.

In the first two weeks of results for the Keynote Streaming Index, MTV and C-SPAN shared the lead in the Cable TV category, with barnesandnoble.com, CNBC, and WUSL-FM Philadelphia leading in their respective categories. The overall average score for stream quality on the Index for the week of October 8-14, 2000 is 1.87 on a scale of zero to ten, and 1.19 for the week of October 15-22; availability averaged 78.9 percent for online users accessing the content the first week, and 78.2 percent the second week.

“With the current state of Internet technology, the highest achievable score on the Streaming Index at this point in time is about a 6.0. This is for ideal delivery of a 300kbps video stream with a frame rate of 20fps,” said Matt Parks, product manager for Keynote’s Streaming Perspective service. “A ’10’ on the Index is near-DVD quality. Although that is extremely uncommon on the Web right now, that is the standard that the public sees on TV and by which video is judged. We expect the ratings on the Streaming Index to improve, just as they have on Keynote’s other industry indexes, with improvements in technology and Web operations.”

Keynote Streaming Index
October 8-14 and 15-22, 2000
Stream Quality Rendering Score Availability
Week of: 10/8 10/15 10/8 10/15 10/8 10/15
Overall Index Average: 1.87 1.19 86.0% 54.9% 78.9% 78.2%
Best Sites
Audio E-Commerce
barnesandnoble.com
1.89 1.33 99.0% 69.3% 65.3% 69.1%
Broadcast Radio
WUSL-FM 99 Philadelphia
2.09 1.45 99.0% 69.2% 88.7% 79.6%
Financial Audio
CNBC
1.86 1.30 97.0% 68.3% 85.3% 96.3%
Cable Television
MTV
3.46 79.0% 83.1%
C-SPAN 2.21 62.5% 83.0%
Source: Keynote

Results are based on measurements taken by Keynote’s Streaming Perspective service once an hour, 5:00 a.m. to 9:00 p.m. Pacific Time from 10 major cities in the US. Stream Quality is based on the rankings of the Keynote Scale for Streaming, on a scale from zero to ten, with ‘10.0’ representing DVD quality.

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