Summing up SME2009 - Conclusion

As you probably know, streaming media is currently definitely not a boring industry to work in. Quite the contrary - for better or worse - it is rich in conflicts with lots of chances and challenges. The image of the industry shown in Streaming Media Europe was one of a market where in many fields a few big companies have positioned themselves in strategic places and hog control. A big part of the rest is observing them, hoping for things to get generally less hideous and difficult to do. It is obvious that the technical and creative possibilities are way beyond what we see today.

The dimensional difference between the European and the US-markets are apparent. We believe that with the growth of streaming media, in Europe we will see a market growing that follows its own rules and that serves the culturally so diverse people of Europe better. Small and micro-sized companies will have a much higher impact in that European market.

On that note, it is a pity that we didn't make it to present some of our results from the Neo Arena project and its pilot companies at the conference. On behalf of our cooperation partners we would have been able to add something to the mix that was largely missing, the perspective of small and micro businesses in the streaming market.

Summing up SME2009 - Where's technology heading?

HTTP Delivery and Dynamic Rate Adoption

The buzz on the technology side clearly was HTTP as delivery method instead of classic streaming protocols. Recently Microsoft released their HTTP-based Smooth Streaming product. Apple declared HTTP Streaming is the only supported way of delivering streaming video to the iPhone. With Adobe announcing an HTTP streaming technology of their own, every big streaming technology player is betting on an HTTP streaming technology. HTTP delivery has the advantage of looking similar to normal HTML traffic, and thus passing firewalls and mobile networks. As opposed to traditional streaming, the player client itself handles the request of the right data chunks for the given time. This takes out a lot of logic from the streaming servers. Because of that HTTP delivery of video-on-demand clips can be handled by normal HTTP servers with little to no logic. If content has been prepared accordingly in beforehand.

Another technological trend is the actual arrival of bitrate adaptation on the broad market. All major players now offer that in their current delivery formats. For Microsoft and Apple it is part of their new HTTP delivery offering. Adobe has integrated that into their RTMP streaming protocol, but their upcoming HTTP delivery won't probably miss out on that one. A caveat is currently that in all those implementations you will need to manually provide the server with all the different bit-rates. The actual news here is that dynamic data-rate adaption actually works now. Real Networks has had the technology for ages, but it never really seemed to work so well in real-world services. Of course also the demand for such a technology, with streaming coming more and more to the mobile space, has promoted the appearance on the market heavily.

Format Convergence

The big hope is of course that those different HTTP delivery specifications would converge to a single omni-compatible standard. Software vendor Microsoft is not going that road, keeping their specs closed and limiting their Smooth Streaming to their own IIS and Windows Media / Silverlight technology. The HTTP delivery release seems to tune in with their current attention-seeking for their Silverlight technology. Apple in contrast openly filed their HTTP Streaming specification as an RFC draft to the IETF. Apple being a hardware vendor tries to shift revenues from the streaming solution market to their sky-rocketing device sales with that move by trying to short-cut the development from a device-user's perspective. I don't guess that Adobe is going to follow Apple's initiative. But it might be that Apple's approach will become a de-facto standard being supported in most other video playback clients. And then we have to see how Adobe and Microsoft are going to react.
In theory the format convergence would be possible as H.264/AAC has been pretty much established as the de-facto industry standard. And that in spite of the yet unclear future of MPEG-LA licensing terms, in addition to the double-licensing of both codec implementers and content distributors. Perhaps there is a chance that we are going to have a de-facto standard platform for web video streaming in an foreseeable time. That would be a major breakthrough for streaming media. But we should be ready for some nasty surprises as well.

So when we take an overview of convergence today between devices, desktops and appliances, we can see that a top-down convergence is still hard to find. Sure most targets now support some form of H.264, but things like delivery methods, ad-standards and DRM-requirements are still very fragmented. Apple offers convergence inside the walled garden of their device and service offering, but of course the bigger the convenience difference between their stuff and the rest of the world is, the more value it creates for them. Apple does not have a big interest in bringing the general convergence development forward, as is visible in their non-presence in initiatives like DECE. Their marketing power enables them to. I am not sure if there is a lot to expect from Microsoft in that respect either. Adobe has done some movement towards opening up with the Open Screens project, but the process is slow and we have to see where they are heading to. There is a lot of strategic manoeuvring happening between the main players, to the disadvantage of small content-producers and users. But it could be worse, a monopolist position of one of the big players would be deadly for the market and very disadvantageous for the end user.

Open Source in Video Streaming

An effective and proven solution to accelerate development and consolidation on the streaming market is to openly develop extensible specifications and publish implementations under widely recognized Open Source licenses. Adobe made an interesting case of that with the introduction of their MPL-licensed Open Source Media Framework (OSMF). The player component in Flex is basically replaced by the OSMF component offering of a modular plugin framework that allows all kinds of third-party extensions to hook into the playback life-cycle. That would be useful to mix-and-match different statistics-, authentication- or ad-integration modules connecting the player to different services. This is of course currently limited to the Flash platform, but perhaps this interesting development catches on to other systems.

Another interesting thing that struck me on the Open Source streaming front is the business model of the streaming platform developer Kaltura. They offer a video delivery software that allows others to build own video portals. The offering of three different editions of their platform is very interesting. There is a completely open community edition, a for-pay supported premium edition with proprietary modules, and a hosted version of that, which takes away most of the duties of running a video platform from the customer. This range of "totally independent" to "totally care-free" is a very interesting Open Source business model. The platform is developed in php and uses Flash as premier target client platform which probably targets the broadest range of the market on both sides of the wire. This can definitely facilitate smaller businesses to enter the streaming market with their own video site while the solution grows as they do. Kaltura advertises that it adds another option to the basic build-or-buy decision, an intriguing idea.

Summing up SME2009 - How's the streaming business?

Growth and Advertisement

Generally, it's growing - a convincing stance for the market in a time of recession. Putting things into perspective, while in 2009 the volume of spendings for online advertisement overtook traditional TV ads, advertisement in streaming media still has a very small share of that. On the other hand - based on the Internet Advertising Bureau's research - it is the fastest growing market segment in advertisement. To keep up that growth, it is necessary to further advance the standardisation of video advertisement. Those are currently still fairly high-level and best-practice rules like ad clip length and insertion rate. However, demand is high enough to have stimulated the emergence of more advanced tools for video advertisement consumption analysis. Standardization of streaming media advertisement would ultimately facilitate business in the market. It is inevitable that advertisement is going to be one of the major business models in streaming media. Perhaps the hoped-for consolidation will finally stimulate a broad range of rights-owners to start globally offering their content in an ad-financed fashion as well as enable business for small content producers.

Content Delivery Market Turbulences

The growth of the streaming media delivery to big audiences has brought the CDN market into a major focus. It is undertaking several changes currently. With classic Telco companies entering the market, as well as cloud hosting services eating up classic CDN ground. Also P2P media delivery has appeared on the horizon. CDNs react differently to those changes. Some of them, like CDN Limelight, seem to believe so strongly in their business models that they dismiss the new competitors as immature. CDNs are usually big American companies. Their market-focus and business models are tailored to US-scales. The cultural diversity in Europe however presents a quite different environment. Big CDNs seem to generally problems in understanding that. Replying to criticism that their billing models are unsuitable for small businesses, they said that they don't see themselves as directly interacting with small businesses. Those are supposed to be served by proxy of aggregators. That of course raises the real-world cost for content delivery, which is especially critical in Europe as the possible audiences are not as big. Are those CDN business models going to sustain in Europe, are young European CDNs with different approaches taking over the market? Time will tell. There definitely is loads of unused potential.

One interesting thing that we observed was connected to rumours of Google further entering the CDN market. At least they are expanding their streaming offering. The fact was mentioned in pretty much every session. Traditional companies however were very reluctant to give real commentary on how they judge this move to their business. Is it that nobody wants to harvest Google's disgrace? Questions were usually discarded by stating that the normal business rules of the market don't apply to Google.

Telcos pout

Internet Service Providers and Mobile Network Providers had a vocal presence at the conference. According to them we have a bandwidth capacity problem created by streaming media. Which I guess is a valid point in the omnipresence of flat-rates and unlimited data plans. There are technical approaches like IP Multicast to tackle this. But significantly it is the ISPs themselves that hold back internet-wide adoption of the technology. Due to the one-to-many nature of Multicast, it does not fit into ISPs' current billing models. Instead they continue to implement measures to limit all the "wild-growth video streaming". Many mobile network providers are blocking RTSP video streams in their networks. The software and devices industry recently reacted by betting on HTTP delivery methods that are difficult to distinguish from normal HTML web traffic. Just to make mobile video work reliably in all networks.

But isn't it good for the ISPs to see a high demand? The prices could rise and they could further grow their core business. It seems however they are about something else than their core business. Telco companies don't get tired to moan about them being out of the equation in the big revenue streams. They say extending their networks would not pay off for them. Instead they reroute the discussion towards introducing technologies like IMS that offer authenticated services inside their own networks. But how is this supposed to solve the investment in bandwidth problem on the internet? Especially when calling into mind that IMS requires enormous up-front investments from the ISPs into their own networks.

I think the answer is: It is not supposed to solve the problems of the internet. With IMS they rather want to pull the most valuable parts of the online service and streaming media business inside their own networks, where they would have full control over data and revenue streams. They would promise quality of service only for their own services. The worse the performance on the internet, the higher the value of the own IMS services is. This is an approach to try shifting over market revenues.

Having a choice between the ISP's internal and the public internet-based services would be a positive thing of course. But I see two dangers in the implementation of IMS. The fact that the ISPs also control generic internet traffic is somewhat concerning, traffic that generates much less revenue than their own service usage. All access control in one hand I potentially see the freedom of choice for the user rather endangered than complemented by those plans.
By creating such a market place on their own premises it is important that the network providers understand to make it a viable place for everyone. They can't take too big a chunk of the revenues just because they are in control. When the Telcos want to implement IMS they only do so because they expect good return on investment in a foreseeable time. The high investments that are required for building the IMS infrastructure they have to get back in however make me sceptic that this will leave much of a business for third-parties. Like in the Finnish SMS services market, there they took such high rates that they basically killed off the market. We can only hope that the Telcos would not repeat the mistakes they did in other places.

The Perspective of the Conference

There was a lot of restless back and forth on business models for streaming media - mostly seen from the big content-owner's perspective. It seems a lot of corporations are still waiting for the new "One size fits all"-business that defines the whole market just like the old broadcast business model did. The interesting question is if there is such a thing. One could argue that development and change only accelerates over time. The change away from linear TV and the stronger involvement of the recipient has created a reality that is progressively changing all the time. But it seams that accepting this fact is the biggest impediment for the current old bulls in the content business to actually see the new markets as a possibility instead of only as a thread.

Some other aspects were mostly missing from the broad discussions. It was generally admitted from all sides that the currently ruling licensing practice that is still very nationally-focused is a big impediment for the internet market. On the net it is harder to impose restrictions on the target group than to just face a global market. I don't know if it was taken for granted and impossible to change the position of the big content-owners on this. HoNobody really enjoyed speaking about that topic.

The quality of the sessions in the business track was mixed. Most things were more or less interesting but some seemed a bit irrelevant. There was plenty of discussion on how the CDN market is developing and how the big companies are moving. What was missing out was the perspective of small and medium-sized businesses (SMEs) and how they can manage to make business in this ever-changing market. Discussions happened mainly on panels. Depending on the moderator, the audience was often only integrated to a low degree. Regarding ideas and inspiration for fresh business models there was not much to fetch for SMEs. Perhaps however the centralized and corporation-oriented structure of the event is just not suited for exchange between SMEs. Perhaps a more open-spaces inspired conference approach would serve those better. An event where people come up with lightning talks about stuff they are doing and find important. However I think it would do Streaming Media Europe well not to forget a big creative group in the industry, small, medium and micro-businesses. And those need to be served with some interaction opportunities that go beyond the normal networking and exhibition offerings.