First there were the OS wars, then the web browser wars and now the battle for the video streaming standard. There is, however, one difference. As Gary Share, Microsoft's Lead Product Manager for Windows Media Technologies admitted, the battle over the streaming video standard is "very similar to the browser wars (but) with a level of complexity that the public will never understand."

But, then again, Videography readers are not the public. We're video professionals, so we understand the complications created by competing file formats, and any of us who produce digital video clips (whether for the Video Web, for CD-ROM or for DVD) know that codecs (compression-decompression software) can make or break both our workflow and our viability.

So, even though most of us are "just video folks" -- not financiers, software execs or media moguls -- all of this Microsoft "action" (from the Justice Department, and other cases, through the battle for standards on the Video Web) is likely to effect us all.

MICROSOFT MASS
While the the Video Web market and the Internet in general watch the future horizon for the market milestone known as "critical mass," there's no question that Microsoft's sheer software market dominance represents a significant "mass" of its own kind.

A former Vxtreme marketing executive (who is now a Microsoft employee) told me once, referring to her company's expanding relationship with Microsoft, "If you're going to dance with the elephant, you better watch your feet." Now, of course, Microsoft owns Vxtreme as well as 10% of its main video web competitor, Real Networks. But the potential "marriage" (or at least agreement on standards and compatibility) between Microsoft and Real Networks that was implied by Microsoft's investment has already turned into an ugly divorce.

This animosity became most visible when Real Networks CEO Rob Glaser took to Capitol Hill with claims that Windows intentionally "breaks" the RealPlayer. He testified, "Instead of either licensing our new products or peacefully coexisting with us, Microsoft has instead in effect tried to stop our products from being used."

Needless to say, these very public remarks got an immediate response from Redmond; and since then, the issues he raised about his video player's incompatibility with Windows seem to have been resolved.

The sad result, however, is that battle lines have been drawn; and the two players no longer support each other's current content. The new Windows Media Player (which replaces the NetShow player and which supports many other codecs) will not play any RealMedia content after version 3 (RealPlayer version 5 is current and version G2 is in public beta release). And, of course, Real Networks is not about to support Microsoft's Advanced Streaming Format (ASF).

As has been said many times before, "In a war, everyone loses."

THE MICROSOFT VIDEO VISION
While serious Video Web enthusiasts are now downloading both players, everyone agrees that the future of the Video Web is in making things simpler. And many challenges still exist. For example, I've been surprised recently at how difficult it can be for people who are relatively new to the Web to download and install one of these plug-in video players. (I discovered this while producing a streaming video "Guided Tour" for the new Hooked on Phonics web site. Please check it out. I'd appreciate your feedback.)

The good news for Microsoft users and the bad news for anyone worried that Microsoft is becoming too much of a monopoly is that Microsoft is uniquely positioned to address this problem. Not surprisingly Microsoft's solution directly parallels its strategy of making its web browser part of its operating system. Microsoft's Gary Schare said that this strategy is also a way to enable ubiquitous video on the web:

"We want video to be built into Windows so people don't have to download and install a plug-in. . . We're trying to get out of the world where people have to go to random web sites and download a player."

I'm sure that most video professionals would agree with Gary when he said, "Video playback is not just a 'nice to have.' It's a necessity." But then only someone from Microsoft could add, "Therefore, we're building it into Windows." As a result, as you might guess, the Windows Media Player will now be bundled with all future releases of Windows 98 (even though it missed the initial release).

So, as you can see, Microsoft is doing the exact same thing with Internet video as they are already doing with their web browser. Both their browser, Internet Explorer, and their Media Player are being built into the Windows operating system. Conveniently, no downloads will be necessary for their customers. This is good news for those who use their software, but it's too bad that Microsoft is the only one who can guarantee this kind of bundling.

And what's even more damaging to Real Networks is that Microsoft is taking the same approach with its server software by including NetShow (a name which Schare said would soon disappear) at no additional cost (i.e. free) as part of its Windows NT Internet server. Once you get above 60 streams (roughly a T-1 connection), Real Networks servers cost thousands or tens of thousands of dollars.

IS CONTENT REALLY KING?
Real Networks is the current streaming leader; and in addition to their software innovations, they seem to think that the proliferation of their player will keep them on top no matter what Microsoft does. Real Networks product manager, Paul Thelan claims that Microsoft has only about 1% of the current streaming content despite the fact that they've been "experimenting" with streaming standards for some time. Thelan also says that 19 out of 20 new web sites with streaming content choose the Real Networks format.

It's certainly true that they are on top, at least for the moment. Real touts about 800,000 downloads a week and 31 million registered users (up from 14.4 million at the beginning of the year) which makes the RealPlayer the #3 most downloaded software on the Internet, right behind the two major web browsers. (Is this "critical mass" for the Video Web?)

Thelan thinks this momentum will keep Microsoft's video streaming efforts in the background and he also downplays the server cost issue by pointing to the overall expenses involved with high-level streaming. He estimates that for video streamers who need big bandwidth connections, "After production, capture and compression, their server software only represents about 10% of the total cost." Even if this is accurate, every producer that I know would jump to do whatever they could to cut their costs by 10%.

A MOVING TARGET
I've written repeatedly in this column about how fast the Internet in general, and the Video Web in particular, are changing and continue to change. One clear example of this phenomenon is the rapid changes in marketshare among online software products.

I remember a prophetic conversation with a Netscape representative just a few years ago. We were marveling at how rapidly Netscape had become the standard web browser, and this particular Netscape rep. had the wisdom to say that he recognized that they were vulnerable because as rapidly as they had seized the "mountain top" someone else could take it away.

On the Video Web, this is dramatically illustrated by VDOLive, the former video streaming standard who, in streaming's early days, claimed that 80% of streaming video content on the web was in their format. This was as recently as Oct. '96, the time when Microsoft made an investment in that company. At that time, VDOLive said that they had 20 million plug-in players distributed all over the Net; but this was before Real Networks (then known as Progressive Networks) had any streaming video player. Real did, however, have the dominant streaming audio standard, RealAudio. Then, in March, 1997, Real Video was launched. In less than a year, VDO's streaming market share was in single digits, and now they are virtually gone.

The point here is that Real Networks seems confident of its future because it now claims that 80% of the streaming video content on the web is in its format. They are so confident that they are now willing to wage a costly David and Goliath holy war with the Redmond behemoth.

Monopoly or no monopoly, this sounds like a dangerous strategy to me.

TWO KINDS OF CUSTOMERS
Personally, I still recommend Real Video to my clients. I recommend Real because they have the Net's largest installed base of plug-in video players. However, my sites don't use large quantities of video clips that necessitate a large investment in capture and compression. Nor do I need to operate my own video servers, nor am I willing to pay the $695 for a basic 60-stream server license. I use service companies.

However, as I explained in my May, 1998, Video Web column, there are two broad general approaches used by video professionals who are offering video on the web. As I do, many use services to capture, compress and especially to host their video clips; while others need to process their content in-house and maintain their own streaming video servers. (Keep in mind that Real Networks' most important revenue stream is from server sales.)

LEARNING FROM EXPERIENCE
When you have large quantities of video to capture, compress and host, the investment in time as well as in software can be very substantial. Randy Haldeman knows this from experience.

Randy was VP & GM at TEN-TV, the Technology Education Network (http://www.tentv.com), a satellite delivered video training network that is now moving tens and soon hundreds of hours of video programming onto the web. They do this service for an all-star list of high tech companies including Microsoft.

Randy told me, "From the unique perspective of my VDO days, I recognize the investment in the thousands of hours of content that was encoded in the VDO format that now must be thrown away."

Today, Randy is making his decision, not as a video software executive, but rather, he is trying to make "the best decision for my company and for my customers." He said he's not only willing to pay for server software, but that he's already spent thousands of dollars for a Real Video Server. However, when Microsoft recently came out with a new version of their streaming video software that, in Randy's educated opinion, is "equal to or within 10% of Real Networks' quality," his recommendation changed.

Now, despite the fact that he prefers the UNIX or Linux operating systems (which are supported by Real Networks), he's willing to work with what he considers a "less mature operating system" (NT) to save money and to ensure the future of his compressed content.

I found his conclusion chilling because as much as anyone, Randy is a seasoned video streaming professional. Randy said, "I feel it would be unwise of me to bet on Real given what I've lived through. . . I'm picking the one that I think is gonna win."

Randy also went on say, "I think that they are making the exact same mistakes that I made. They think that more deals for content will solve the problem. Eventually, the huge difference in server price/performance is going to catch up with them."

WHAT TO DO?
The bottom line is that the value of competition conflicts with the convenience of a video streaming standard. In the best of all possible worlds, Real Networks and Microsoft would find a way to collaborate on that standard; however, I fear that that opportunity has been lost.

For now, if you only need services for a relatively small selection of video clips, you can safely put video online in RealVideo or other formats; however, if your company needs to run its own video server and to compress large quantities of clips, I'm not so sure.

If I were the federal government (and I weren't spending my time watching video tapes of Presidential Grand Jury testimony), I'd follow the AT&T anti-trust model and break up Microsoft into three companies -- an operating system company, an applications company and a content company. But who knows what those folk will finally do.

In the meantime, as Dylan said, "Time will tell just who has fell, and who's been left behind;" and, I think we all better stay tuned.

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