Despite streaming video's currently under-welming quality at dial-up speeds, the Video Web gathered considerable momentum during 1998. All quality puns aside, the future is coming into focus.

I predict that within the next five years, streaming video on the Internet will far outpace DVD (and the other alternatives) as video's dominant digital delivery platform Ž second only to VHS tapes overall.

Bottom line, networked video will deliver true video-on-demand which means the unsurpassed convenience of watching what you want when you want it. After all, why would anyone want to be limited to a disc when they can have a world of video content at their finger tips?

Now all we have to do is wait for the quality to get up to speed, and that's coming along faster than you think (read on).

As I've said before, with things changing this fast, it's hard to get a clear perspective. As I see it, the truth is that the Video Web may well be greatest entrepreurial opportunity available to video professionals during the first decade of the next millennium. Remember when QuickTime was just jerky little movies?

In order to try to put the Video Web's past year in perspective, I'd like to use this month's column to identify 1998's major Video Web milestones as well as its most dynamic trends.

Software Shake Out
If you look at Video Web 1997 vs. Video Web 1998, the biggest difference is the slimmer selection of software options in this year's "model." Remember VDOLive, Vivo, and Vxtreme? They're all gone.

Today, virtually all web sites that include streaming video are either offering content that plays using Real Networks' RealPlayer, the Microsoft Media Player or both. QuickTime is expected to announce an upgrade that will include a streaming server, perhaps by the time you read this. However, I believe that Apple's biggest hurtle in this market is that they require the installation of QuickTime 3.0 at the system level rather than at the browser level. It's one thing for a dial-up modem to download a plug-in that's a megabite or so, but it's a whole other challenge to get users to download 10 megabites or more. This has certainly slowed the online adoption of Apple's excellent technology. Hopefully, their new version will include a browser plug-in that does not require such a massive installation. But even if they do, as much as I like their technology, I have to consider them a dark horse as a late entry in the streaming market.

Microsoft, on the other hand, is using its immense power to gain momentum in the streaming market. Whereas streaming software vendors like to report the gross number of software downloads, actual stream selection is probably a better indication of market share. (Remember that users can also download and use both players concurrently.) One web site who offers both formats reported on the webcasting e-mail list that he notices a major trend. In May, 1998, his users selected the RealPlayer 86% of the time and selected the clips using the Microsoft Media Player only 14% of the time. By November, they report that usage had shifted to 58% RealPlayer and 42% Microsoft. This trend certainly sounds reminiscent of Netscape's market share erosion in the browser market.

The sad news (as I reported in more detail in my November Video Web column) is that Real and Microsoft are waging a full scale war over the streaming standard. These means that current versions of these formats are completely incompatible, and the whole market suffers as a result.

Bandwidth Begets Quality
1998 was the year that cable modems and DSL services began to be implemented, and researchers predict that consumers are ready to gobble them up.

According to Forrester Research of Cambridge, MA, 25% of America's online homes or 16 million U.S. households, will use broadband Internet connections by 2002 with 2 million of those subscriptions being sold by the end of 1999. 1998 was just the beginning. Forrester reported that cable data services, such as At Home Network and Time Warner's RoadRunner had 350,000 subscribers at mid-year.

In a separate report, researchers at Boston's Yankee Group reported that nearly two-third of households with a PC in the U.S. are so hungry for faster Net access that they're willing to pay for it. In a recent survey, Yankee found that 36% of online households are willing to pay $40 per month for high-speed data services, up from 27% in 1997. Of course, corporations are increasing their bandwidth at an even faster rate (although I've not yet found statistics on this.)

As a result, cable companies and phone companies are now moving as fast as they can to deliver these services to everyone who wants them, and since this competition does not introduce any incompatibilities at the user end, it will only make things better.

Another encouraging statistic from the Forrester study (which was sponsored by large advertisers including AT&T, Bank of America, Levi Strauss' Dockers, First USA, Toys R Us and Tylenol) was the consumer experience of the Video Web at cable modem bandwidths. In terms of quality, the report said that most cable modem users found high bandwidth video advertising to be "as good or better than TV."

Corporate Cash
At the recent Streaming Media conference in San Francisco, another trend became apparent to me. The companies who depend on the Video Web for their bottom line are finding that corporate work is where the money is. While six months ago, companies like InterVU or Activate (among others) where pursuing advertising and original content as business models, they have now shifted their strategic focus toward serving the corporate sector.

In today's world, this not only makes sense because of the available cash flow, but also because corporations generally have much better bandwidth connections which means that they can deliver better quality video. As consumers become wired with faster connections, advertiser driven online video will become more viable, but for now, you can't blame people for trying to make these new businesses profitable.

Also at the Streaming Media conference, Encoding.com founder, Martin Tobias made an interesting observation about "critical mass." He said that he thought that 56K was the data rate for streaming content that would push it over the hump into more common use. Tobias observed (and I agree) that the quality of streaming video when compressed for 56K modems or faster connections is "good enough" and that connections at this bandwidth or better are becoming much more common. Thus, 1999 may well be the year that we find more people watching more video on the Web.

Looking Forward
The trend toward higher bandwidth delivering higher quality video is clear. Just as certainly as jerky little QuickTime movies managed to evolve into broadcast quality non-linear editing systems, streaming video clips on the Web will someday morph into Hollywood movies on demand. In the meantime, the corporations with the bandwidth and the vision will capitalize on these opportunities, and video producers with the commitment to climb the learning curve that necessary to master this new medium will take a leadership role.

I look forward to exploring this new frontier with you, my readers; and I wish you a successful New Year with an unlimited horizon.

Stay tuned.

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