New technologies promise streaming rebirth

Streaming media technology has long been dominated by RealNetworks and Microsoft, which have waged a high-profile battle for control of the formats for broadcasting and playing back video and audio events such as rock concerts and sports programming over the Web. Now, several start-ups are stepping in with add-on products and services that promise to dramatically improve transmission efficiency and drive down costs.

Analysts warn that pledged technical improvements alone may not be enough to clear the way for profits in the streaming media business, which has been hampered by inadequate content as well as complaints about the quality and efficiency of online broadcasts. But most agree the industry's difficulties open a wide door to newcomers vowing to solve some of its more intractable problems.

"You do need to have a whole set of technologies in place" to make streaming really work, said Michael Hoch, a senior analyst at Aberdeen Group.

Like many other businesses on the Net, streaming media companies are facing funding and identity crises. Mass audiences have failed to emerge for all but a few one-time-only programs, such as sports playoffs or rock concerts. Analysts say a key problem has been the simple lack of compelling programming of the type found on television. But emerging technologies could help make the business cheap enough and spur the production of better content, they add.

One of the most prominent of these new approaches comes from a San Francisco company called Digital Fountain, which announced support Monday from Cisco Systems and Sony for a technology that promises to make Web "streaming" far more efficient. This and other newcomers could help revive the business, analysts say. But more is needed.

"They're addressing part of the problem relating to streaming media," said David Willis, an analyst with Meta Group. "It is very significant...But I still have to question how anybody is going to make money on streaming media."

Too many people, too few attractions
The classic example of Net streaming problems was provided by Victoria's Secret's first fashion show, which proved inaccessible to many surfers because of high demand. More recent examples include Madonna's online concert and the college basketball "Final Four" playoffs, which also found many people unable to connect.

Hampering these events has been the difficulty of figuring out just how much infrastructure is needed to support the number of expected viewers. More viewers mean more physical pieces of computer equipment, or streaming media "servers," dedicated to the task. If these servers are overtaxed, the streams are unavailable or of poor quality.

Digital Fountain's technology addresses this problem. The company has discovered a new way of encoding video and audio files that allows each piece of equipment to serve far more people and makes the individual streams far more stable.

Ordinary Web streaming chops a file into tiny pieces, or packets, that it then sends one by one to a computer on the other end of the Internet connection. To display a video, an individual computer has to receive these packets in the right order and put them back together as though it were filling in a jigsaw puzzle. If one or several goes missing, a common occurrence on the Net, then the computer has to ask the server to retransmit it, a big cause of the jerky images familiar to anyone who has used video online.

Digital Fountain's technology instead uses something called "meta-content." The files are still broken into packets, but each packet contains identical instructions for reconstituting the entire file, rather than just puzzle pieces. The receiving computer needs only a minimum number of these packets, in any order, to show the file.

"It's as if instead of using a 52-card deck to deal a hand of poker, you were dealing with a deck full of wild cards," said Cheryl Haines, vice president of marketing for Digital Fountain. "All the cards are the same."

This means that if some packets are lost along the way, it no longer matters. As a result, streams will be considerably smoother for the watcher and will require far less resources on the part of the servers to resend lost bits of data. In an ordinary Net situation where each viewer taps into a single stream, this will be about 30 times more efficient than today's technology, the company says. And the number of viewers could be almost unlimited in some newer networks that use "multicasting" technology," which lets many people use the same steam, much like TV broadcasting.

Digital Fountain will have considerable hurdles to adoption by mainstream companies, however. Its servers require a steep initial investment--about $40,000--for the first product, which will theoretically do the job of about 30 ordinary servers.

Moreover, the company's technology requires individual viewers to download new software that pieces together the new kind of data, even though it supports ordinary streaming formats such as RealNetworks' and Microsoft's Windows Media. Analysts say consumers have been loath to take this step, and companies seeking a wide audience have been reticent to adopt technologies that can be used only if each customer jumps though certain hoops.

Still, Digital Fountain has already drawn some interested partners. Cisco has said it will use the technology to distribute content inside its network, but not all the way to the individual computer user. Sony, which has also toyed with other Net-speeding technologies, has expressed interest in using the company's products for some of its consumer services. Each has also invested in the company.

"It's an important and very innovative approach," said Aberdeen's Hoch.

No easy solutions
Digital Fountain is just one of the most ambitious of a new set of companies and techniques emerging to deal with streaming media's woes. A host of other start-ups are offering new compression techniques--which push video into small packages so it can be transmitted over slow connections--and other ways of making streaming media faster and cheaper to produce.

Other newcomers range from Divx Networks, which hopes to take a popular underground video-compression technique and turn it into a mainstream product, to Generic Media, which hosts streaming services and promises to eliminate inefficiencies that slow connections.

Many in the industry are looking at two other established companies--Microsoft and Akamai--to take up much of the rest of the slack. Microsoft's new compression technologies are already built into the newest version of Windows Media Player and provide high-quality pictures that can be sent relatively quickly, analysts say.

On the other side, Akamai is the strongest of the "content delivery network" companies, which have established servers sprinkled throughout the world that host content as physically close to computer users as possible, making downloads faster.

Of course, the Net landscape is littered with companies offering streaming media breakthroughs. The most visible of these was Pixelon, a company promising to revolutionize online entertainment that spent much of its early venture funds on a launch party featuring rock band KISS, among others. The company faded from view after funding dried up, and its chief executive turned out to have had a criminal record.

Another company, Burst.com, recently broke onto the scene with technology offering speedier, more efficient streaming transmissions. It won the support of phone and DSL (digital subscriber line) giant SBC Communications, but has now dropped to only a few employees, with stock worth pennies a share.

But the real barrier may be content itself. Vast amounts of streaming media are available on the Web, but nobody has shown a consistent ability to make money with strong broadcast TV-like programming. This becomes a chicken-and-egg problem: Viewers don't appear until there is good content, which can't be produced unless there are enough viewers to make money, analysts say.

"The other piece is having content that people care about," Meta's Willis said. "There's not going to be demand without content."