Can streaming media unlock new sales?

Immature technology has limited the widespread adoption of streaming applications to larger enterprises, but analysts and some early adopters forecast a boom during the next few years.

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Can streaming media unlock new sales?

Immature technology has limited the widespread adoption of streaming applications to larger enterprises, but analysts and some early adopters forecast a boom during the next few years.

by Garry Kranz

For Steve Waterhouse, the decision to add streaming media applications to his company's Web operations has paid off handsomely.

"During the past six months, we've seen a 300 percent increase in Web traffic as a result. Streaming media definitely has been a revenue generator for us, because the applications enable us to add 50 percent more content to our training programs through follow-up services. We're also adding streaming media training courses on a subscription basis, and project that could increase our revenue 20 percent to 30 percent," said Waterhouse, founder of sales-training company The Waterhouse Group in Scarborough, Maine.

Early adopters of streaming media are found in the financial services, training and health care industries, according to Christine Perey, president of Perey Research and Consulting in Placerville, Calif. "In these industries, the actual content of the file is the asset being sold. Companies in which knowledge transfer is a core competency are better able to make money from streaming media technologies," said Perey.

Streaming media is common among large, widely dispersed enterprises, according to Lou Latham, an analyst with Stamford, Conn.-based Gartner. But a growth boom is on the horizon.

"By 2004, we expect that one-third to one-half of all companies will be using streaming media applications for training, virtual announcements and for business-to-business portals for help desks, customer service and marketing," Latham said.

Assess potential advantages

Although few companies are making money from streaming media, many are realizing cost savings and other benefits, said Philip Graham, vice president of the Internet Streaming Media Alliance, a nonprofit industry consortium.

"If your CEO needs to be in two places at once, he could do so by streaming a live broadcast to both sites. Aside from savings on travel costs, this actually helps the company seem smaller to employees, not larger," said Graham.

Enterprises can boost employee productivity by streaming training programs, including video on demand, to all who need it simultaneously. "Instead of spending days in a classroom, streaming video and audio training enable new employees to get training on site and be productive the very first day on the job," Graham said.

Streaming media commonly is used for interactive customer service demonstration videos. "These can help cut down on expensive customer service calls to your call center, which adds to your bottom line," he said.

Selling your content on a recurring basis is a promising feature of maturing streaming technology, said Dale Sorenson, president of streaming media consulting firm Sorenson USA in New York City. "Most videos are promotional in nature, and companies want to give them away as often as possible. But streaming video will make a new range of applications available in which the video becomes the product that you sell," said Sorenson.

Consider the limitations

Those potential gains are held hostage by technological limitations. Latham said excessive latency -- the lack of synchronization between audio and video components of a data stream -- remains a problem, leading to unsatisfying viewer experiences. To remedy this, companies have to pay to multicast the event or use a content delivery network.

Another obstacle is the existence of competing media devices of the industry's three heavyweights: Microsoft Corp. (Windows Media Player), Real Networks (Real Player) and Apple (Quick Time). Graham said IMSA wants to develop open standards, similar to the Linux operating system, to enable different devices to work across multiple platforms.

Perey cited security issues, including potential "firewall holes" that could compromise sensitive company information. "This is one of the prime factors for a financial services company to outsource streaming media to a content delivery network. They don't want any information leaving their network for an IP address they don't recognize," Perey said.

Quantify costs

Adding streaming media to your Web operations requires technical expertise but generally can be done at minimal cost, users and industry observers say.

"The scary thing is how low cost it is," said Waterhouse, who estimates his company invested around $1,000 for software licenses, hardware and production equipment to establish streaming media as a recurring service offering.

Equipment purchases and contracting with creative talent are the main costs, according to Latham. "Aside from content creation, you'll have to invest in infrastructure upgrades and buy dedicated servers. You don't want to use your Web server to stream, since this is a very data-intensive activity," said Latham.

Sorenson said enterprises should implement cautiously, gauging the marketplace to see how technology is evolving. Proprietary authentication systems that are imposed on existing enterprise architecture often are "deeply flawed" and some don't prevent data from being decrypted once a file is opened, he said.

Nonetheless, enterprises ought to ponder streaming media strategies in anticipation of massive deployment during the next few years. According to Perey, businesses spent $600 million to $700 million through 1999 for products that enable streaming media applications. By 2003, she predicts that figure will grow to around $4 billion. "A great many companies are running pilot projects to try and improve streaming media technology," Perey said, "because they sense a heartfelt and proven need for it within business units."

About the author: Garry Kranz is a freelance business and technology writer based in Richmond, Va. Contact him at gkranz@ureach.com

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