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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