Crossing That Bridge: TV and Radio Move to the Web

Conventional broadcasters -- television and radio affiliates, television and radio syndicators, cable networks, and major radio and television networks -- will argue that they are sitting in the catbird seat when it comes to the emerging broadband streaming media phenomenon. Television broadcasters already own what they believe is the premier medium for building an integrated broadcast and Internet strategy. Radio stations say their local flavor gives them a leg up on the Internet-only competition in their respective markets. And all broadcasters point to the power of on-air promotion as a significant competitive advantage.

But the growing wave of Internet-only streamers also have advantages to tout, and though their rivals often neglect to admit it, they pose a real threat to conventional broadcasters. Streaming content providers typically possess advanced Internet expertise and savvy, and they recognize that Web-based streaming is a unique and incredibly powerful new medium. And rather than starting with the somewhat constraining "scheduled content programming" framework, combined with a strategy of repurposing broadcast content, native streamers most often design from the ground up to leverage the distinct characteristics of this emerging medium.

Conventional broadcasters are waking up, however, and many are beginning to take the Internet opportunity -- along with their Internet streaming competition -- very seriously. The future will surely be interesting. And regardless of how conventional broadcasters and native Web streamers fare, there is no doubt that streaming technology, infrastructure, and service providers will make out like bandits as Internet streaming gains its foothold as a mainstream global mediumfor rich, interactive content.

To help set the stage for the battles that will play out over the next several years, we offer a quick summary analysis of the current conventional broadcaster perspective on streaming media, and how those broadcasters are using streaming technology. We'll also highlight the role of some successful, up-and-coming streaming technology, infrastructure, and service providers.

Radio

Let's start with a look at radio, since radio is clearly ahead of television when it comes to streaming sources and total hours of streaming content. Remember, reasonable quality audio is already supported by the current Internet streaming infrastructure. Terrestrial radio must deal with streaming effectively in the near term, or risk the erosion of its position as a dominant audio medium. The revolution that MP3 has wrought does not just affect record labels -- radio stations also must face the wild world of readily available digital audio content.

Currently, more than 1,500 terrestrial radio stations are streaming their signals, with more stations being added continuously. Most of these stations stream close to 24 hours a day, seven days a week (many stations stream somewhat less than 24/7, because some syndicated programs won't allow Internet rebroadcast).

The typical radio station gets into streaming primarily to extend its listening audience by serving its core drive-time listeners throughout the day -- in the workplace where the Internet-connected desktop PC doubles as a wonderful Internet radio sound system. For many stations, streaming produces minimal revenue initially. But the move to streaming presents a cutting-edge image to listeners, and it is a good first step toward an integrated broadcast/Webcast strategy that will surely emerge to increase listening audience size and revenue.

Those stations that have a more evolved streaming strategy find that streaming creates a Web presence that can be tied to on-air promotions, generating increased ad revenue on the Web site. For some of the most successful radio streamers, streaming actually creates a new audience. Also, ad replacement technology is used to create a significant new revenue stream, as ads are sold for insertion into the Webcast in lieu of local ad spots.

Television

Television broadcasters haven't moved to streaming with the urgency of radio broadcasters. Many look askance at streaming, which offers quality that pales in comparison to conventional television, while they anticipate a future with widespread adoption of high-definition broadcasts. They hold tight to the notion that television broadcasting will remain a dominant medium for the foreseeable future. Still, television broadcasters are increasingly presented with information and analyses indicating that eyeballs are moving fromtelevision to the Web, and increasingly, they are taking notice.

Local television affiliates aren't as well positioned as local radio stations to leverage streaming media. Video is, of course, much more challenging to stream, given bandwidth, quality, and scalability issues. Television affiliates are also constrained because the rights owners of much of their programming won't allow Internet rebroadcast. Thus, locally produced content is all that most television affiliates can stream -- and most of the hundreds of affiliates that arecurrently streaming are simply Webcasting evening news, with a rolling on-demand archive for access to recent newscasts. This is hardly a wow strategy, but it is one that leverages the tie to local content and the on-demand (damn, I missed the news tonight!) strength of streaming media.

Moving up to the major networks, cable networks, superstations, and television syndicators, things begin to get a little more interesting. These are larger media players who recognize that they have considerable brands, media assets and opportunities. They are now struggling to determine how best to leverage their strengths in a synergistic fashion -- maximizing the impact of Internet streamingwhile boosting the bang of broadcast.

News and information providers are leading the way. ABC News, CNN, C-span, the Discovery Channel, and many others recognize that consumers often access the Web to obtain information and insight, and news services typically provide streaming access to news accounts on demand. News and information feature stories are often promoted on the Web with streaming clips, and some broadcasters will put up additional streaming video content to complement the broadcast.

News and information providers are also coming to grips with fact that Internet technology enables a personalized experience, a model of access not supported by broadcast media. The big news and information providers also recognize the value of their content as a searchable resource. Thus, video search has emerged as a cutting-edge strategy for repurposing content in a personalized interactive environment.

Like the news and information providers, network sports outlets are also experimenting with a variety of streaming media mechanisms to find the right mix of on-air broadcast, Web interaction and streaming. Once again, personalization is important -- and we find personalized highlight reels implemented by sports networks like Fox Sports and ESPN.

Most entertainment broadcasters don't yet see the economics that can underwrite the rather expensive production of entertainment media exclusively for the Web. Entertainment broadcasters are now working to drive traffic to the Web with polls and chats and other non-streaming, but very sticky, Web interactions. Low-cost repurposing and the creation of inexpensive programming -- such as "behind the scenes" promotions, and interviews with the stars -- comprise the main activities of most broadcast entertainment streaming initiatives.

Eventually the quality of streaming video will improve to the point that consumers will routinely watch streaming video for more than a few minutes at a time, and sticky Web interactions will build significant traffic. Then, original Web programming will surely follow.

Streaming Technology and Service Providers

It is just too early to identify what models of interactive streaming content will succeed and take hold, and to determine whether conventional broadcasters can use their significant resources and content properties to overcome the competitive challenge of Internet-only streamers. But one thing is clear right out of the gate: The companies that provide streaming technology, infrastructure, and services will clearly do well over the coming years.

We are still in the early stages of a major rollout of streaming content, and the list of streaming technology and service providers is changing almost daily. We highlight a few of the current players here to give you a sense of the current technologies and services that are shaping the evolution of conventional broadcasters' use of streaming media.

Real Networks and Microsoft will continue to do well as mainstream providers of streaming technology. While there are other streaming technologies out there, our research clearly revealed the predominance of Real and Windows Media among conventional broadcasters. Quicktime, Emblaze and others will hopefully get a shot, but the "big two" currently have a grip on the streaming technology used by most conventional broadcasters.

Another set of winners will be those companies that offer outsourced technical support and infrastructure. These include turnkey streaming providers such as Real Broadcast Networks and Yahoo! Broadcast, which provide the bulk of streaming services for local radio and television affiliates; high-volume encoding and media-management providers such as Loudeye; and hosting providers/content distributors such as Digital Island and Akamai.

A third group of winning technology companies is comprised of outfits that offer convergence solutions and services -- for instance, for aggregating searchable content, or creating innovative Web sites that integrate streaming with interactive services and advertising. Virage, FasTV, Blue Zone, Zatso, and Internet Broadcasting Systems are examples of companies in this category with very bright prospects.

The Future?

Broadcasters have had the power to create markets for decades. They've had a lock on our eyeballs and our eardrums over the course of my lifetime. Now, that is finally beginning to change. Can broadcasters transform themselves to create and retain significant markets in the new Web-streaming environment? Surely some will do just that. But others may not fare so well.

Radio has evolved over the past several decades in the context of geographical isolation, based on the physics of broadcast technology, which effectively limits competition to a local market. Television has also enjoyed a restricted set of competitors -- with the whole competitive landscape limited to local affiliates, the big three networks, and cable networks. Now Internet-based narrowcasting and niche marketing are rising up to challenge conventional broadcasting and mass marketing for consumer interest and attention. The resulting audience fragmentation offers a huge challenge for conventional broadcasters. Throw in the fact that Web streaming is a fundamentally different medium, and you can see that conventional broadcasters clearly have their work cut out for them.

I'm betting many will be up to the task.