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Streams of Thought: Back to Basics

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2009 is, in many ways, becoming the year in which we get back to the basics. From companies that are shedding experimental growth plans in order to return to fiscal fundamentals to companies that are retrenching into their core competencies and competitive positioning, this seems to be shaping up as a year where mastering the basics is what counts.

In my consulting and writing in the early part of 2009, I’ve noticed three trends: competitive strategies are shifting, innovation is continuing, and a tipping point of new users appears to have been reached. In all of this, streaming media is set for solid growth and even more solid acceptance by the masses.

The first trend, which should come as no surprise in financially uncertain times, is that the service-based companies in our space are either entering a holding pattern or moving aggressively to obtain market share.

For instance, content delivery network (CDN) service providers, especially those with a solid customer base or deep pockets, will probably view 2009 as a shakeout. There will be the tendency by many of the newer entrants into the space to slash prices to stay afloat early in the year. While that’s a good short-term strategy for newcomers, it will also be used against these new companies by their more well-heeled competitors as a way to drive skepticism with potential clients by questioning the viability of these bargain-basement CDN providers.

For potential customers looking for short-term bargains, there will also be a few long-term players—foreshadowed by Amazon’s recent announcement to drop its already low per-GB-delivered pricing—that will use this pricing advantage to further entrench their positions. While this approach won’t win praise from other CDNs, it may position key CDNs as viable alternatives for many up-and-coming online video startups.

The second trend is a bit of a corollary to the first: While there will be a number of companies that may not survive 2009 due to complex business models and suddenly limited funding, I also expect we’ll see an equal or greater number of startups.

The new startups will have simplified business models, and many will deal with ways to make the mundane tasks easier.

For instance, transcoding might be one of these areas. Many companies that want to use streaming or progressive download video to get the word out about their products or services have been content to upload video clips to YouTube, but they are also curious about ways to better encode their content in even higher quality to stand out from the crowd. Yet these same potential transcoding- tool customers have neither the time to learn all the nuances of transcoding nor the budgets to purchase expensive in-house solutions that may not scale to meet their growing needs. Given the bandwidth available to most potential customers and the potential for key startups to provide expert consulting/transcoding services, it may be that 2009 is the year when transcoding grows up and the majority of it moves online.

Other areas of innovation may be multicasting, mobile video, and true 720p and 1080i video streaming that equals or exceeds digital download in quality. In short, the year of retrenching may yield solutions to common problems that have the potential to slow the scalability needed for mass adoption.

The third trend, which is a bit of a surprise to me personally, is the number of new streaming media users that are entering the space. I can only base my observations on anecdotal evidence, as we’ve only just recently seen this potential trend begin. The fact that viewers had more than 15 options (in terms of quality/format and commentary) to view the presidential inauguration made the first major event of 2009 feel more like a television experience than it had in the past. Coupled with the number of people I heard from who used the inauguration as their first step beyond watching YouTube videos, it seems to indicate a tipping point of sorts for the average internet user to consider the option of watching long-form content on the web as equal to watching it on television.

Another anecdotal point is the fact that a significant number of readers have been reading the Back to Basics articles on StreamingMedia.com. What began as a personal exercise in trying to explain some basic tenets of streaming media without using the jargon I’d grown accustomed to in the past 14 years has been very well-read and has evoked additional comments and questions from those who are new to the space.

So what will 2009 look like for your company’s business model? And what other "basics" do you think your customers need to know? Email me with your thoughts at the address below.

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