The Argument for Closed Development: Competition Promotes Advancement

Inoperability between the three leading proprietary streaming formats creates frustration among users, developers and just about anyone who does not own a proprietary streaming format. But while standardization and an open source development environment would make life easier for a lot of us, some argue not only that the codec war is a necessary evil, but that it will ultimately benefit the market and the industry.

The heated competition between purveyors of proprietary codecs can be seen as healthy, and it can be argued that technological advancements might roll out more slowly without the deep investments of time and money that competitive development invites.

"With open source, you start to lose that control and won't make leaps with the technology," says Tom Sauer, manager of broadband systems, professional services at RealNetworks.

Moreover, standardization doesn't necessarily promote cooperation. The ratified standardization of the MPEG-4 codec, based on Apple's QuickTime file container format, simply invited another wave of competition between RealNetworks and Microsoft, who delivered proprietary variations of the standard. "MPEG-4 is not the holy grail," says Geoff Allen, chief executive officer of streaming company Anystream.

But it's not really all about maintaining dynamic tension. The root of the issue lies within the revenue streams of the platform providers. RealNetworks, for example, derives significant profit from selling its proprietary server platform and player. "Part of the competitive advantage is owning real estate on the client side. Until we discover new revenue sources, we won't see standardization," admits Sauer.

And it's not just Apple, Real and Microsoft who stand to benefit from a lack of standardization. Encoding and software companies like Loudeye, Media 100, EncodeThis! and Sonic Foundry all gain from the need to provide transcoding services or software for three different formats, and consulting firms may get more business from streaming companies intent upon satisfying the whole market. Still, others have positioned themselves to mitigate the market turbulence created by the unyielding competition between the leaders. One of Anystream's big selling points, for example, is integration of multiple codecs into its enterprise encoding solution. "I want to call a spade a spade," Allen says. But Allen still supports future compromise that favors the needs of content distributors and ultimately, the Web audience.