Streaming media picks up steam

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Streaming media, once considered an over-hyped technology pushed on advertisers by vendors, has become a solid investment for companies as they use the software for advertising, internal communications and client collaboration.

Recent reports and deals by software vendors show that companies are investing more heavily in streaming media for a variety of applications, and executives say the returns are well worth the investment.

"This kind of technology works," said Tom Hill, program manager of the Education and Training Center, NonStop Division of Compaq Computer Corp., Cupertino, Calif., which uses streaming audio and video for internal sales training and client technical training. "There is a sound business model around it," he said, pointing to a return of two to five times the investment in cost savings for technical training alone. "Everything has to be justified, or we’re not doing it."

Last week at the Streaming Media West conference in Long Beach, Calif., show producer Streaming Media Inc. reported that 79% of Fortune 100 companies use streaming media, according to a new survey. The report found that among responding companies, spending on streaming media is up 86% over last year, and enterprise spending on streaming media averages $104 million a year per company.

Broadband paves the way

Also last week, Boston-based Yankee Group reported that companies would increase spending on streaming media-enabled advertising to $3.1 billion in 2005 from $44 million in 2000, as broadband deployment opens up new marketing opportunities such as on-demand viewing.

And a report earlier this month from DFC Intelligence, San Diego, said streaming media ad-supported online programming will reach $138 million this year, although only 10% of the programming will actually contain ads in the streams.

"It’s all very, very early [for deployment of streaming media]," said Paul Palumbo, research director of streaming media at DFC. "There’s a hell of a lot going on on the b-to-c side, but it’s much more fragmented in the corporate market."

However, b-to-b marketers are beginning to spend more on streaming media as they realize its efficiencies. Compaq uses streaming video technology from Eloquent Inc., San Mateo, Calif., for field technical support and field sales support and for external client technical support.

"It’s a more productive and more effective way to communicate fast-changing information with the field sales force," said Hill.

Compaq customers who subscribe to a yearlong technical support agreement have shown a 95% renewal rate, which Hill attributes to the use of streaming media to help them understand the products and services, both through a CD and an intranet now in development.

Ad software companies and Web sites are now rolling out a host of applications to meet such demand.

Last week, Yahoo! Inc. announced a Webcasting service targeted at corporate marketing departments (see "Yahoo! Webcasts angle for marketers," Page 2), and at the Streaming Media West conference, at least two dozen companies announced new products, services and agreements involving streaming media.

Among the announcements:

E-Media L.L.C., a streaming solutions provider, and Zerotree Technologies Inc., which develops visual communications software, said they would merge. The new company will retain the name e-Media and will be headquartered in Stamford, Conn., led by CEO Al Barber, a former CNBC president.

StreamCenter Inc., Murray Hill, N.J., announced InCompass Reporter, a measurement service that reports on viewer experience with streaming media, such as connection speed and rate of congestion impacting the stream.

HotRoof Inc., a media customization software company based in Great Barrington, Mass., and EncodeThis!, a digital media infrastructure company based in Los Angeles, announced a strategic alliance to deliver customized streaming video content over the Web and physical media such as DVD and CD-ROM.

"Companies are finally starting to understand it," said Marc Harrison, director of custom research for Jupiter Media Metrix Inc., which reported in April that enterprise spending on streaming media would grow to $2.8 billion in 2005 from $140 million last year.

The Jupiter Media Metrix report said the investment is driven largely by streaming media technology used for internal communications and external collaboration with clients.

"Streaming can be used to get people more knowledgeable about products and services," Harrison said, pointing to the ability to do product demonstrations and other interactive capabilities with streaming audio and video.

He said high-tech companies such as Cisco Systems Inc. and Hewlett-Packard Co. have been leaders in using streaming media internally and externally, but other industries such as financial services and pharmaceuticals are now beginning to use the technology to collaborate with clients, for example.

In the financial services industry, Global Crossing Financial Markets, a division of Global Crossing Ltd., last week said it would use streaming media technology from to provide Internet broadcasting services to its financial clients.

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