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Technology Focus: Is Internet Video Ready for Prime Time?

Thursday, April 24, 1997

By JOSHUA MILLS & SREENATH SREENIVASAN

New York, April 24 (Bloomberg) -- Imagine sitting at a computer, dialing
up the major Hollywood studios and watching clips from the latest films.
Or connecting to Major League Baseball's Web site and watching last year's
World Series -- or Don Larson's perfect game in 1956. Or sitting at a
trading desk on Wall Street and viewing an instructional video on new
investments or procedures.

An emerging technology known as ``streaming video'' makes these things
much faster and more practical. A handful of privately owned companies as
well as giants like Microsoft Corp. and News Corp. are betting that such
services will appeal to both the corporate and consumer markets. ``Video
extends our reach tremendously,'' said Scott Ehrlich, director of Fox News
Internet, which runs the online operations of Fox News Channel, a unit of
Rupert Murdoch's News Corp.

When Fox News opened its Web site in October, it carried all the audio
from the 24-hour cable news operation and some video clips, using
technology from the VDOnet Corp. of Palo Alto, California. Ten weeks ago,
Fox switched to live, 24-hour streaming video, through Real Video, from
Progressive Networks of Seattle.

Would-be viewers can obtain the software ``video player'' at the Fox or
Real Video web sites and watch the Fox service without charge. The
Internet allows Fox to be viewed in Manhattan, where it has been blocked
from the major cable system owned by fierce rival Time Warner Inc.

Hundreds of others, from companies hawking wares to corporate training
divisions to the Jewish Orthodox Union (``Cyber home of the Torah'') and
educational institutions, are experimenting with streaming video.

Rosy Forecasts
Jae Kim, an analyst at Paul Kagan Associates, a media research firm in
Carmel, California, predicted that 33.5 million consumers would be using
Internet streaming video by the year 2000, compared with 4.5 million now.

Similar audio technology has been commonplace on the Internet for two
years. Progressive Networks' Real Audio is the best known -- allowing
computer users to hear a variety of programming, including ``simulcasts''
of hundreds of radio stations around the world. Progressive does not
release financial figures, but analysts estimate its 1996 revenue at $20
million and say perhaps 9 million people have tried its software.

Until streaming video emerged, watching a video clip from the Internet was
like waiting an hour for television to warm up each time you wanted to see
a show. A viewer would choose a clip (``Click here to see John Lennon
singing'') and the computer would request the video from the host Web
site. Downloading a one- minute clip could take up to an hour over a
typical modem and phone line.

Breakthroughs in streaming video come at both the serving and receiving
ends. Video clips can be compressed into small bundles, then transmitted
over the Internet to individual computers. Viewing begins as soon as the
first few images arrive, even while the rest of the video is being
delivered. It's like being able to water your garden with a hose, instead
of going back and forth with bucket after bucket.

Standards Still Unresolved
But there's no agreement yet on what type of hose to use, or who will
create it. Besides VDOnet and Progressive Networks, competitors include
VXtreme of Sunnyvale, California; Vivo Software of Waltham, Massachusetts;
Xing Technology of San Luis Obispo, California; and InterVU of San Diego,
all privately owned. And Microsoft is now aggressively marketing its
streaming product, NetShow, from the Microsoft Web site. ``It's still
early days yet for streaming video,'' said Patrick Keane, an analyst at
Jupiter Communications in New York. ``It's not much more than a slide
show right now. But you can certainly see its potential.''

Most companies in streaming video sell the software system -- the servers
-- that hosts the content and then supplement their revenue in other ways.
Some, such as Vivo Software, sell ``developer tools'' for content
developers. Others, like Xing Technology, derive revenue from selling
video compression encoders that prepare video for Webcasting.

InterVU has a different approach, charging the content provider a fee for
each video clip downloaded by visitors to its site. Major League
Baseball's Web site, for example, has several historical as well as
current video clips hosted by InterVU. Baseball turns over videotapes to
InterVU, which digitizes them and provides them on the Web. Another
potential source of revenue is advertising that appears on Web pages,
incorporating short video clips.

A Tool for Training
In the corporate market, superior technology at a much higher price is
already in use. Using their own internal ``intranets,'' free from having
to make their images available to the global universe, companies
distribute training videos and inspirational speeches from top executives
to employees.

Companies competing in the intranet market include Tektronix Inc., of
Beaverton, Oregon, with its Spotlight system, and Starlight Networks, of
Mountain View, California, with StarCast. Both offer full-screen,
full-motion video. The brokerage house Smith Barney recently announced it
would use StarCast to deliver real-time video to 11,000 employees'
desktops across the company.

In February, Lotus Development Corp., the Cambridge, Mass.- based unit of
International Business Machines Corp., began widespread testing of Domino
Player, a video player that enables its popular Lotus Notes program to
incorporate streaming video.

For years, Lotus offered Video Notes to its 12.5 million users, but for
the first time, streaming video is being incorporated for browser clients.
``It's an additional feature that our customers use to make their Web
sites accessible to those who are not using Notes,'' said Bruce Poduska,
Lotus product manager for streaming technologies.

The consumer market is more fragmented, because software video players
from one company aren't compatible with those from another company.

``It's a pain to decide which player you already have, which
you need to download, which works with your system,'' said
Benjamin Compaine, chairman of the Center for Information
Industry Research at Temple University.

Other hurdles are that the video window that opens on-screen is usually
only a fifth of the screen size; the number of viewers who can connect
simultaneously is limited, and bandwidth -- the electronic pipeline that
carries the information-laden video signals needs to be increased to
provide less jerky, more realistic images.

``No one watching on the Web is going to mistake us for our TV version
right now,'' said Ehrlich of Fox, whose Web site provides video at three
to eight frames a second, compared with broadcast video's 30 frames per
second.

``Most streaming video is a jerky, shaky, out-of-sync blur.
It completely takes away from the storytelling experience,'' said
Joan Friedenberg, the editor of ``The Online NewsHour,'' the Web
version of the Public Broadcasting System's ``NewsHour with Jim
Lehrer.''

In the past six months, several streaming video companies
have demonstrated their wares to Friedenberg, but she's still not
convinced. ``Down the road, this will be extremely important for
us -- when I can see a piece of video that looks like a piece of
video's supposed to look, without a lot of excuses.''
Others are more optimistic.

CNNfn, the financial news network CNN launched in November,
offers two hours of video programming a day and plans to increase
to 14 hours in June, using a product from VXtreme Inc. Court TV
has used streaming video to broadcast clips, but not live
coverage, of trials.
``Superior technology is not what's going to win in the
end,'' Professor Compaine said. ``Marketing and market share
Copyright 1997 Bloomberg L.P.