MONDAY, August 20, 2001
THE WALL STREET JOURNAL
Video Streaming Is a Sleeper Hit With Business Crowd
By Riva Richmond
Dow Jones Newswires
New York - Webcasting as entertainment may have been a bust, but the technology is turning out to be a sleeper hit as a corporate communications tool - and a saving grace for the streaming-media industry. As live Webcast concerts from the likes of Madonna have shown, television beats the Web handily when it comes to showmanship. The quality of streaming video disappoints many viewers, and streaming to the masses is an expensive nightmare. Meanwhile, lingering digital rights concerns keep media companies from providing content, and advertisers shun the medium.
But where Webcast as entertainment fails, the corporate Webcast seems to succeed. Limited audiences make the still young technology more manageable, while offering a better way to communicate with investors, employees, partners and customers. Moreover, the economics are right. Bringing a global sales force together in cyberspace is much cheaper than orchestrating a Hawaii retreat, for example, which makes companies apt to invest in the technology.
As more companies catch on to WebCasting, a growth industry is developing, with beneficiaries already emerging at software companies, production houses and network operators.
"Corporate America has really come in and helped the industry grow, says Steven Chester, founder of closely held Digital Planet LLC, a Webcasting production concern that started out in the entertainment market but is increasingly focusing on corporate clients. 'It's keeping everything alive.”
According to Billy Pidgeon, an analyst at research firm Jupiter Media Metrix Inc., the top 1000 US. companies ranked by revenue will spend about $2.8 billion on Webcasting in 2005, almost 10 times as much its the $290 million that he estimates they will spend this year. Surveys by Market Decisions Corp., Portland, Ore., show 26% of businesses with more than 500 employees were using streaming media in April, triple the number 18 months ago,
Corporate Webcasting got its first bump, it turns out, from the Securities and Exchange Commission's nine month-old Regulation Fair Disclosure. The rule led growing numbers of public companies to Webcast conference calls with analysts and institutional investors to ensure broad dissemination of material information.
"Companies realize this is a cost-effective way to reach more investors." said Ron Adler. president of CCBN Inc., or Corporate Communications Broadcast Network, a closely held investor-relations Web site and Webcasting-services concern based in Boston. "We've seen, in the past year, it go from a good idea to a have-to-have,” he said.
Investor Webcasts tend to be fairly low tech and inexpensive - an audio feed combined with PowerPoint slides can cost as little as $3,000 - but also may include streaming video and interactive features like chat and audience polling, which can run as much as $50,000, according to Mr. Adler.
Alone, they won’t make for a big or high-growth industry. That is why streaming-media companies need corporate clients to start using the technology for a host of other purposes.
In fact, Jupiter's market projections assume significant growth in corporate spending on Webcasts for product launches, which Mr. Pidgeon estimates will increase to $567 million in 2005 from $72 million in 2001, and for employee training, seen growing to $519 million in 2005 from $30 million this year.
This growth is being led by pioneers at large international corporations, particularly in the financial-services, health-care, pharmaceutical and software industries.
Among the experimenters are Wall Street firms, which are increasingly Webcasting investor conferences to satisfy executive speakers' Reg FD worries, boost attendance and keep a record. Going a step further is Merrill Lynch & Co., which, in partnership with streaming media technology provider iBeam Broadcasting Corp., is offering daily Webcasts to its customers featuring its analysts and economists.
Pharmaceuticals companies are using Webcasting to promote new drugs, and meet Food and Drug Administration requirements regarding physician and patient education.
Elsewhere, many businesses at using Webcasting as money-saving components of employee-training programs. Daimler-Chrysler AG's Mercedes-Benz USA offers an online Course for mechanics joining its Starmark used-car program. The German luxury car maker covered its costs in just six weeks, or after 50 students, through savings on items such as travel to its train trip centers and days absent from the job, said Richard Thomas, head of media development end e-learning.
"Where it's effective to communicate through digital video, we’re going to do it,” Mr. Thomas said. “It’s going to be better, faster and cheaper as time goes on.”
Even the telecommunications sector, weighed down by a glut of unused fiber, will benefit eventually from the rise of this bandwidth-heavy enterprise, industry observers say.
But the more-immediate winners are lower down the food chain, starting with software and content-delivery networks.
Among the software beneficiaries are Microsoft Corp., its main rival RealNetworks Inc. and to a lesser degree Apple Computer Inc., the important media-platform and "player" makers.
Some industry participants suggest Microsoft could use its heft to be a consolidator in digital-media software. But Jonathan Usher, group product manager for Microsoft's digital-media division, discounted that notion. "We want to focus on providing a great platform for digital-media technologies," he said. "It's a tremendous foundry for third-party innovation."
Indeed, a host of smaller niche software outfits that make Webcasting production and editing tools, such as Adobe Systems Inc., Sonic Foundry Inc. and Media 100 Inc., are likely to profit from the uptick in corporate spending, said Phil. Leigh, vice president and digital-media analyst at Raymond James & Associates Inc. Software firms that make applications for managing content, like Virage Inc., and video archiving and search, such as Convera Corp., could benefit, too.
These companies have suffered along with their dot-com clients, Mr. Leigh said, but “the next boom for them will stand on much more solid ground because it will be based on terrestrial companies moving into streaming." While their stocks tend to be cheap, he says it is too early to buy most of them, with the exception of RealNetworks.
Corporations' growing need to create and deliver content also will mean more work for the companies that manage the transmission of these bandwidth-hungry events across the Internet and within corporate intranets. In this realm, the leading players are Akamai Technologies Inc., RealNetworks’ Real Broadcast Network, and Yahoo Inc.’s Broadcast.com unit, Mr. Leigh said. Close on their heels are iBeam and Digital Island Inc., which Britain's Cable & Wireless PLC bought in June.