The Insider: The Two Sides of Uncertainty

We are in the middle of a technology revolution that is redefining the fundamental relationship between $600 billion worth of media industries and their audience. IP networks enable audio and video to the PC, mobile phone, and other wireless devices today, and will eventually replace the broadcast TV and radio networks as the preferred audio/video delivery technology. But 2000 was pretty much a meltdown in our industry and many other tech sectors. So what the heck is going on?

Perhaps the single largest element to have a negative impact on the streaming industry has been uncertainty. During 2000, nearly everyone became acutely aware of uncertainty surrounding the size, shape and timing of the long promised, yet still forming, streaming opportunity. Simultaneously, the financial markets made a 180-degree turn away from any tolerance for uncertainty and became laser focused on very near-term profitability.

Now it is crunch time. It is time to figure out what you really believe in. It is time to figure out if you picked the right path, made the right inventions and gathered the right team. It is time to figure out if you really have any brains. It is time to figure out if you made the right bets and have what it takes to see them through. This is the reality for the entire streaming media industry.

Major areas of ambiguity include connectivity, quality, security, business model, and pace of rollout. Although the streaming audio audience has tripled in the last two years (according to Forrester Research), many people still believe we are waiting on broadband for the real audience to appear, and that rollout is going slower than predicted. While audio quality has improved radically, it still coughs and sputters. And video is not VHS-quality over the Internet (although the demos are great!). There is no agreement on media security: Consumers aren't going to stand for multiple intrusive technologies when viewing media from different sources, and copyright owners aren't going to stand for too much piracy.

All of this leads to many questions of business model, both for technology companies and for media companies. Where is the money? Whenever you have a new pie to divide, there is a lot of wrangling over who gets how much, and for what. Most of the infrastructure, as well as a substantial initial audience, already exists. But knowing how to monetize the audience remains unclear, so people wait on their big rollouts.

The good news about uncertainty is that it breeds opportunity for those who make the right bets. Technology only gets adopted in a big way if it generates more sales or saves costs for the customer. It is time to show how important and relevant streaming technologies can be to consumers' lives and to the fortunes of media companies.

What needs to happen? First, every minute we spend waiting for broadband is time we could use developing product offerings that consumers will love and that will create huge new revenue streams for media owners. There are many business models that can work with today's audience and bandwidths, and be upgraded for broadband. Let's view broadband as a bonus, not a necessity.

Next, companies need to ensure that their customers have a clear return-on-investment for the money they pay. Your customer has to make new money, or save costs. This one principle by itself can transform the streaming media industry into a solid, value-added marketplace that can generate real revenue and shareholder value. At the same time, companies must thoroughly understand their businesses and their relative positions in the industry. They need to realize what they bring to the value chain, focus on doing it better than anyone else, and partner out the rest.

Based on the number of media players distributed since 1997, the available IP audio/video audience has grown from about 20 million to over 300 million, and is poised to grow even more with wireless and broadband deployments. This is the fastest growing audio/video audience in history — an absolute certainty. This technology is fundamentally changing the way that audio and video is distributed and consumed across the planet. But we are still in the early stages and the going is getting tough. Have you made the right bets and do you have what it takes to finish the race? Think about it.