Proprietary streaming codecs may have won the PC battle,
but standards-based platforms are sharpening their steel for
an emerging turf war to be fought on many fronts

In the battle for streaming media supremacy, the lion's share of the booty has gone to market leaders Microsoft Corp. and RealNetworks Inc. At the same time, however, a new class of standards-based combatants has emerged in an attempt to share a portion of the loot.

Though standards typically win these battles when the dust and smoke settle, the question still remains whether the proprietary mainstays are so deeply entrenched that it will be nearly impossible for the standards fighters to break that line and bring balance to the streaming media landscape.

MPEG-4, the most promising of the near-term advancements in streaming, has gained some momentum of late, enlisting legions of companies that hope to shatter the hammerlock that the proprietary vendors currently have on the market.

At the same time, the standard isn't without its problems, and must untangle some operational issues tied to licensing and intellectual property. Its primary benefits, in contrast, are fairly straightforward.

MPEG-4 can stream at lower bit rates than MPEG-2, whose typical range for broadcast video is 2 megabits to 3 megabits per second, and up to 4 Mbps to 6 Mbps for DVD-quality video. In comparison, MPEG-4, depending on content quality, drops that range to between 750 kilobits per second and 1.5 Mbps for high-quality, full-screen, full-frame video. Bandwidth savings aside, MPEG-4 also might play a role in personalized advertising, thanks to its object-oriented framework.

RealNetworks and Microsoft, competitors themselves, are believed to have already won the PC streaming codec war. RealNetworks alone has secured about 250 million registered users, and the RealPlayer "is the second-most used desktop application in U.S. home PCs, behind [Microsoft's] Internet Explorer," says Sharon Goldstein, product manager of mobile products at RealNetworks.

Meanwhile, Microsoft's Windows Media Player gets tremendous leverage and market power via its bundling with the Windows operating system. Although Microsoft doesn't track registered users of the software, the player itself reportedly has been distributed more than 350 million times.

"It would take something highly compelling to drive users to use something other than what's already out there," argues Goldstein, "because the content creators have the infrastructure in place and the consumers are situated to the products."

One company that hopes to break that mold is DivXNetworks Inc., a La Jolla, Calif.-based start-up. Focusing on resolutions of 640x480 pixels and above, one DivX target involves high-end, full-screen IP delivery decodes at 70 frames per second.

Though Real and Microsoft largely dominate the PC streaming codec landscape, DivX's MPEG-4-based technology is starting to attract a large following among consumers and professional users.

DivX has verified on its own servers that visitors have downloaded the company's codec more than 30 million times since last July. Considering the dozens of mirrors that offer DivX's software, "I think it's not out of the question to take that 30 million download number we've had and almost double it," says company co-founder and Director of Product Development Joe Bezdek.

DivX is also ranked No. 5 on CNET's site, with 468,741 downloads the week of Feb. 25. It's been on the "chart" for more than 19 weeks.

Though DVD-quality streaming at 500 kbps is one of DivX's strong suits, the company's codec is designed to be scalable for lower bit-rates, and has been tested at 32 kbps and even 8 kbps for teleconferencing applications, Bezdek says. On the higher end, DivX has conducted high-definition video codec experiments at between 5 Mbps and 6 Mbps.

While the basic DivX bundle (codec and player) is available for free (the latest generation, 5.0, was released in early March) and plugs into legacy Windows Media Player architectures, the company is trying to make hay with a professional-grade platform comprised of video tools for the company's format and an Open Video System flagship product for video-on-demand over broadband IP networks.

Though DivX and its MPEG-4-bent is gaining a rather large following, proprietary codecs will continue to proliferate as long as the win involves an operating system, says Ganesh Rajan, director of advanced technology at MPEG-4 software company iVAST. "But you'll also see MPEG-4 proliferate on cable and satellite, which are largely based on standards."

The PC and beyond

Ryan Jones, a media and entertainment analyst at the Yankee Group, believes opportunities for MPEG-4 will surface when streaming media applications are shoehorned into devices other than the PC.

"Microsoft has a good strategy with the Windows OS, and Real is good on the server side," he says. "It's hard to leverage those guys out of the PC environment. It's not going to be a war fought on their turf (the PC), but on other devices." Wireless, for example, represents the "holy grail for the MPEG-4 folks," Jones says.

But that's just one area of MPEG-4's budding penetration potential.

"MPEG-4 can be applied to the Internet for streaming, wireless platforms like mobile phones, PDAs (personal digital assistants), as well as television, be it cable or satellite or packaged media like DVDs," says iVast Vice President of Marketing Kent Libbey.

Digital video recorders could serve as another arena for MPEG-4's eventual growth, as DVR vendors tap the technology to create more efficient hard drives and pricing better suited for mass-market acceptance. But that scenario is probably at least two years out, Jones says, noting that it took five to seven years before MPEG-2 reached strong penetration in the cable sector.

In addition to delivering streaming media via narrowband and broadband connections to personal computers, RealNetworks is extending its platform to other devices, as well. In February, the company launched RealSystem Mobile, a new platform for the creation, delivery and playback of Real-enabled audio and video content for mobile devices such as digital phones, handheld electronics and laptop computers.

RealNetworks has also weaved its way into the world of DVRs via a deal with TiVo Inc., which will house the RealOne Player and Real Music platforms in its new Series2 DVR.

MPEG-4 allies unite

To perhaps force the hand of the streaming media world in the direction of MPEG-4, a number of alliances have emerged to push the standard forward. For one, the Internet Streaming Media Alliance (ISMA), founded in December 2000, is led by big guns such as Cisco Systems Inc., IBM, Sun Microsystems and Apple Computer, the maker of QuickTime.

ISMA's goal is to accelerate the adoption of open streaming technology, says alliance President Tom Jacobs, who also serves as director of Digital Media Services at Sun's lab research division.

To balance that power beyond the two primary proprietary platforms, ISMA is defining implementation specifications for suppliers and streaming media customers, and crafting those specs for myriad operating systems, so "devices will work together, and not have a single vendor stamp on all of them," Jacob says.

ISMA also sees MPEG-4 as a streaming platform for venues beyond the PC, and its recently published 1.0 spec includes profiles for wireless and wired environments.

"We've published the spec, but now we've got to put the teeth behind it so that a product can claim compliance," Jacobs says, adding that the organization recently sent out an RFP (request for proposal) for potential test hosts and hopes to have the program up and running by the end of this summer for compliance testing of encoders, streaming media servers, players and other pieces that make up the streaming puzzle.

Because ISMA is not a standards organization, but cooperates with existing standards bodies such as MPEG and the IETF (Internet Engineering Task Force), market acceptance will determine the alliance's success. "It depends on who wants the spec and whether [vendors] specify it as a requirement," Jacob says.

ISMA membership does come at a cost (see sidebar, page 30), but affiliates do get advance access to the specifications. However, ISMA's membership costs have hindered some smaller companies that have to keep a vigilant eye on their nickels.

DivX, for example, is not an ISMA member, but is active in the MPEG-4 community via its active membership with the MPEG-4 Industry Forum, whose activities include interoperability and certification programs.

RealNetworks and Microsoft have demonstrated some support for MPEG-4, but neither is an ISMA member. Microsoft supports MPEG-4's video elements, but has yet to announce plans to support the standard's interactive framework. RealNetworks, meanwhile, argues that its proprietary products represent just one part of the company's overall strategy, and that it's behind the MPEG-4 movement.

"We're most well known for RealAudio and RealVideo, but we've always embraced standards as part of our ecosystem," Goldstein says.

RealNetworks has relationships with ISMA marquee members such as Apple, Cisco and Philips, but has yet to formalize a relationship with the alliance. "We have considered joining, but we typically go under the philosophy that standards decisions should be made at formal standards bodies," Goldstein says.

In the meantime, expect ISMA to keep the door open to RealNetworks and Microsoft. "We made the offer [to RealNetworks and Microsoft] when the organization was formed, and the offer continues to be open to them," Jacobs says.

Real Networks offers Envivio's MPEG-4 software plug-in for the RealPlayer, RealOne Player and RealSystem Server products.

The question with that deal is whether Envivio will support a version of MPEG-4 that adheres to the standard, says Steve Vonder Haar, an analyst with the Yankee Group. "MPEG-4 is a lot like religion. Everybody thinks they have the true faith," he says.

Though DivX is MPEG-4 compatible, Bezdek agrees that implementations of it are subject to high levels of latitude.

For example, a motion compensation algorithm is a core element of the MPEG-4 standard, but MPEG-4 implementers are allowed to create their own as long as the resulting video is compliant with the standard, Bezdek says. In the case of DivX, the company has patented its own "secret sauce" algorithms for video development tools.

Figure 1: On the rise: Upstart DivX has served
the No. 5 position on CNET’s site.

Royalty issues impede MPEG-4's progress

Everything appeared to be going swimmingly for the budding standard going into 2002 until a per-use licensing fee proposal disrupted the MPEG-4 community in January.

MPEG LA, MPEG's intellectual property licensing body, was criticized for its pricing on decoders and encoders and for suggesting per-minute streaming charges for MPEG-4-delivered video, which is not part of the existing MPEG-2 video license.

MPEG LA has countered that the proposal is fair, reasonable and nondiscriminatory, and represents a basic requirement to spark the development and deployment of MPEG-4 technology.

"The patent owners understand the risks inherent in a startup technology in which companies large and small are asked to make a pioneering investment and are sensitive to the role that their licensing model will play in that process," MPEG LA CEO Baryn Futa said in a statement announcing the proposal. "Therefore, the license has been specifically designed so that reasonable royalties are shared fairly by a variety of industry participants in order to stimulate early, rapid and widespread MPEG-4 product investment, development, deployment and use."

Industry observers, however, don't exactly see it that way.

Jones argues that the rift with MPEG LA's proposed royalty model has impeded the standard's progress. He adds that the licensing body passed up an opportunity to charge higher royalty rates for MPEG-2 licenses, and wasn't about to repeat the mistake.

"They're making sure they won't miss the MPEG-4 boat, and they've over-compensated somewhat," Jones says.

While those rates drew the ire of the MPEG-4 community–most notably Apple, which rejected the initial MPEG LA proposal–they might be readjusted.

"We reached out to MPEG LA," says ISMA's Jacobs, "and told them that the current terms are not a good basis for success moving forward and that we want to work with them to achieve terms that are acceptable to them and their licensors to create a good, viable marketplace."

The MPEG-4 Industry Forum also opened debate on MPEG-4 licensing via the Web to pore over the practicalities of the terms. So far, reactions have ranged from "this sounds reasonable" to "this will never work," according to the organization's Web site.

Licensing terms for MPEG-4 are made more challenging due to the number of applications that can be tied to the standard, says iVast's Libbey. "It's not like any other media in terms of audio and video. The bottom line is that it's a complex equation, and it's reasonable for MPEG LA to come out with a first cut of it...and adjust accordingly."

The other possible alternative involves a much messier and expensive proposition; instead of acquiring a package of patents from MPEG LA directly, a company could sign deals with each of the individual patent holders.

"To invest that type of effort to line-up all of those negotiations for a standard not established in the marketplace, that won't happen any time soon," Jones predicts.

MPEG LA reportedly plans to finalize its royalty licensing model as early as this month. MPEG LA officials were not available for further comment by CED's deadline.

Will standards win out

Just because MPEG-4 appears to be down, it's most certainly not out.

Coupled by indications that proprietary camps have started to embrace MPEG-4 technologies, industry observers believe it's only a matter of time before standards eventually take hold.

Libbey draws on the history of MP3 to strengthen that point. Digital music over the Web was fostered by proprietary technology from Real and Microsoft, but MP3, a derivative of MPEG-1 and MPEG-2, has propelled it, prompting chip makers to buy into devices designed to playback tunes in that format.

"The evidence shows that for the long run, standards always beat proprietary solutions," adds Bezdek, noting that even MPEG-1 and MPEG-2 did battle with proprietary platforms initially, but eventually secured an established user base. MPEG-2, by some estimates, supports more than 100 million devices today.

Libbey admits that MPEG-4 probably won't take the world by storm this year, but it will obtain a steeper market penetration trajectory. How steep a direction it takes depends on how quickly consumer electronics and silicon companies add support for it, he says.


Membership has its privileges

ISMA is comprised of three membership levels, each with its own set of benefits and costs.

Sponsor members: Apple Computer, Cisco Systems, IBM, Kasenna, Philips, Sun Microsystems.

Involvement/benefits: Participate in specification creation, host group events, set the course for other members, gain access to specs before release.

Fixed cost: $60,000 per year.

Participant members: AOL Time Warner, Analog Devices, Bitband, Dolby Laboratories, Entriq Inc., Envivio, Fraunhofer Institute, Hitachi, Inktomi, iVast, Lucent Technologies, Macrovision, National Semiconductor, NeoMagic, Network Appliance, ObjectVideo, Oki Electric Industry Co., Optibase, PacketVideo, SRI International, Serome Technology, Sigma Designs, Sony, Telecom Italia Lab and Thomson Multimedia.

Involvement/benefits: Participate in marketing, technical committees and plug-fests and how the specs are defined. Cost of specs covered in membership, and obtained prior to public release.

Fixed cost: $20,000 annually

Adopter members: IndigoVision, SGI, Streaming21.

Involvement/benefits: Able to provide spec requirements and track ISMA activities, but not committee members.

Fixed cost: $7,500 annually.

Source: ISMA