Streaming Media Battle Heating Up

The browser wars may be history, but the battle over the streaming media
market is just warming up.

Later this month, Microsoft will launch a
renewed attack on Real Network’s commanding market share, which analysts put at 85 percent.

Microsoft will strike first on March 18 by bundling the Windows Media
into the
final release of Internet Explorer version 5. And when the company ships
the next service release of Windows 98 this quarter, the player will be
there too.

According to product manager Gary Schare, Microsoft expects to see Windows
Media player usage soar in coming months, with 50 million players in use by
June, up from its current 25 million. By its own estimates, Microsoft has
built Windows Media’s share to 30 percent in the eight months since the
final version of the player was launched last summer.

“It’s sort of like the Internet Explorer versus Navigator battle. They
started out with a big lead and Internet Explorer was nowhere. We made up
ground fairly rapidly, but it took a couple of years,” Schare said.

Jay Wampold, Real Networks PR manager, shrugged off Microsoft’s claims of
momentum and distribution advantages.

“There’s this attitude that Microsoft
will inevitably catch up to us, but they’ve been in this market for three
years and have not gained any share.”

Wampold said Real has more than 53 million unique, registered
users, whereas Microsoft can only point to raw downloads. And he claims
more people actually download Real players every day than purchase copies
of Windows 98 — 178,000 per day to be exact. And then there’s the ride
Real gets on the back of every new copy of America Online’s access software and Netscape

“Sure, they are a big company and we take them seriously, but I think we
have made a lot of the right moves and have learned from companies that
didn’t make the right moves,” he said.

One move by Microsoft that’s still in doubt is the company’s decision to
make its streaming media a one-platform solution. Microsoft said the tight integration between the player, the NetShow server, and
Windows NT gives Windows Media advantages in performance and scalability.
The company commissioned an independent lab to test this claim, but before
its PR machine could make hay last month with the results, Real
struck first with lab results
of its own touting the advantages of the G2 platform.

Microsoft’s bundling of the NetShow server with Windows NT last year was
also expected by analysts to give it a market share lift. But nine months
later there’s been no major lift. Analyst Jae Kim of market research firm Paul
Kagan and Associates
said the tactic may actually have backfired.

“Instead of trying to propagate the server itself to companies that may
want to use it and take advantage of Microsoft’s support, they decided to
bundle it with NT. That puts companies that don’t want to switch to NT in a
conundrum, so they’ll opt to go with Real since it supports a variety of
different platforms.”

Kim said his firm’s study of 1,400 online radio stations found Real’s technology is place at 80 percent, versus 10 percent for
Microsoft and 10 percent for all the others. Kim also estimates that 95 percent of
the streaming content on the Web is encoded in Real media format.

Yet Kim said you’d be foolish to count Microsoft out.

“It’s not Microsoft’s first entry in the market that you need to watch out
for. It’s the second and third attempts. That’s when they step
back, assess what happened, and that’s when they come back to market and
things change,” he said.

Indeed, while Real is widely seen to be a generation ahead with its G2
system and support for SMIL, or the
synchronized multimedia integration language, Windows Media could get a big
boost going forward from a technology called HTML+Time.

Submitted to
the World Wide Web Consortium last fall by Microsoft, Compaq, and
Macromedia, HTML+Time
puts synchronized multimedia right in the Web browser, without an external

HTML+Time is being touted as an extension to SMIL. But Tim Kennedy, editor
of’s StreamingMedia World, said HTML+Time could be a SMIL killer.

“If they roll out a really compelling use of streaming multimedia within
the browser environment, Real will really have to scramble
to match it, and that could change the market overnight,” Kennedy said.

Kennedy said Microsoft is keeping mum about its HTML+Time development
plans, but support for the technology could be added to IE5 as soon as this

This summer may also see the arrival of Apple’s QuickTime version 4, which
will for the first time support streaming. Kennedy said it could be
the dark horse of the marketplace.

Since there seems little chance that Real will capture a 100 percent share
of the market for streaming media, Kennedy said most developers have
resigned themselves to supporting at least two flavors for the foreseeable

“Developers are growing tired of leaning one way or another. And
the big ones that have a lot of content are just going to provide options,”
he said.

Don’t look for any major interoperability between the two platforms anytime
soon. Since they squabbled last July during the Senate Judiciary Committee
hearings on digital competition, Real’s and Microsoft’s relations have been
downright icy. Microsoft subsequently divested its stake in Real Networks.
And while Microsoft licensed version 4 of Real’s technology back when they
were practicing co-opetition, Schare said it won’t happen again.

“We did an agreement, paid them a large chunk of money, and they quickly
raced off in a totally different direction. So we’ve had
that experience and it wasn’t a very pleasant one. At this point we have no
interest in licensing any more code from them,” Share said.

Wampold said Microsoft is of course free to draw its own technology road
map for Windows Media. But he said Microsoft runs the risk of being a lone
cowboy on the streaming media frontier.

“The major platform companies like AOL, Netscape, Intel, @Home, Lotus, and
IBM have all standardized on us,” Wampold said. “I think it’s pretty clear
where we’re going.”

An audio version of this article is available here.

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