Streaming Media Swimming Upstream

Streaming media remains as puzzling as ever, if today's Streaming Media East show is any example.

New York — Streaming media remains as puzzling as ever, if todays Streaming Media East show is any example. "It is too hard to do, the content sucks, and it costs too much," says Geoff Allen, president of Anystream, a streaming-media encoding-and-production company showing here.

These sentiments were echoed across the Jacob Javits Convention Center, as vendors, analysts and content producers faced low attendance and depressing prospects.

The Carmel Group, for example, released a study that pegged the non-PC streaming market to handhelds and digital TVs at a miniscule 4 million devices by the end of 2002. Bad news for a sector banking on that space. "I think the industry was shocked to see just how low these numbers are," said Sean Badding, vice president of business development at The Carmel Group. "Gaming platforms like PS2 are network enabled for streaming, but consumers do not understand it and will not use it,"

Attendance was also spotty. Though actual figures have yet to be released, there were far fewer people here than expected. Show organizers combined the Streaming Media show with fellow trade show Internet World, to keep the show cozy. And organizers were quietly worrying about the future of both events. "It just seemed like a way to bring these two struggling (entities) together," said a show worker.

Applications and business models for streamed content remained as elusive as ever. "There are such extreme limitations of network and devices that there is no way to make a business case," said Gary Ginstling, product manager for Java software at Sun Microsystems.

While vendors like Microsoft, RealNetworks, Sun and smaller players like Intertainer and Anystream Networks came here armed with new ideas, the actual business cases behind these services were blurry. Real, for example, touted its RealOne player, which boasts 400,000 subscribers and legal streamed music; while Intertainer showed its innovative online film service. But Intertainer would not release actual revenue numbers. (executives quietly said that the service is meant as a "bridge" to a more TV-oriented service) And analysts pointed out that RealNetworks 400,000 subscribers represented just a few hundredths of a percent of the over 200 million copies of the companys installed base. "If a cable company had that kind of low penetration, they would be out of business," said Jim Stroud, analyst and editor at The Carmel Group.

Probably the toughest problem the space is facing is content. Providers as are still skeptical about the space. MTV Networks, for example, is stepping back from its streaming efforts; in spite of the fact that it has pioneered online gaming and music videos on demand. "These have been successful from a traffic point if view, but it has been a challenge to make these ideas work financially," says Nicholas Lehman, vice president of interactive services for MTV and VH1.

And the space does not expect wireless providers, or new gaming devices, to bail them out any time soon. Efforts to offer content to cell phones and un-tethered PDAs have stalled. With some even giving up on well-touted foreign business models, like NTT DoCoMos I-Mode service. "It is clear now that DoCoMo will simply not work here," says the Carmels Badding. "And gaming as well is equally far away."

What the industry is banking on now is business applications. Across the market, vendors, investors and producers are deploying business-based services like distance learning, teleconferencing and educational video services. "It is no accident that the (streaming) business is pointed in that way" says Carlos Montalvo, chief marketing officer at Virage, a media-infrastructure company. "And I can assure you that Boeing is not losing money in its video efforts"

Investors, too, have been stymied by the space "From an investing standpoint I cannot see a return as of now," says Cliff Friedman senior managing director at Constellation Ventures, a streaming media investor. "And we have bets here."

And, ominously, failures here are no longer spectacular. The glory days of streaming start-ups like Den and Pop flaming out in grand style live are over. Now good companies, with decent business models are simply folding. Digital rights management company Reciprocal closed last month with no formal announcement. According to a source close to the company, "They owed money to their backers, they could not pay and it was a quiet death. Now people want that stuff quiet."

All in all, the mood here is grim. One vendor, stuck in the back of the show floor, behind a large Internet company that had nothing to do with streaming-media content, says the whole event was frustrating. "Unless you looking for us, it will be hard to see us," the vendor says. "I really dont like it."