Even though I normally don’t respond to other blog posts, Dan Rayburn’s post from this morning definitely deserves some comments (or a discussion panel during the next Streaming Media conference). Dan is a well-respected streaming media veteran, who has been deeply involved with the industry for the last decade.

Ray’s main statement is the following:

While some in the industry still want to set false expectations that streaming media technology is somehow going to replace the primary means of delivering video to the living room, the fact remains that five years later, cable TV is here to stay and is still the primary way to get video into the home.

There is a conceptional problem here, since it’s important to differentiate between business models and technologies. With online streaming, you would normally refer only to technology – the ability to use IP networks to deliver video. Broadcast TV is traditionally based on QAM in the United States, originating from traditional broadcast standards.

But there is no reason why broadcast TV can’t use IP delivery. As an example, Intel confirmed a partnership with Comcast to bring TV to Intel devices, as well as most major cable providers offer to stream cable programming to mobile devices. And yes, it’s fully scalable in this case.

Instead of focusing on technology, the key is the business model – there are no replacement services beyond your cable subscription that offer similar broad content. Cord cutting hasn’t become mainstream. This is driven by business decisions, content control and ease-of-access, and not related to technology limitations.

But many are hell-bent on the concept that one technology has to replace another, when in fact, most times, one complements the other. Streaming media is never going to be as reliable, scalable or as high-quality as cable TV, even in the future.

The quality comparison is not fully accurate anymore. Cable channels are by design compressed, and depending on the dedicated bandwidth, the compression is certainly visible. In contrast VOD offers e.g. from Apple TV or TIVO with Amazon VOD are encoded in higher quality 1080p and include 5.1 Dolby Digital. The NBCSports 2012 Summer Olympics were streamed live in 1080p.

Think of all the companies over the past 10 years who said their technology, be it better compression or P2P delivery etc. could solve the issues with delivering high-quality video to “TV sized” audience. They couldn’t. And even with guys like Netflix taking the smart approach of placing caches for free inside ISP networks, there is a limitation to what can be achieved.

Again, this has many facets. First, if a cable provider provides HTTP streaming within their own infrastructure to their own customers, the scalability is easy to control and likely guaranteed. If multicast is enabled on the network, as it is even in certain public regional networks in Asia or Europe, a single-stream, highly scalable live event is possible as well. Where scalability issues come into place is when CDNs need to deliver content without being able to control the last mile (quality), and their server capacity is limited (scalability). But this isn’t the only way streaming is deployed today.

In 2009, Akamai, the largest CDN on the Internet peaked at 7.7M simultaneous video streams during the Obama inauguration, for all of their customers combined. It was so much traffic on their network that they had to cap customers and they made it clear that there is no such thing as “unlimited” capacity on the Internet. Last year, YouTube claimed they did the largest live event on the web with 8M simultaneous streams. So three years in between events and the largest live event numbers didn’t grow that much.

Agreed, it appears to be a stagnant growth rate. The reason YouTube’s event had 8M simultaneous streams is due to its online exclusivity, which is important for high online viewerships.

It seems many outsiders want to judge the “success” of the streaming media industry and the technology on how quickly it can “displace” cable TV as a broadcast distribution medium. What a false idea.

Disagreed – IP streaming delivery will clearly replace traditional broadcast technologies, simply because redundant infrastructures are not economical. My prediction is the following will happen:

  • Cable subscriptions are relevant, the lean back experience will remain. But technologies underneath will evolve, set-tops boxes will become smarter, and won’t be the only platform to consume cable content.
  • As part of it, business models are evolving. TV Everywhere is becoming reality. And with a working revenue model, the floodgates are open to provide additional content beyond the traditional broadcast channels. One example are the NBCSports Summer Olympics again, where authenticated online and mobile users could access significantly more content.
  • Cord-cutting will still be a factor, but I do not think that a Roku or other set-top boxes will be able to compete with cable TV in the near future – high quality content won’t, or rather can’t, be free.

“Public” internet streaming hasn’t replaced broadcast TV yet, and it probably won’t anytime soon, but IP based video delivery via your cable provider or authenticated content is exploding – and so is online video advertisement revenue.

Please note, as always, these are my own, personal opinions.