Enterprise Streaming Video

Streaming Video Adoption In the Enterprise Market

March 2001


MarketAccess, March 2001 Jupiter Media Metrix

Table of Contents Objectives and Key Questions ....................................................................... 1 Methodology ..................................................................................................... 2 OVERVIEW.......................................................................................................... 2 LIST OF ENTERPRISE USERS INTERVIEWED .......................................................... 3 LIST OF VENDORS INTERVIEWED.......................................................................... 4

High-Level Findings......................................................................................... 5 Enterprise Streaming Applications and Adoption Curve............................. 8 CURRENT APPLICATIONS..................................................................................... 8

Drivers........................................................................................................... 9 Adoption Curve ........................................................................................... 10 Deployment................................................................................................. 12

ENTERPRISE CHALLENGES FACED IN IMPLEMENTING STREAMING........................ 16 Technology Challenges .............................................................................. 16 Business Challenges .................................................................................. 17

IDENTIFYING STREAMING BUDGETS.................................................................... 18 Current Budgets/Funding............................................................................ 18 Return on Investment ................................................................................. 19

STATE OF EXISTING NETWORKS ........................................................................ 21 Employee Access to Streaming.................................................................. 21

USE OF OUTSIDE VENDORS............................................................................... 23 Outsourced Activities .................................................................................. 23 Vendor Selection Process and Criteria....................................................... 25 Content Distribution Networks (CDNs) ....................................................... 27 Value Chain Vendors .................................................................................. 29

Market Projections ......................................................................................... 31 INTRODUCTION ................................................................................................. 31 NORTH AMERICAN OUTLOOK............................................................................. 32

Outlook by Market Segment ....................................................................... 35 B2B Collaboration and Interdepartmental Meetings................................... 36 Customer Service ....................................................................................... 36 Customer/Partner Training ......................................................................... 36 Earnings Calls............................................................................................. 37 Employee Education ................................................................................... 37 Financial Services....................................................................................... 37 Internal Announcements............................................................................. 37 Product Launch Marketing Events.............................................................. 38 Sales Training ............................................................................................. 38 Other ........................................................................................................... 38

INTERNAL VS. EXTERNAL STREAMING ................................................................ 38 VALUE-CHAIN OPPORTUNITY............................................................................. 39 LIVE VS. ON-DEMAND ....................................................................................... 41

Technology and Vendors .............................................................................. 42 STREAMING MEDIA WORKFLOW......................................................................... 42 TECHNOLOGY COMPONENTS FOR ENTERPRISE STREAMING................................ 45

Encoding/Indexing/Editing Tools ................................................................ 46 Streaming Servers and Storage ................................................................. 46 Content Publishing Tools............................................................................ 46 Content Management Middleware.............................................................. 47 Content Networking Management Systems ............................................... 47 CDNs .......................................................................................................... 48 Web Browsers and Media Players.............................................................. 49 Business Models......................................................................................... 51

STREAMING SERVICES VENDORS....................................................................... 51 Video Creation ............................................................................................ 52 Video Capture ............................................................................................. 52



Video Processing ........................................................................................ 52 Video Hosting/Archiving.............................................................................. 52 Application Packaging ................................................................................ 53 Content Distribution .................................................................................... 53 Professional Services ................................................................................. 53 Managed Services ...................................................................................... 53

COMPETITIVE ISSUES AND TRENDS.................................................................... 56 Vendor Value Propositions ......................................................................... 56 Competition and Cooperation ..................................................................... 57 Competitive Trends..................................................................................... 58

Application Focus: Training and Education................................................ 60 MARKET DYNAMICS........................................................................................... 60 TRAINING VENDOR LANDSCAPE ......................................................................... 62

Table of Figures

Streaming Infrastructure Cuts Across Numerous Technology Categories .......... 6 Primary Drivers That Have Prompted Enterprises to Adopt Streaming

Technology ................................................................................................... 9 Current and Planned Applications for Enterprise Streaming/Webcasting........... 11 Sizing Up the Best Streaming Events ................................................................. 13 Growth in Sales Training Leads the Pack of Internal Streaming Applications .... 14 Enterprise Streaming Applications: Vital Characteristics .................................... 16 Per-Enterprise Spending on Streaming Technologies and Services in 2001 ..... 19 Measuring ROI of Streaming............................................................................... 20 Suitability of Streaming on LAN/WAN versus Public Networks........................... 21 Availability of Streaming across Enterprises ....................................................... 22 Interest in Outsourcing Internal-Focused Streaming Activities ........................... 24 Top Considerations for Enterprises When Evaluating Streaming Technology

Partners ...................................................................................................... 27 Percentage of Enterprise Streaming Events Outsourced through a CDN .......... 28 Mapping Adoption Phases to CDN Selection Criteria ......................................... 29 North American Enterprise Streaming Market Opportunity................................. 32 Corporate Bandwidth Penetration ....................................................................... 33 Streaming Spending by Enterprise Application................................................... 35 Enterprise Streaming by Opportunity Type (Internal vs. External Usage) .......... 39 Enterprise Spending across the Streaming Value Chain .................................... 40 Enterprise Streaming by Opportunity Type ......................................................... 41 (Live vs. On-Demand) ......................................................................................... 41 Video Workflow – “Glass-to-Glass” ..................................................................... 42 Functional Map of Streaming Technologies ........................................................ 45 Enterprise CDN ................................................................................................... 48 Technology Vendor Positioning by Product Offerings......................................... 50 Service Providers by Type................................................................................... 52 Vendor Positioning by Service Offering............................................................... 55 Training Vendor Snapshot................................................................................... 62 Training Vendors and Streaming Partnerships ................................................... 64

Streaming Video Adoption In the Enterprise Market Page 1


Objectives and Key Questions The primary goal of this MarketAccess study is to provide market forecasts, customer requirements and competitive information for providers of streaming video technologies and services that are targeting enterprise customers. The application segments Jupiter considers in this report are as follows:

• External applications of streaming o Earnings announcements o Customer/partner training o Product launches/marketing events o Customer service o Business-to-business collaboration

• Internal applications of streaming o Internal announcements (company address) o Sales training o Employee education o Intra-company (departmental) meetings/collaboration

Jupiter interviewed vendors and enterprise end-users to present an “end-to-end” view of market development through 2005. Overall, key questions to be answered include:

• What is the size and growth of the streaming market opportunity in the enterprise market?

• What are the barriers to enterprise adoption? • What are the infrastructure and managed service needs of

enterprises? • Who are the leading vendors serving the streaming needs of

enterprises? This MarketAccess study was researched and written by Jupiter Media Metrix analysts in the Custom Research and Consulting group. Principal analysts for this report were David Rader, Marcia Loewenstein, Patricia O’Shea, Neel Chopdekar, senior analysts; and Marc Harrison, research director. Contributors included Steve Islava, senior analyst; and Steven Gilison, research associate.



Methodology Overview To achieve an in-depth level of research and analysis in this MarketAccess report, senior analysts in the Custom Research and Consulting group at Jupiter Media Metrix conducted more than 70 in-depth interviews (lasting approximately one to two hours) with executives at technology vendors and enterprise “buyers” of streaming video products and services. In addition, Jupiter fielded an executive survey targeting end-users in early-adopter corporations to provide a “voice of the market” in measuring anticipated demand for streaming video components and overall spending levels. The detailed methodology Jupiter used in forecasting this market is included in the “Market Forecasts” section. In this MarketAccess study, Jupiter uses a six-step market opportunity identification process to identify opportunities for market development. The first three steps of the process focus on market attractiveness, while the second three steps of the process focus on vendor readiness to address this market. The following steps evaluate market readiness:

• Need. What is the application for the product/service under study? How exactly will this market segment utilize this offering? Which market segments will have the greatest need and place the highest value on the product? Which will be the early adopters? What are the decision factors that impact the decisions?

• Value. What are the most compelling value propositions for this type of product/service? How will customers value this product/service? What are the benefits and advantages? How would they value these services against alternatives? What would they be willing to pay for it? Would these services command a premium over existing approaches?

• Volume. Determine the size of the opportunity through market sizing and timing. How many situations exist in the market for this solution?



The following steps evaluate vendor readiness:

• Whole product requirements. What are the components of a complete solution? What does the customer expect to be included in a complete offering?

• Channel. Through which channels do these customers prefer to buy this type of product or service?

• Positioning. Who is perceived as the market leader by this market segment? What are the market buying criteria?

List of Enterprise Users Interviewed Executives at the following companies, 30 in all, were interviewed for this study:

3Com American Electric Bank One BEA Systems Boeing Cadence Design Systems Cisco Dominos Pizza Eaton Corporation Experien GE Medical General Motors Goodyear Hartford Hewlett Packard

IBM Intel Johnson & Johnson Kaiser Permanente Levi Strauss Merrill Lynch Motorola Nike Oracle Pharmacia Rockwell Sony Texaco The St. Paul Companies Whirlpool



List of Vendors Interviewed Jupiter interviewed 45 vendors of streaming technology products and services:

Adobe Activate Akamai Anystream Avid Internet Solutions CacheFlow Cereva Cidera Cisco Convera Digital Island Digital Lava Digital Pipe Digital Planet Eloquent EMC enScaler eScene eVoke Exodus iBEAM InfoLibria Inktomi

Kasenna Madge.web Media 100 MediaSite Microsoft Mirror Image NaviSite Network Appliance Qwest Digital Media RealNetworks Scale Eight SeeItFirst Silicon Graphics Sonic Foundry Speedera Streampipe.com Sun Microsystems Teleglobe Tellsoft Virage Worldstream Yahoo Broadcast



High-Level Findings • Jupiter estimates that the enterprise streaming market in North

America will grow from a base of $140 million in 2000 to $2.8 billion in 2005. Growth will be driven primarily by three factors: presence of a captive business-user audience with access to high bandwidth connections; applications that do not need to directly tie revenue to streaming activity (which has plagued the consumer streaming market); and the large technology budgets of medium and large companies.

• Investment growth is focused internally in the short term. Once enterprises have mastered early internal streaming applications such as internal corporate announcements, they will evaluate solutions that solve the “difficult” – streaming sensitive info to customers and partners. Moreover, with the focus on internal streaming initiatives, investment growth in intranet caching and multicasting solutions will outpace all other value-chain segments.

• On-demand streaming content ties into the core value-propositions of streaming: repeatable, consistent, pervasive, dynamic access. On-demand streaming revenues will grow from 36 percent of total revenues to 56 percent. Enterprises will take advantage of the time-shift and easy accessibility of on-demand streaming; once a live event is broadcast, streaming technology solutions allow it to immediately become part of an enterprises on-demand content archive – transforming growth of live streaming into a driver of on-demand.

• Training investment outpaces all other application categories because the ROI is clear to enterprises. The presence of a captive business-user audience with access to high bandwidth connections, a perception of applications that do not need to directly tie revenue to streaming activity (which has plagued the consumer streaming market), and the large technology budgets of medium and large companies all contribute to market growth

• Aggressive adopters have begun to multicast-enable their networks, or are planning to do so in the next 18 months. Companies who are not aggressively upgrading their networks are more likely to limit themselves to audio streams. Audio is a step to video for those who are multicasting their networks.



• Jupiter has developed a functional map of technologies necessary for enterprises looking to stream live and on-demand streaming video to audiences inside and outside the corporation. Streaming video cuts across a range of technologies. Enterprises at a lower level of activity – conducting pilot programs, for example – may require only a few of the components. Moreover, a full array of services vendors – content distribution networks, network operators, facilities-based service providers, ASPs and consulting organizations – are also competing for enterprise clients, in what is shaping up to be a highly competitive vendor landscape.

Streaming Infrastructure Cuts Across

Numerous Technology Categories

Source: Jupiter Research • Vendors must not underestimate the education process that will be

required to successfully sell video products and services into enterprise users. Enterprises are in the early phases of adopting streaming; many companies are easing into the use of streaming media by doing basic external audio applications such as quarterly earnings calls. Pioneering organizations are developing capabilities to do video streaming for internal company announcements and the beginnings of training applications.



• Enterprise streaming champions are looking to vendors to provide the business case for streaming. Early adopters have gotten by without justifying an ROI for streaming to date because:

o Total investments have been low o Cost has been hidden in other IT initiatives such as

multicasting o CEO has mandated the use of streaming o Cost has been spread out among many departments

• Lack of bandwidth or server capacity at regional or remote locations has precluded companies from targeting 100 percent of their workforce for access to streaming events.

• Users of internal streaming are confused about many of the value-added products and services that vendors are marketing. Few organizations understand how an external provider can help them with their internal streaming requirements, with the exception of video production and hosting/storage. They are more focused on getting guidance from “streaming experts” on best practices. Once vendors overcome this educational hurdle, they may find more receptive prospects for their products and services.

• Early adopters who have rolled out streaming to most of their employees are now considering their options for how to deliver secure streaming to partners and distributors. Jupiter believes that as the penetration of streaming applications that target external partners and customers increases, the current, mostly cultural, barriers of disseminating sensitive information via streaming technologies will subside.



Enterprise Streaming Applications and Adoption Curve Current Applications Enterprise streaming comprises audio and video content that is deployed, or streamed, in enterprise environments. Although the adoption of this technology by large corporations is still in its infancy, streaming activity is expected to grow two to three times its current volume within the next few years. Companies are in the early stages of planning and/or rolling out infrastructure to support streaming beyond a minimal level. Early applications are focused at both internal and external audiences. Examples of internal (intra-company) applications include:

• Executive addresses • Employee education • Sales training • Intra-company (interdepartmental) meetings

Streaming media is used externally for:

• Earnings announcements • Product launches and marketing events • Customer and partner training • Business-to-business collaboration • Customer service

Examples of early adopter industries are high-tech, financial services and pharmaceuticals because their fast product cycles, distributed sales forces and complex products require continuous employee, sales, channel and customer education. Traditional industrial manufacturing segments may adopt streaming at a slower pace because a higher percentage of their workforces do not have access to desktop PCs throughout the workday. With that said, a company’s decision to use streaming currently seems to be based more on its own individual situation than on external, vertical industry, forces.



Drivers The main impetus for enterprises to adopt streaming, video in particular, is the promise it holds to improve internal communication efficiencies (see figure below). However, the most widely adopted use for streaming today among Fortune 500 enterprises, is for quarterly earnings calls – an external, audio-based application. Streamed earnings calls have gained popularity at least in part by the change in rules imposed by the SEC. Companies also believe that this technology will increase their marketing reach helping to drive sales. In many cases, executive directives have prompted organizations to implement streaming.

Primary Drivers That Have Prompted Enterprises to Adopt Streaming Technology

Source: Jupiter Executive Survey (3/01), n = 31 Infrastructure Upgrades Additionally driving the adoption of streaming for internal applications is the upgrading of corporate IT infrastructure. As networks are upgraded to support e-business initiatives such as corporate portals and e-procurement, existing infrastructure is replaced with multicast-enabled equipment.



ROI Proposition Organizations that have adopted streaming or are in the process of evaluating the technology clearly see the potential cost savings in its use. Often cited areas for cost savings are: employee travel costs, costs to deliver seminars and new product information.

“When I compare this sort of [streaming] technology to the kinds of costs that we use to incur when we were doing either videotapes that we sent out quarterly or we did a four-color magazine, our costs to establish this have not been astronomical.” – Insurance Company

Corporate Evangelists In most cases, streaming within enterprises has received an enthusiastic reception from internal audiences. Line of business managers are beginning to understand how streaming can help them communicate more efficiently and are looking for ways to incorporate its use on a wider scale. Some early-adopter companies established broadcast centers (at a cost in the low tens of thousands of dollars) for internal media production and often facilitate the adoption of streaming. Adoption Curve Enterprises are phasing in streaming applications in a predictable way. Publicly held organizations tend to use streaming technology for earnings calls first. The information is generally a live audio stream directed mainly at financial analysts, but often company employees and other stakeholders have access, as well. There are many vendors that provision streamed earnings announcements, including Yahoo Broadcast, Activate and several specialists such as Corporate Communications Broadcast Network (www.ccbn.com), Investor Broadcast Network (www.vcall.com) and On24 Financial I-Network (www.on24.com).

“The last couple of analyst calls have been webcast to anybody or any shareholder that wants to call. That is part of the SEC’s desire to make sure that the analysts [on Wall Street] don’t get information before anyone else does. We have been using one or two of the public investor-supported companies that stream the analyst meetings.” –Automotive Company

http://www.ccbn.com/

http://www.vcall.com/

http://www.on24.com/



Executive announcements are another early application for streaming within large corporations. These are usually live audio addresses directed at company employees. The use of streaming for intra-company meetings – in which streamed content is replacing telephone conferencing – is also experience early-stage growth. These are also live events; streamed audio is coupled with static visual content such as slide presentations and documents. The figure below shows the applications that organizations report adopting to date.

“What is being accepted right now are corporate types of communications – major announcements, quarterly revenue reviews, analysis meetings. Plenty of that is being done live online with audio.” – High Technology Company

Current and Planned Applications for Enterprise Streaming/Webcasting

Source: Jupiter Executive Survey (3/01), n = 31 Corporate training has also embraced the use of streaming technology. Training applications account for the most pervasive use of streaming within an enterprise today (see “Application Focus: Training and Education,” later in this report). Streaming is employed for the following types of training activities:

• Employee Education • Sales Force Training



• Partner/Channel Training • Customer Training • Product Training

Streamed training tends to be directed first at internal audiences. Today, it is mainly live audio or simple, “talking head”-style video coupled with slide presentations.

“It’s a very significant strategy for us in pushing out appropriate training information sort of in real time to people.” – High Technology Company

Deployment Video vs. Audio Audio is currently the favored streaming deployment medium within the enterprise due to bandwidth constraints. Infrastructure and bandwidth issues, as well as the fear that video will overburden a corporate network, have limited the use of video on a large scale.

“It’s a bandwidth issue. It’s how much can be on your network at one time. So, we’ve restricted it to audio mostly from a performance standpoint.” – High Technology Company

However, for the right deployment, video adds value. Video is considered important when it communicates a message. However, vendors must not underestimate the education process that will be required to successfully sell video products and services into enterprise users. In order to ensure that enterprise customers employ streaming video in a cost-effective manner and have a positive experience, streaming vendors should push enterprises towards deploying the technology for the “right” streaming video event.



Sizing Up the Best Streaming Events

Source: Jupiter Research Optimal streaming video events have the following characteristics:

• Visually focused. When the duration of a meeting or an event will be spent working on a document or spreadsheet, the value of video is diminished, because interaction is focused on a document, as opposed to a person.

• Relationship building. Streaming video is emerging as a good conduit to foster relationships between dispersed parties. During events where building a relationship is a factor, video, and the facial expressions it conveys, is a positive factor. If all participants in a meeting are known, the need for relationship building, and the value video can add to this[attribute] is not critical.

• Planned events. Given the costs associated with a streamed video event, participants and leaders must be prepared. Streaming video is not recommended for a spontaneous event where the potential for meeting participants to appear unprepared is high.

• Continuous events. The length and frequency of a training event also plays a role in determining its fit with streaming technologies. Streaming is an option for those events that run a significant length of time, will be archived and replayed, or recur with frequency. For one-off short events that will never be reused, the investment in streaming is not recommended.



Internal vs. External The majority of streaming video applications in use today are focused at internal audiences. Companies are honing their streaming skills internally before reaching out to external audiences, particularly customers. Jupiter believes the trend toward the use of streaming primarily for internal applications will continue over the next couple of years, notwithstanding the use of streaming for earnings calls, which Jupiter already views as a commodized market. Jupiter believes that sales training in particular will drive significant revenues in the near term. Growth in Sales Training Leads the Pack of Internal Streaming

Applications

Source: Jupiter Research Live vs. On-Demand Research interviews and survey indicate that approximately 20 percent of streaming events currently employ live streams. Live streaming is considered important for two-way meetings where interactivity (e.g., shared power point, Q&A and polling) adds value. Live video is not considered essential for skills training and for non-time sensitive material – designed for employees to access as necessary.



The main benefit of streaming content live is that information retention tends to be higher. Behavioral responses such as interactivity, finality and excitement account for the audience’s enhanced ability to retain information during live events. Studies have shown that for live broadcasts the audience is more likely to attend, listen and stay for the duration of the event. Mock live – where content is pre-taped but only shown at specific times – is often considered as useful and powerful as live as it creates the same response in the audience as live events do. Additionally, it can be presented on a time-shift basis helping to alleviate network congestion concerns and time-zone differences. Some organizations feel that broadcasting live or mock live events helps them manage their network traffic better because the event can be presented on a time-shift basis and/or the number of simultaneous viewers can be controlled by requiring pre-event registration or limiting the audience size on a first come, first served basis. However, live events are perceived to have quality issues. Due to bandwidth constraints, the user experience can be less than ideal for remote users. On-demand is essential in most cases and is considered one of streaming technology’s key value propositions because:

• It lowers the number of key employees missing events • Allows all to access an event at their convenience at their desktop • Remote users can access

“Clearly one of our limiting factors is our ability to reach everybody. We don’t want second class citizens. Putting it on-demand levels the playing field. A lot of people can choose on-demand because they can’t receive the entire world simultaneously with the network as we have it. I would imagine that 60 percent of the video streamed will be streamed live in 2003. [up from 15 percent today.]” – High Technology Company

Moreover, offering on-demand naturally follows from a live event – particularly from a cost perspective.

“There is not much incremental cost to producing something live vs. on-demand.” – High Technology Company



Enterprise Streaming Applications: Vital Characteristics

Source: Jupiter Research Enterprise Challenges Faced in Implementing Streaming Technology Challenges Multicast Enabling Networks Enterprises are still mostly in the pilot stage, getting comfortable with the fact that streaming works on their networks. Many are overestimating the extent to which they need to upgrade network infrastructure for streaming applications. Internal networks must be multicast-enabled in order to optimally handle streaming video requirements; at this point, most networks are not multicast enabled.

“In most cases my customers want to reach a larger audience inside the firewall than I will commit to because of the lack of multicast. If you have a multicast-enabled network then streaming is [not a problem]. We have unicast today and that can cue up some bandwidth, but once we get to multicast, I can’t see bandwidth being a problem.” – High Technology Company



“The initial constraints we faced were getting all of the code upgraded in the routers and the switches to be multicast-enabled.” – Energy Company

Inconsistent Network Infrastructure and Security Concerns Most companies lack a consistent global infrastructure. Network architecture as well as connectivity can vary widely from campus to campus especially at small remote and international locations. As a result, there are performance issues that must be taken into account for each separate corporate location.

“The WAN is a T-3 at some sites but can be as small as an ISDN line at others.” – High Technology Company

Enterprises also have to deal with the challenge of securing sensitive information streamed both inside and outside the firewall, and manage the process of deploying streaming applications across a combination of enterprise networks and the public Internet. Firewall issues can be cited as an inhibitor, however Jupiter believes that as the number of streaming applications targeting external audiences increases, the barriers – mostly cultural – of disseminating sensitive information via streaming technologies will subside. Vendors that establish themselves as secure, trusted channels can mitigate this barrier, and capture this opportunity. Business Challenges Gaining IT Buy-In & Support The initial business challenge that enterprises face when considering the use of streaming technology is getting IT approval. Network administrators fear that streaming content will tie up the corporate network. Those desiring to stream content also have to vie for time on the network.

“I have been disappointed in how long it has taken to get our IT people onboard and provide the support needed to do this. The way that I had to build that mindshare was by rounding up my customers. Currently our CEO does a lot of streamed events. So I just told the IT folks, ‘If you can’t do this, why don’t you go talk to [the CEO] and tell her she can’t do it. I am going to tell her that my end of it is ready to go.’” – High Technology Company



Facilitating Awareness and Adoption Potential users need to be educated about streaming technology and its potential applications. Value propositions need to be made clear.

“At first we had to envision what was possible [with streaming technology]. Just kind of get a sense of what we could do and how far we could take it.” – Insurance Company “Part of it is just making people aware of the technology. We are a large dispersed organization and you have to make people aware of the technology and show them how they can use it before they start coming to you. It has been a bit of a marketing road show.” – Energy Company “We still have an awareness issue. We are going to have a big announcement internally to drive people to use these mediums.” – High Technology Company

Once potential users are aware of streaming and its applications, they need to feel confident that the technology will deliver as promised. Development of User Processes Processes need to be developed and put in place to administer the production and use of streaming content. Organizational wide guidelines are generally developed for:

• Content production • Application integration • Content administration; scheduling • Content delivery

Identifying Streaming Budgets Current Budgets/Funding Most organization have not developed a separate budget for their streaming activities. There is not a significant enough amount of streaming being done to warrant its own budget nor is it broken out as a line item on a training, sales or marketing budget, for example.



“The cost is spread out across three different business units, corporate communications, HR and IT. It’s not painful for anyone.” – Insurance Company

Streaming is considered a way of executing on a directive – a means to an end not the end itself. It is not viewed as the solution but rather as a solution enabler.

“We really don’t look at it as a technology, it’s just a tool. It is just part of the delivery mechanism.” – High Technology Company

Return on Investment Jupiter estimates that most enterprise streaming initiatives are in the pilot phase, with investments often less than $100,000. However, the cost to manage a staff internally far outweighs the investment in technology.

“The kind of costs that we have incurred for this, not repetitive costs, but just to establish this technology, we are probably looking at $50,000.” – Insurance Company

Per-Enterprise Spending on Streaming Technologies and Services in 2001

Source: Jupiter Executive Survey (3/01), n = 31



Vendors are ahead of most users in constructing ROI cases to justify corporate-wide deployment. Organizations understand where the cost savings potentials are but have either not invested very much in streaming to date or used the technology enough yet to warrant extensive return on investment calculations.

“I don’t think that it is cost prohibitive. If you look at the entire financial model on it, it’s clearly cost effective.” – High Technology Company

Measuring ROI of Streaming

Source: Jupiter Executive Survey (3/01), n = 31



State of Existing Networks Employee Access to Streaming Although the majority of employees, in most cases, have access to streamed content, few companies are reaching their entire workforce for a variety of reasons:

• Large workforces that do not have access to desktops on the job (e.g. manufacturers).

• Employees with outdated desktops that lack sufficient CPU power and soundcards.

• Remote locations that lack the infrastructure to support streamed content particularly video content.

Suitability of Streaming on LAN/WAN versus Public Networks

Source: Jupiter Research Despite not reaching all employees, enterprises feel that streaming is a worthwhile endeavor.

“I’ve been in corporate communications for awhile and this is the first time that I can remember that we’ve consciously gone into a certain kind of communication where we said, ‘You know, we are not going to hit everybody.’ Usually, when you decide that you are



going to implement a new kind of communications on the internal side, you say, I want to hit 100 percent. I want to figure out how I can get to all employees. “This was one time where we very consciously said, ‘We have a chance to make a huge improvement here. We can do it for maybe 70-80 percent of the employees. We probably can’t make the investment, because it would be a significant investment, to get to 100 percent.’” – Insurance Company

Availability of Streaming across Enterprises

Source: Jupiter Executive Survey (3/01), n = 31 Blocking of Streaming Enterprises often restrict access to streaming, particularly when streams are coming from outside the organization. Regulation is often done on a site-by-site basis at the discretion of the IT department. Blocking can be triggered by an incidence of many employees accessing the same site in a short period of time.

“We do not, as a general rule, allow people to go out and grab any stream and bring it into our network.” – Insurance Company



Connection Speeds/Bandwidth Enterprises have inconsistent connections across their corporate networks. Connection speeds and bandwidth vary from campus to campus. Therefore, streaming content is typically formatted to target the lowest common denominator – 56 kpbs dial-up connections, perhaps even as low as 28.8 kbps – in order to be accessed by remote users.

“We have three classes of offices. The largest offices on the intranet are typically 3 to 6 Mbps. The next tier is 56K to T1 [speeds]. Below that is anywhere from a dial-up modem to 128 or 56K – these are international and remote offices. This is why we offer a hybrid of video and audio. The business units will not pay for video infrastructure to small and remote offices.” – Energy Company

Media Players Content, for external audiences, is currently formatted for both Microsoft and Real players; rarely is content formatted for QuickTime players. For internal use Real seems to be the favored player, for now. For internal applications, today we often see that organizations merely provide a link to Real or Microsoft so users can download the necessary software. Most companies aren’t doing much, if any, internal streaming so player software is not centrally administrated. As internal use of streaming expands, the trend will be toward centrally administering media players as they become a standard part of desktop tools such as Office and Outlook. Use of Outside Vendors Outsourced Activities Internal Streaming Early adopters have developed capabilities in-house to create, encode and deliver streaming content. Because streaming to date has seen predictable, limited use and is mainly audio content delivered to internal audiences, in-house facilities and networks have been able to handle the demand. As a result, few organizations have considered outsourcing their internal streaming requirements. Today there is more interest in consulting – getting guidance from “streaming experts” on best practices – than hiring a vendor to handle production, encoding or delivery.



“We might look to an outside vendor for expertise – any consulting to help us deploy products or solutions or design expertise or best practices on how we might do this stuff internally.” – Energy Company

More advanced early adopters, which are multicast enabling their networks, are interested in outsourcing. But their focus is on content delivery to internal audiences not value-added services such as content management and scheduling. But they have yet to figure out how a vendor would fit into their existing network.

“I couldn’t tell you what would or wouldn’t be outsourced. Typically, we want to keep our arms around what would be strategic or would give us a competitive advantage and outsourcing everything else. But, if we were to go with a CDN to do the internal stuff, then we would radically have to change our infrastructure.” – Energy Company “If we were to go with a Yahoo Broadcast to do our internal stuff then we would have to radically change our internal infrastructure. We would have to break our private WAN and tell every office that they would have to use the Internet as a backbone.” – Energy Company

Interest in Outsourcing Internal-Focused Streaming Activities

Source: Jupiter Research



External Streaming Overall, organizations are more willing and likely to outsource their streaming requirements to reach external audiences and for off-site events. The main interest here again is for content delivery but other services such as production are also considered. Although companies state that it is more expensive to use an outside vendor than to do it themselves, they find that using vendors for offsite and external streaming is often more cost effective.

“We are considering using an outside provider for partners and customers. There are quality issues when you are delivering to partners or customers. There is a different level of service that is expected.” – High Technology Company

Vendor Selection Process and Criteria Vendor decisions are both decentralized and centralized. For early pilot projects, divisions or groups within organizations are free to select the vendors they will work with. They can even choose to go outside of the organization even if internal streaming capabilities exist. However, as streaming becomes more prevalent within an organization, the decision to use an outside vendor and which vendor to use becomes more centralized – typically becoming a broadcast services and/or IT decision. Some organizations even develop streaming standards by which vendors are evaluated and must compete.

“We have a dozen different vendors that have our standards and with whom we have worked directly with at least once. These vendors are competing to the same deliverable and they have to use our standards. It turns into more of a commodity and the vendors are not trying to sell some special technology.” – High Technology Company

Organizations complain that the vendor selection process is an arduous task. There are so many different solutions and vendors on the market that the due diligence process becomes a massive undertaking. One problem is that companies feel that no one offering encompasses the total solution they are looking for. While they are not necessarily looking for a one-stop-shop, they also do not want to have to work with multiple vendors to achieve the solution they need.

“Consolidation of offerings is what will finally get me to pull the trigger with one of these vendors. The way it is today, everyone wants to offer me a different piece. I don’t want to work with 15 vendors and I don’t want to pay for one piece of the puzzle 15 times or pay 15 times as much as I should.” – High Technology Company



Increasing this burden is the fact that vendors are evaluating both traditional and non-traditional streaming providers. Because companies are looking to purchase a solution and not a technology this increases the number of providers in the consideration set.

“If someone came to me and tried to sell me streaming, I wouldn’t know what they were selling me. I don’t buy streaming. I’m looking for a solution. If it includes streaming, so be it. But I am looking for effective ways of communicating or educating or producing content and part of that may be streaming.” – High Technology Company

The following are important factors that organizations consider when selecting a streaming partner:

• Pre-production, production and post-production capabilities. Vendors are evaluated on their professionalism and reliability during the process.

• Robustness of offering. Products and services need to be enterprise grade.

• Flexibility of solution. Enterprises are looking to solve specific business problems, not adopt a new technology.

• Vertical industry expertise. Select vendors who are focused on their “space” and have “like” clients.

“We didn’t pick them predominantly for their technology. They had a good technology but it wasn’t the primary factor. It was really that they understood our space and our products.” – High Technology Company

The following diagram maps the importance of the selection criteria that enterprises employ when selecting streaming technology partners against the control vendors possess over those criteria. When selling into the enterprise, vendors must focus on those high-priority and high-control factors highlighted below.



Top Considerations for Enterprises When Evaluating Streaming Technology Partners

Source: Jupiter Research Content Distribution Networks (CDNs) Most organizations have not considered using a CDN for internal applications. Some perceive using a CDN for internal applications as “overkill” since the value proposition that CDNs offer has not been scaled down to specifically address enterprise requirements. Enterprises feel that could not scale their use of CDN services to justify the cost.

“We will never have one million simultaneous users and we don’t want to pay for that. The production requirements for internal are not as great as for external.” – Energy Company

“[CDNs] want us to predict usage. But I work with individual customers and their audience size is not big enough to warrant the price.” – High Technology Company



Percentage of Enterprise Streaming Events Outsourced through a CDN

Source: Jupiter Executive Survey (3/01), n = 31 To address internal content distribution and performance concerns, companies are focusing on multicast-enabling their networks. They perceive that using an external CDN delivery for internal applications would create firewall issues and would not solve their network load issues. However, there is interest in how CDNs can be used for external applications and for delivery to remote company locations. CDN Selection Criteria

“Clearly, we have to work with a firm that can give us the broadest support globally. We elected to work with our current provider because we felt they had the deepest and broadest global capabilities.” – Financial Services Company

Organizations focus on different selection criteria at different stages of adopting streaming:

• In the first phase, the focus is on infrastructure. Global presence is a key consideration factor for companies seeking to work with a CDN at this point. At this stage, organizations are looking to work with a CDN to extend their global reach.

• Proving the business case for streaming becomes the focus in phase two. It is only through proving return on investment that a



company’s use of streaming will grow. Champions of streaming within organizations look to vendors to provide ROI case studies.

• In phase three, an organization’s volume of streaming has grown to a point where management services and tools become a priority. This is where a CDN’s value added services are evaluated.

• As audience size grows and content is streamed more frequently to external audiences such as customers, performance measurement and service level agreements (SLAs) become the metrics with which organizations evaluate providers.

• In phase five, an enterprise’s use of streaming has matured to the point where monetizing the content becomes a consideration and more sensitive data is streamed in and out of the organization. Securing streams becomes a top priority.

Mapping Adoption Phases to CDN Selection Criteria

Source: Jupiter Research Value Chain Vendors Given the fractured nature of the enterprise streaming technology market, it is not surprising that users are not ready for what all vendors have to offer. When an enterprise sets out to deploy a pilot streaming initiative – particularly an internal application, in which enterprises may be unsure of how vendors can help – the number of vendors along the streaming value chain that an enterprise buyer must evaluate is daunting.



“I get calls from three vendors per day wanting to sell me stuff, but most of them go on the back burner because we are not ready for that – and we are pretty far along.” – Media Solutions, High Technology Company

Proactive education initiatives by the vendor community to simplify the streaming technology evaluation cycle can increase awareness of streaming technology benefits within the enterprise and better prepare enterprise buyers for sales initiatives. Such efforts can increase sales conversion rates and make prospects into educated and “better” customers once streaming technology has been adopted. End-to-end solutions and value-added services will take on a greater importance among users as volume and scale increase. Security and collaboration tools will also be considered essential as applications become more one-to-one and externally focused.



Market Projections Introduction Vendor attention in the enterprise streaming market has exploded over the past six months. The presence of a captive business-user audience with access to high bandwidth connections, a perception of applications that do not need to directly tie revenue to streaming activity (which has plagued the consumer streaming market), and the large technology budgets of medium and large companies all contribute to market growth. Jupiter estimates that the enterprise streaming market will grow from a base of $140 million in 2000 to $2.8 billion in 2005. Forecast Methodology To provide as much information to vendors as possible during this early growth phase of the enterprise streaming market, Jupiter divided up the market up by phases of adoption, application segment and the value-chain of delivery. To arrive at our figures Jupiter conducted interviews with executives of 30 Fortune 1000 companies – both early and late adopters of streaming – and fielded an Executive Survey. Jupiter determined market participation, views on spending and activity by application segment as well as spending along the value-chain of technology and services. Streaming activity can vary widely across companies and we accounted for this difference in our projections. Our figures reflect the total market size for applications and services for enterprise streaming as segmented.



North American Outlook Jupiter expects the market for enterprise streaming market will grow at a CAGR of over 80 percent to reach $2.8 billion in 2005 (see figure below).

North American Enterprise Streaming Market Opportunity

Source: Jupiter Enterprise Streaming Model, 3/01 Factors driving the market for streaming technologies within the enterprise include:

• Linking dispersed entities consistently. Enterprises are beginning to realize how streaming can be used as a tool that enables consistent and pervasive communications with employees, customers and partners. Sales training can be delivered consistently around the world. Companies communicate with customers and partners to ensure that training and information is delivered consistently and fairly.

• Proven implementation success momentum. As enterprises begin streaming application deployment, business users see how to use streaming and the value that the tool can deliver. The momentum originated from successful implementations of training, customer service and B2B collaboration applications serves as the best tool to educate enterprises about streaming technologies.



• Multicast network traction. Although not a prerequisite for streaming, company networks upgrades often include multicast capability. Companies are aware of the capability and are testing streaming.

• “CDN in a Box”. Prior to the establishment of intranet CDNs, enterprises encountering network architecture and maintenance issues were forced to build costly network expertise internally. The introduction of “iCDNs” into the enterprise-network market provide enterprises with viable outsourcing solutions that enable high quality internal communication networks, and allow enterprises to stream without major network upgrades.

• ROI lessons from training and collaboration. Online training and collaboration tools that leverage streaming technologies are exhibiting huge growth and are demonstrating return on the investments enterprises are making in those solutions. This demonstrated value is driving increased investment in those solutions.

• Corporate bandwidth. Among the Fortune 1000, high bandwidth connections are prevalent for core corporate offices. Jupiter predicts that 87 percent of employees with Internet connectivity will use a broadband connection by 2005.

Corporate Bandwidth Penetration

Source: Jupiter Internet Access Model (12/00)



Although these factors are driving the growth of the enterprise streaming market, vendors of streaming technologies must mitigate the following forces that are inhibiting growth of enterprise streaming:

• Network load. Both the enterprise market’s inability to provision the network resources required to stream, and the perception that streaming will overload network capacity make enterprises hesitant to experiment with and deploy these applications.

• Business process. In order for streaming applications to become a standard within the enterprise, vendors and enterprise customers must develop a consistent business process for streaming. As streaming penetration increases, guidelines surrounding the processes for content production, scheduling, storage and delivery must be established – so as to not overload network or human resources.

• Inexperience. There are few experienced or enterprise leaders and best practice scenarios in the streaming market. One leading practitioners emerge the enterprises can look to these leaders and follow in their footsteps.

• Fractured market. The high number of vendors offering streaming solutions in the enterprise marketplace forces buyers to go through a high level of due diligence when evaluating solutions. The number of vendors to evaluate when trying to establish a streaming solution can be daunting.

• End user access. Though high-speed access exists within an enterprise’s network, end-users accessing from beyond the firewall generally do not have high-bandwidth connections today.

• Quality of streams. The quality of the majority of video streams today is still rather jumpy, and entities charged with producing video for the Internet are still learning the limitations of the medium.

• End user experience is not consistent. The experience of enterprise end-users still varies greatly. Connection speed and streaming-view download experiences must be harmonized in order to provide all end-users with a consistent experience.

• Limitations of corporate desktops. Though the number of high-speed Internet connections is growing, enterprises must work to increase the penetration of both high-bandwidth connections as well as installed base of sound cards.



Outlook by Market Segment In assessing the enterprise streaming market, Jupiter analyzed the in detail to understand the dynamics of penetration and growth per application segment .

Streaming Spending by Enterprise Application

Application Segment Forecast (in millions US$)

2000 2001 2002 2003 2004 2005 Product Launch/Marketing Events $38 $72 $133 $254 $499 $567 Customer/Partner Training $0 $3 $28 $58 $116 $143 Customer Service $0 $3 $28 $58 $116 $143 B-to-B Collaboration $0 $1 $5 $39 $115 $142 Earnings Calls $9 $13 $18 $35 $70 $84 Financial Services $28 $56 $109 $213 $418 $510 Sales Training $3 $30 $74 $186 $385 $519 Employee Education $7 $15 $33 $88 $228 $277 Internal Announcements $52 $80 $106 $132 $188 $227 Interdepartmental Meetings $2 $14 $29 $58 $116 $142 Other $0 $2 $17 $35 $70 $85 Total $141 $290 $580 $1,156 $2,320 $2,840 Source: Jupiter Enterprise Streaming Model, 3/01



Applications focusing on training are poised to experience the highest streaming growth within the enterprise, with a CAGR of nearly 100%. Although the overall drivers and inhibitors influencing enterprise streaming apply to all application segments, per segment, factors influencing and inhibiting the growth specifically include: B2B Collaboration and Interdepartmental Meetings

• Flexibility. Streaming collaboration applications allow enterprises to collaborate with partners “on the fly” without incurring high levels of travel expenses.

• Cost. Collaboration solutions are less expensive than traditional video conferencing tools.

• Bandwidth. End-users may not have the bandwidth connections to effectively participate in collaboration events (this is more of an issue for B2B collaboration).

Customer Service

• Quality of service. Before penetration of customer service applications reaches high levels the quality of streams delivered to the customer audience must be of a guaranteed, high-quality level.

• Response. On-demand customer services streaming applications can enable a high level of responsiveness toward customers.

• Cost of delivery. Streaming delivery of customer service (when on-demand) can require less in-person interaction (and cost) than live customer service channels.

Customer/Partner Training

• Security. The training of customers and partners often involves the dissemination of sensitive company information. Most enterprises currently express reluctance at streaming this information, due to security concerns. This application segment represents a large opportunity for streaming vendors if can establish themselves as a trusted source that provides increased control over the dissemination of this information while guaranteeing security.

• Quality of stream. Enterprises must guarantee high quality streams because of the importance of customer and partner audiences.

• Consistency. Streaming allows enterprises to reach all customers and partners with the same message, and ensure that by deploying the same content, all customers/partners are treated equally.



Earnings Calls

• Regulations. The primary driver for this application segment is that streaming allows enterprises to comply with SEC regulations surrounding the dissemination of financial information publicly.

Employee Education

• Cost savings. In-person training of a dispersed workforce, be it national or global, is an expensive proposition. The ability to bypass centralized in-person training will reduce the costs associated with those events.

• Parsing the training cycle. Because online training inhabits a digital medium, course content and tools can be edited to meet the needs of individual participants.

• Tracking and compliance. Tracking and compliance functions can range from ensuring that all members of a sales-force viewed a training event, to testing and re-enrolling those trainees if they did not absorb knowledge at required levels.

Financial Services

• Timely dissemination. Streaming financial information allows enterprises to distribute critical and time-sensitive information quickly, to all required parties.

• Audience needs. The end-user audience within the financial community that consumes streaming financial service information is often a time-crunched hard to schedule group, that benefits from the archival and on-demand retrieval of this information.

Internal Announcements

• Consistency. The use of streaming for internal corporate announcements assures that no employee is left out of the information-chain, and that the same message is delivered to everyone.

• Executive mandate. The driver for internal announcement capabilities within the enterprise often comes from the executive level.



Product Launch Marketing Events

• Consistency. Streaming allows product launch and marketing information to be deployed in a consistent manner to all constituencies.

• Reach. The reach of streaming in this segment is higher than traditional modes of dissemination, because parties that cannot view events live, possess on-demand streaming access to events.

• Bandwidth. Because end-users may be accessing events from low-bandwidth connections, the power of marketing and launch messages may be lost via streaming.

Sales Training

• Cost savings. Streaming training eliminates the need to incur travel expenses to train a dispersed sales force.

• Consistency. Streaming allows the enterprise to train all sales-people in a consistent manner, and ensure/track that all sales people participate in training events.

• Reach. For a dispersed sales force, streaming allows enterprise to reach sales-users that are difficult to reach. However, these end-users often do not have access to high-speed connections.

Other

• This segment includes streaming for recruiting purposes, and other miscellaneous enterprise streaming events.

Internal vs. External Streaming Enterprise use of streaming today varies from market to market and from application to application. Though the adoption path often moves from external to internal to external applications. For example external marketing events like product launches can trigger enterprise use of internal product launch activities like sales training and product communication. Enterprise streaming demands are evolving. Their needs become more complex as they move from pure external to pure internal to combination of both internal and external streaming.



Enterprise Streaming by Opportunity Type (Internal vs. External Usage)

Source: Jupiter Enterprise Streaming Model, 3/01 Value-Chain Opportunity As enterprise streaming for internal initiatives gains momentum, intranet-based streaming solutions will become increasingly important to the vendor and enterprise community. Jupiter expects the intranet caching/multicasting segment to grow from 9 percent to 18 percent of total revenues. Growth in the intranet caching/multicasting segment is fueled by enterprise buyers seeing the value in internal streaming applications.



Enterprise Spending across the Streaming Value Chain

Value-Chain Segment Forecast (in millions US$)

2000 2001 2002 2003 2004 2005 Value-added Services $21 $40 $74 $145 $277 $314 Systems Integration Services $13 $28 $60 $120 $262 $345 Storage/Hosting $25 $48 $89 $173 $323 $366 Post-Production Services $21 $40 $75 $147 $273 $309 Content Delivery $21 $46 $95 $196 $401 $498 Content/Applications $26 $55 $108 $198 $397 $486 Intranet Caching/Multicasting $13 $33 $79 $176 $388 $522 Total $141 $290 $580 $1,156 $2,320 $2,840 Source: Jupiter Enterprise Streaming Model, 3/01 As enterprises deploy internal streaming initiatives, enterprise-buyers are purchasing the boxes and network equipment needed to enable streaming over internal networks from caching and multicasting vendors. These enterprises want to stream, and to date had to “do it themselves” – creating significant demand for intranet caching and multicasting technologies. Jupiter expects content delivery will grow as a percent of total revenue – increasing it share year over year. Enterprises realize that they will need caching and distribution capabilities as the volume they stream increases. Because enterprises have little expertise and equipment to support these needs, investment in these solutions (and outsourcing providers) is poised to grow.



Early adopter-enterprises streaming internally are managing much of the value chain themselves. Currently, external providers (CDNs) are not offering internal-enterprise solutions, but Jupiter sees a growing interests from these vendors in this market. Live vs. On-Demand Because enterprise needs vary for live and on-demand applications. Jupiter has segmented its streaming spending forecasts by live vs. on-demand usage. Jupiter forecasts on-demand streaming to become more important and a larger opportunity than live streaming, and is already seeing movement in the marketplace towards this end. On-demand streaming content ties into the core value-propositions of streaming: repeatable, consistent, pervasive, dynamic access. Once a live event is broadcast, streaming technology solutions allow it to immediately become part of an enterprises on-demand content archive – transforming any growth of live streaming into a driver of on-demand access. The rapid growth of the training application segment within the enterprise fuels the growth of on-demand streaming, as well. Effective training applications need to reach disparate constituencies with harmonized messages, at convenient times, which can only be provisioned by on-demand solutions.

Enterprise Streaming by Opportunity Type (Live vs. On-Demand)

Source: Jupiter Enterprise Streaming Model, 3/01



Technology and Vendors Streaming Media Workflow As with any media production and distribution, enterprise streaming applications involve a series of steps. This workflow is a useful way to illustrate the needs of enterprises in terms of tools and support services they may buy from outside vendors. Each step in the process requires hardware and/or software, or could potentially be outsourced to a service provider. The following diagram illustrates the general flow of work from creation through distribution.

Video Workflow – “Glass-to-Glass”




Creating, Capturing Apart from planning, video workflow starts in front of the camera. Video productions for enterprise applications usually take two forms:

• Live events, where company executives or other staff are meeting or presenting while one or more cameras are capturing the proceedings, producing a live feed that can be broadcast or captured on tape or other recordable media.

• Taping of processes surrounding the enterprises own products and services, such as customer usability research, product usage demonstrations, production processes, or skills training. These video productions can require a higher level of skill and postproduction than live events such as meetings.

Many large companies have their own production facilities and staff for producing video programming, but the output has been geared toward broadcast quality events or medium quality VHS tapes. Streamed live video event, in contrast, are constrained by bandwidth and network latency, requiring different camera and lighting techniques to compensate. Video product staff – whether company staff or outside contractors – are learning to employ these techniques for their “made-for-streaming” productions. While production staffs are grappling with the challenges of producing video for distribution over IP networks, companies are beginning to put more emphasis on higher production values for live streaming, especially for audiences they want to impress such as investors, customers and sales prospects. Video Processing: Editing, Encoding, Indexing Real-time video signal feeds from live events go straight to live encoders, where they are converted into digitally compressed formats that can be delivered over IP networks. Video that is not live and that requires modification is processed by linear and non-linear media tools that production staff can use to “clean up” the video and audio tracks so that they are audibly and visually presentable. Editing tools are also used to add effects such as dissolves and fades between scenes and text and graphic overlays, such as rolling credits. The edited output is then encoded for IP distribution. The most commonly used formats for enterprise applications are RealVideo from RealNetworks and Windows Media from Microsoft.



In parallel with encoding, indexes (metadata files) are created that are time-synchronized to the audio and video tracks to allow them to be searched later on by time sequence or content topic. Indexing is critical in on-demand applications, in which users may only want to watch clips of a few minutes long and need a means to find specific clips without playing back videos that may be hours long. Serving/Storing Regardless of the application, video is served from servers from either RealNetworks or Microsoft, depending on the format involved. These servers, backed up by large storage units depending on the volume, act as repositories for content to be streamed on demand, such as training videos. Packaging, Publishing After it is produced, video that is to be streamed must be managed and published in the context of applications that it is intended to support, such as marketing communications or training. In these applications, audiences typically view video in a web-based multimedia presentation that includes HTML content, graphics and perhaps animation. In the case of live events, much of this content publishing work occurs before the video is actually captured and streamed. The process of publishing video involves locating video files (and associated meta data such as indexes) or links to live feeds along with other files (such as PowerPoint presentations) that are a part of the application, then linking or embedding them in HTML pages that serve as the interface for end users. Media services and other staff that are publishing applications using video also are making decisions about various distribution factors:

• The audiences that will have access to the content – inside or outside the firewall, and at what locations within the company

• Mix of scheduled events or on-demand availability • Directories to allow users to find non-live or archived content.

Distributing In enterprise applications, video is streamed in two ways, depending on the application and the state of a corporations network infrastructure:

• Through content distribution networks (CDNs) that attempt to overcome some of the Internet’s throughput deficiencies in delivering video. CDN distribution can reach both external audiences and audiences inside of the corporate firewall.



• Over the company’s own intranet if the application is intended for internal audiences.

For internal applications, intranet distribution offers advantages over CDNs if the company’s network has the bandwidth or architecture to handle the streams, or if usage (e.g., audience size) is kept low. For content that is intended for both internal and external audiences, companies can use their own intranet to reach employees and an external content distribution provider to reach investors, partners and customers. Technology Components for Enterprise Streaming Like most networked digital media, streaming video cuts across a range of technologies. The following diagram illustrates the functional components of a complete technology solution for an enterprise that is streaming a sizeable volume of video to employees in various locations and to an external audience. Enterprises at a lower level of activity – conducting pilot programs, for example – may require only a few of the components.

Functional Map of Streaming Technologies




Encoding/Indexing/Editing Tools Codecs (for encoding) are available from RealNetworks and Microsoft for their own formats and are also bundled with editing tools (Adobe Premier and Sonic Foundry’s Vegas Video, for example) and with Virage’s VideoLogger, which also handles indexing. Encoding/editing products range from $500 to $2,000, depending on level of richness. Software licensing for Virage’s indexing product starts at $50,000, which includes a flat-file database for storing metadata. The tools themselves are either operated internally by corporate production staff, or the video is sent out to for processing by the vendors themselves or service providers. For example, Virage offers an encoding and indexing service using its own technology. In the case of live events for external viewing, CDNs will often handle this production on behalf of clients. Streaming Servers and Storage Microsoft bundle Windows Media with its NT Server, which runs on standard Intel-based hardware. For the enterprise, RealNetworks offers RealSystem Server Intranet in configurations that can serve either 200 or 500 simultaneous users with list prices at $4,000 and $10,000. RealSystem Server runs on a variety of operating systems, including Windows2000, Windows NT, Linux, Solaris, HP/UX, AIX, IRIX and FreeBSD. In some cases video files are too large to store on local server storage, especially as archiving requirements increase. In such cases, systems administrators will place it on disk array products from vendors like EMC, Network Appliance or Sun Microsystems. Content Publishing Tools Since streaming video and audio are displayed in Web browsers, media services staff use authoring tools to create HTML applications with links to files for streaming. Media services staff can also use these tools to add interactivity, such as Q&A, polling and chat and to synchronize video and audio with other media, such as PowerPoint slides. Vendors of these products include Adobe, Digital Lava, Microsoft, MSHOW, RealNetworks, SeeItFirst and TellSoft. Publishing tools are also integrated into content management middleware (see below). Finally, content distribution service providers, such as Activate and Yahoo Broadcast have home-grown tools that they offer their clients as part of their media production services.



A related category of tools is phone-based webconferencing from vendors such as Evoke, Placeware and Webex. Offered as services, these tools are focused on collaboration, including features such as shared whiteboard functionality. By using telephone networks for voice, they avoid the reliability problems that can occur with IP streaming while still taking advantage of the Web’s ability to organize meetings and display text, graphics and animation. Content Management Middleware Enterprises and the service providers who serve them are beginning to adopt more sophisticated systems for managing content and publishing it to various locations inside and outside of a company. This middleware provides media services staff with the following capabilities:

• Directories of video and related files to be published • Tools for organizing and scheduling streaming events and

determining access to content by identity and location • Publishing tools with capabilities similar to the ones described

above • Tools that report on usage, such as who attended what events for

how long and what links did they follow Products in this category are available from AxessPoint, Eloquent, enScaler, eScene, Kasenna, NaviSite, Oracle, SGI, Virage and Worldstream. These systems are usually used in conjunction with CDNs and are capable of interfacing with many of the content networking management systems (see below) that distribute video in a way that overcomes network bottlenecks, such as low-bandwidth Wide Area Network (WAN) connections. Some middleware products, such as Kasenna’s MediaBase Network Edition, even assume some of the responsibilities of content networking systems by, for example, pre-caching preview clips in edge servers to reduce network traffic. Content Networking Management Systems This technology is the software layer that coordinate the functions of caches and multicast network nodes in ways that optimize use of network infrastructure – either an external CDN or enterprise (intranet) CDN to support on-demand and live applications of streaming. Content networking management systems are available from the same vendors who offer caching/multicasting equipment: CacheFlow, Cisco, InfoLibria, Inktomi and Network Appliance.



CDNs Enterprise CDNs, also known as intranet CDNs, apply caching and multicasting technology in a corporate LAN/WAN environment to distribute video and other content-rich files in ways that help minimize bottlenecks – congested WAN connections between campuses, for example – while taking advantage of the relatively abundant bandwidth of the LANs close to users.

Enterprise CDN

Source: Jupiter Research CDNs, both external and enterprise types, employ two techniques for handling video that is to be streamed – caching for on-demand applications, and multicasting or stream-splitting for live broadcast events. Network managers use one of three different caching strategies, depending on the way video is used in their companies:

• Manual or automatic replication. The simplest form of content management, this approach involves “pushing” copies of files to remote servers or only to those servers where requests for the content are expected. One weakness of replication is that it does not address the needs of users who request a file that is not on their local servers. Another shortcoming is that it does not direct incoming requests to the server that is closest to the user. For



companies that are handling low volumes of content distribution, this approach is adequate.

• Edge caching. A more advanced approach is to distribute some of the intelligence of handling file requests out to the edge caches. When an edge cache server at a remote site receives a request, it checks its own cache to see if the file is stored locally. If it is, then the file is served to the user from that cache. If the file is not found, then it is retrieved from the origin server via the WAN and then served locally from that cache server. The file is then stored at that cache for a pre-defined period of time to handle further requests for it from the edge. The main drawback to this approach is that users can experience delays when most of the files are stored at the origin server and the files must transit the WAN.

• Edge serving. A hybrid of the previous two approaches, edge serving involves pushing files to the edge, based on expected demand, while leaving lesser-used files to be requested from the origin server. Although this approach potentially mitigates the WAN bottleneck, it requires more planning on the part of media services staff to anticipate where requests are likely to come from.

Live broadcast events take advantage of the enterprise CDN’s ability to send single streams across the WAN to LANs at different corporate sites, where they are then replicated for viewing in conference rooms or on desktop PCs. Depending on the technical implementation, this process is called multicasting or stream splitting. These broadcasts usually involve latency or delays of up to several seconds. Latency is not a major problem in broadcast applications, however, since the video is not two-way, unlike videoconferencing, so viewers are not usually aware of it. Web Browsers and Media Players The final piece of technology in the streaming delivery chain is the desktop software that displays html and allows users to stream audio and video. Microsoft and Netscape (owned by AOL Time-Warner) dominate the browser market. Microsoft’s Windows Media Player 8 and RealNetworks RealPlayer 8 are the choices for the streaming media plug-ins. Both of these players, which work in conjunction with the server products from their respective vendors, are capable of displaying adequate quality video in the 200 kbps of average bandwidth that most enterprises have targeted for desktop delivery of streaming media.



Technology Vendor Positioning by Product Offerings




Business Models Vendors in the enterprise streaming market support both application hosting and licenses of shrink-wrap software. But particular categories tend to lean one way or the other. For example, customers tend to purchase editing tools outright and operate them in-house in order to ensure high-performance. Enterprises are more open to “rent” online content management middleware and some Web publishing tools. Tools vendors have identified two advantages to the hosted application model:

• It ensures a continued stream of revenue rather than licensing revenue that is tied closely to product upgrade cycles.

• Since it establishes them as a service provider in the mind of the customer, they have better opportunities to cross-sell or up-sell clients other services, such as video hosting.

Vendors are also employing varying distribution channels. The three most common are:

• Direct sales • Service provider partners, such as content distribution and other

service providers (e.g., hosting companies) • Systems integrators

The direct sales channel is appropriate for the early phase of adoption of enterprise streaming because most customers tend to be self sufficient and open to trying new technologies on their own. Channel partners will become more important as later adopters become more active. Streaming Services Vendors Services available to corporations from outside vendors map closely to workflow – from creation to distribution. The two exceptions are professional services and managed services. These two services, which encompass consulting, planning, implementation and operations, are not necessarily tied to any one step of the process but may directly or indirectly support all of them. A complete outsourced solution would encompass all services described here.



Service Providers by Type

Note: includes ASPs offering services beyond application hosting Source: Jupiter Research

Video Creation Video creation services comprise equipment – camera, lighting and mobile satellite uplinks – and the personnel to operate them. Outside of corporate media production departments, these services are mostly provided by independent contractors or job shops. One vendor with a national presence, Digital Planet, is leveraging its entertainment industry experience producing streaming events to provide expertise and support staff in this area. Video Capture This service is usually provided by content distribution service providers who have network operations centers. Video signals are acquired through satellite or landline networks. Service providers with this capability include Activate, Akamai, Digital Island, Globix, iBEAM, Teleglobe and Yahoo Broadcast. Video Processing Encompassing editing, encoding and indexing, these services are also typically provided by content distribution service providers like the ones listed above. But technology vendors such as Avid, Media100 and Virage can also provide video processing services for corporate customers interested in outsourcing. Video Hosting/Archiving It’s only natural for content distribution service providers to provide hosting of video, beginning with the live feeds they are capturing and distributing. But hosting companies such as Exodus, which is planning to provide an end-to-end service, also plans to provide this service. In addition, two technology vendors, eScene and NaviSite, provide video



hosting services along with the content management applications they provide. Application Packaging Content distribution service providers are again the major players here, although some publishing tools vendors are now providing services using their own tools. One example is Eloquent, which charges per hour of finished media using its own LaunchForce package, which targets new-product-launch applications. Content Distribution These service providers use their own network facilities – data centers and distributed servers to delivery streaming media closer to end-users – mostly outside the corporate network. These are the same companies – Activate, Akamai, Digital Island, Globix, iBEAM, Teleglobe and Yahoo Broadcast – that also provide video capture, processing and hosting services. These companies either charge based on the expected attendance of a streaming event or by the amount of video stored and streamed from the edge. Professional Services Most Fortune 1000 companies have yet to use outside consulting or implementation services for their streaming application needs. They have tended to rely on in-house staff for internal applications and on CDNs for advising them on their external applications. Those companies that have turned to outside consultants have turned to smaller vendors specializing in emerging technologies, including Approach and QB systems. But traditional consulting companies such as Accenture, IBM and KPMG have announced plans to offer such services along with facilities-based service providers Exodus and Qwest Digital Media, who are also developing “end-to-end” services. Managed Services An emerging category, managed services involve not just the turning over to outside vendors of one or more steps in the content distribution workflow, but the outsourcing of major planning and operational functions. Examples include:

• Enterprise CDN installation and management • Content management • Media services (not just for individual external streaming events).



Digital Pipe is currently the only vendor providing enterprise CDN installation and management, but several content distribution service providers are developing their “behind-the-firewall” strategies, which could include one or more of the examples listed. Meanwhile, Exodus and Qwest Digital Media have announced that they will provide end-to-end solutions for enterprise streaming, which presumably includes consulting, vendor selection, implementation and operational support. The rate at which managed services grow will mostly depend on how quickly Fortune 1000 companies ramp up in terms of the volume and complexity of streaming applications, and how well vendors make the case that outsourcing is superior in cost and quality to insourcing. The opportunity will also vary by industry and individual enterprise based on general tendencies to outsource information technology. Such tendencies are driven by industry or corporate culture as much as any other factor.



Vendor Positioning by Service Offering




Competitive Issues and Trends The vendor communities serving the enterprise market represent a diversity of opinions and strategies but also significant commonalities in how they see their role in serving enterprise customers. In most cases, vendors are ahead of their customers in understanding requirements and are therefore in a position to take the lead in driving the market forward. Vendor Value Propositions Vendors have given a great deal of thought as to how their products and services can help enable streaming applications. The opinions of vendors in each category tended to be in harmony more than in discordance. Features and benefits that vendors associate with their products and services fall into the following categories:

• User interfaces. Media services staff should have a single, easy-to-use interface for content management, content publishing, and event planning and scheduling. Set up for end users should be easy, requiring minimal maintenance by support staff. Users should have easy to use controls and the ability to quickly assess whether video clips are relevant to their tasks.

• Interactivity. Important features include polling, text or audio Q&A, chat, document reference and Tivo-like controls on streaming content (such as pause-live, fast-forward, search agents).

• Metadata. Coverage should include video and other file types to be integrated as well as characteristics of applications such as audience, distribution requirements and schedule. Metadata also supports searchable video databases.

• Reporting. Media services staff should have access to aggregated data on viewer usage of video applications, event attendance, duration of attendance and clickstream activity (such as clicking on related links).

• Content distribution services. CDNs should offer security, geographic targeting, usage tracking and speedy turnaround on event requests.

• Intranet content distribution. Network managers should have the tools to distribute content in ways that allow conscious trade-offs between speedy response times for users of on-demand applications and manageable bandwidth and/or storage requirements across the network. Techniques offered by vendors include:

o Reporting of usage data to support intelligent decisions on content distribution



o Distributed cache intelligence to respond to requests at the edges rather than burdening the network with file transfers from the origin server

o Control over timing of transfers to edge caches and freshness dating

o Ability to pre-cache preview clips to minimize storage requirements

• Business-to-business content distribution. Content distribution systems should support caches that sit behind firewalls, allowing either content to be transferred into the enterprise, or content to be transferred behind the firewalls of partners and customers. Options for live streaming are less attractive or less well-developed. They include:

o HTTP streaming, which is less feature rich o Changing firewall policies to open ports for streaming

• Multicasting. Vendors suggest the best approach to multicasting is to implement it at the application level to give administrators more control over routing, quality, bandwidth consumed and fail-over procedures. However, several vendors have observed that enterprises place a greater emphasis on multicasting than their streaming needs warrant. They suggest edge caching would handle many of the non-live inter-campus or business-to-business distribution issues early adopters are now grappling with.

Competition and Cooperation With over 30 vendors serving the US market that is only beginning to move beyond the early adoption phase, with the exception of using streaming providers for earnings calls, competition is already shaping up to be intense. Head-to-head competition is evident in the following product categories:

• Streaming servers and media players • Content management middleware • Content publishing tools • Content networking management systems and infrastructure

In services, video hosting/archiving and application packaging services are especially crowded, with both technology developers and service providers entering the market. Competition also occurs between service providers and product vendors. CDNs have some of their own production and management tools – for example, Activate’s Active Conference Center, Yahoo’s Webcast Studio –



although they also license the tools of software vendors in areas where they have not developed capabilities. Some software vendors provide video hosting (eScene, NaviSite). They see it as a natural extension of application hosting and another recurring revenue streaming with supposedly high switching costs for customers. Closer inspection, however, reveals less competition than looking at general categories would suggest. Vendors in the same general category are not necessarily competing on exactly the same ground. Content distribution providers, for example, may be strong in a particular geographic region, or focus on live events rather than on-demand applications. It’s not uncommon for them to partner with each other to make up for their weaknesses. In another example, tools vendors may be targeting different applications or different ends of the market. For some vendors, the enterprise market may not even represent their chief focus. Telecommunications-based service providers, for instance, are diversified to the extent that streaming services are only a faction of their business. While product vendors may compete fiercely in their niches, they cooperate with vendors in adjacent areas on creating APIs for integration and on co-marketing campaigns, such as educational seminars for customers and prospects. They also recommend to their own customers other vendors for products and services they do not provide. Competitive Trends Although the Fortune 1000 market for streaming will grow significantly over the next two to three years, competitive stresses will only continue to mount as vendors invade each others’ spaces and enterprises look to reduce the amount of choices and vendor due diligence they have to conduct. Look for the following developments:

• One or more vendors in several categories will be acquired or drop out of the market as there will not be enough business to support more than three vendors in certain sub-categories for the long term. Categories to watch are content management and publishing tools, content networking management and infrastructure, content distribution and related services such as hosting.

• Serious competition will develop in the emerging areas of professional services and managed services, with several well-known companies having announced plans.

• New points of conflict will develop: o Kasenna is touting its capabilities in intelligent content

distribution to complement its content management capabilities, putting it in competition (at least in general



function) with the content networking management and infrastructure vendors – CacheFlow, Cisco, Inktomi and Network Appliance. Meanwhile, Inktomi will attempt to leverage its capabilities in search engines to add content management capabilities to its content distribution suite of products.

o Oracle and general content management players will increasingly address video assets in their products offerings, providing increased competition to providers of content management middleware for streaming. Content publishing tools vendors may also add content management capabilities, since these two areas fit together naturally.

Vendors will rediscover the value of specialization and division of labor. Although the drive for growth is powerful and vendors perceive that enterprises want a one-stop shopping experience, no vendor can expect to offer an end-to-end solution that is best-of-breed in everything. Look for service providers to do more outsourcing, focusing on a few areas of core competency. In the area of content distribution, for example, that means a new category of service provider’s service providers, who focus on the technology of efficiently moving and storing bits across networks, leaving account management and customer service to companies who want to focus their resources on enterprise marketing and quality of experience for their customers.



Application Focus: Training and Education Market Dynamics The ROI-mantra of “reduced expenses through digital learning” has allowed training and learning technology vendors to gain a beachhead within some enterprises and pioneer the early stages of streaming adoption in a corporate environment. Once these vendors entered the enterprise and surmounted the cultural and infrastructure issues needed to stream in these environments, they quickly realized that they had the ability to expand the accepted definition of “corporate training.” The core competencies required for streaming education and training content could easily be applied to external training functions, in addition to applications within an enterprise. In varying degrees of aggressiveness, training technology vendors have expanded beyond traditional education deployments to stake a claim on provisioning streaming events that include executive addresses, intra-company meetings, sales training, product launches, partner training and business-to-business collaboration. Although training vendors have made inroads into the enterprise, the use of streaming for education purposes is far from commonplace. Education and training is a leading streaming application in terms of enterprise adoption, yet most enterprises are still uneducated, unwilling or unprepared to aggressively adopt the technology. The barriers that education and training vendors most commonly encounter when selling into enterprises include:

• Unfamiliarity. The majority of enterprises have no experience with streaming for internal purposes, and even within those companies that do stream, the penetration of streaming implementation knowledge from division to division can be inconsistent. Training vendors are mounting efforts to educate enterprise customers to mitigate this barrier.

• Economics. Given current economic conditions, there is not a lot of enterprise investment in new technology solutions, even one with streaming education’s clear ROI. Once again, education of the benefits of streaming, as well as evangelizing successful



implementations of this technology, will enlighten enterprises to the potential economic boon they are missing.

• Video production competencies. Streaming video requires that enterprises have access (either internally or through partnerships) to the resources and equipment that are needed to prepare for and capture video broadcasts. Training vendors have found that they must provide these competencies to enterprise customers – either directly or through partner relationships.

• Authoring costs. The costs of creating video training content can be significant, so enterprises must be made aware that large amounts of money invested in content can be reused a number of times, thus creating a profit center.

Increasing enterprise awareness of the various permutations in which streaming training technologies can be implemented, as well as the measurable ROI associated with such implementations, is the clearest path towards spurring increased adoption of these technologies. By stressing the following potential returns, training vendors can capture a piece of an enterprise’s training budget. Training vendors stress the following efficiencies they introduce into the training process, to justify the cost of their solutions:

• Cost savings. The most touted and arguably the sector’s strongest benefit is cost savings. In-person training of a dispersed workforce, be it national or global, is an expensive proposition. The ability to bypass centralized in-person training will reduce the costs associated with those events and lower an enterprises training expenditures, when balanced properly with the creation and infrastructure costs of online training.

• Parsing the training cycle. Because online training inhabits a digital medium, course content and tools can be parsed to meet the needs of individual participants. This can ensure that enterprise employees or partners are not exposed to content they are already familiar with, thus placing focus on topics that require emphasis. The result that training vendors deliver is a better-educated and engaged training participant.

• Tracking and compliance. Training vendors also offer easy integration into learning management systems, that track training event participation and compliance. Tracking and compliance functions can range from ensuring that all members of a sales-force viewed a training event, to testing and re-enrolling those trainees if they did not absorb knowledge at required levels.

• Flexibility. The on-demand nature and the parsing abilities that training vendors offer enterprises instill events with a high degree



of flexibility. Internal and external trainees can consume courses at-will, and can choose to only view content that is of relevance.

Training Vendor Landscape The makeup, delivery, and pricing of a training event varies significantly with the type of event served, but broadly, the vendors in this market can be viewed in two categories: point solutions and enterprise-class platforms.

Training Vendor Snapshot

Source: Jupiter Research Although a growing number of streaming vendors can be viewed as a blend of point and enterprise solutions, some of the factors that distinguish these two segments include:

• Event type. Point-solution vendors are focusing on provisioning live streaming training events—serving functions such as executive addresses, product launches, and customer and partner training. Those vendors on the enterprise side of the spectrum concentrate on providing technology platforms that enable and track employee education. These enterprise solutions are also beginning to branch externally towards partner and customer training.



• Streaming usage level. The types of events that point-solutions focus on are those that result in a heavy emphasis on streaming media. Much of this streaming content is on-demand, which allows internal and external users the opportunity to consume training content at will. Enterprise solution providers (whether they provide platforms or course creation services), are relying on customer-demand levels to dictate the usage of streaming media. Current courses provisioned rely on a blend of learning tools that include web-based content, instructor-led chat, and offline courseware, with streaming content representing a small, but growing, allocation.

• Implementation. Point solutions are geared towards getting enterprise customers streaming as quickly as possible, with minimal effort. Quelsys claims that a trainer can begin creating a course with a few mouse clicks, while Caliber offers enterprise customers on-site production services to capture video events and the capability to host and deliver training material. On the other end of the spectrum, enterprise-class platforms can be large-scale software implementations that require time to scope systems and content to meet an enterprises business needs – and time to implement. These solutions deliver training content, and also integrate with corporate tracking and learning management functions.

• Pricing. Both point-solutions and enterprise-class solutions derive revenues from a mix of per-seat pricing, per-event pricing, as well as integration and course creation fees. However, point-solutions offer a pricing model that allows enterprises to stream training events at a relatively low cost. For a price level of a few thousand dollars, enterprises can create a basic training course, and have that material hosted and streamed. The motivation for minimizing the cost barrier to entry is to assuage an enterprise’s concerns with a relatively new technology such as streaming, demonstrate ROI with the first streaming event, then create opportunities for a longer-term contract. Larger-scale solutions justify the higher costs, which can range from tens to hundreds of thousand dollar contracts (due to software licensing fees, course creation services and integration fees) by clearly establishing ROI metrics at the beginning of an engagement. By measuring participation-levels, cost savings, and trainee-learning against these pre-established metrics, vendors demonstrate the recurring value that their offerings deliver to enterprise customers.



As video is adopted more aggressively in training applications, streaming infrastructure vendors have the opportunity to facilitate, encourage and profit from this trend. Although the leading training vendors have made inroads into enterprise customers, this market is still in the early phases of adoption, and as enterprises increasingly deploy streaming for training purposes, their infrastructure needs will escalate accordingly. Yet, surprisingly, leading education technology vendors have not courted streaming infrastructure partners to a high degree. Partnering will allow streaming infrastructure providers access to the enterprise relationships these training vendors have fostered, and provide the opportunity to promote streaming training with to a higher degree across all enterprises—accelerating adoption of these streaming applications.

Training Vendors and Streaming Partnerships


Documents

Enterprise Streaming Video