Streaming-Media Mavens Refine Content Strategies

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Over the past year, the media players from Real Networks Inc. and Microsoft Corp. have become the de facto standards for delivering streaming-media content to cable-modem subscribers.

Both products — Real's RealOne and Microsoft's Windows Media Player — are widely distributed in the narrowband world, and one or both reside on most PCs with cable-modem or digital subscriber line connections.

As broadband grows, both companies have refined their business strategies. Although the media players and their associated asset management and digital-rights management systems may share some common themes, each company has taken a slightly different approach to content.

Real is selling several subscription packages that include RealOne. Available content ranges from cable networks to music to sports.

Microsoft also has aligned with content providers, but not within a subscription-service framework.

Both companies' products handle content from traditional cable networks in an IP environment. And both are reaching out to cable operators with the knowledge that at the moment, cable modems have the upper hand in the broadband data marketplace.

"We're still in the early days of broadband consumers subscriptions online," said Real vice president of programming Scott Ehrlich. "More and more content providers are looking to put high value content into subscription programs."

REAL'S STRATEGY

Real offers "RealOne SuperPass," a $9.95-per-month mix of video content from several producers, including many cable networks. Cable News Network recently pulled out of SuperPass to offer its own $4.95-per-month service, but still uses Real's back-end to deliver and fulfill content.

Real, which carries Major League Baseball radio broadcasts in SuperPass, has a similar deal for MLB's stand-alone, 20-minute subscription video highlight service that launched this season.

RealOne MusicPass offers consumers 100 songs for download and 100 streamed song for $9.95 per month. Music Pass is the MusicNet service from Warner Music Group, EMI and Bertlesmann Music Group.

Consumers can get both the music and SuperPass service for $19.95. Real counts 500,000 subscribers across both packages.

Erhlich said Real has studied cable's subscription- and advertising-based business model.

"We envision ourselves growing much as the way cable did," he said.

Some consumers will pay a discreet fee for content, while others will pay a fee for content that is aggregated in a package. Erhlich sees Real adding tiers of service as new content moves to its platform.

"Content providers can play at both levels," he said.

Real has talked with cable operators about developing cable-modem specific packages. Under one scenario, operators would create, develop and run their own service.

A second option would be one in which Real provided the content and became the MSO's home page. A third option would take a hybrid approach, said Erhlich.

MICROSOFT MOVES

Microsoft already has a deal to offer the broadband home page of its MSN Internet service to Charter Communication's Inc.'s cable-modem subscribers. But the software giant approaches the subscription space differently.

Five major record labels use Windows Media and its digital rights-management technology, including Sony Music and Universal Music Group's Pressplay service.

A number of music Web sites — including HOB.com, Launch.com, MTV.com, RioPort.com, FullAudio, Yahoo Music and RollingStone.com — use the Windows Media DRM.

And Intertainer Inc. and CinemaNow use the DRM to secure Internet-protocol video downloads.

"We're focused on creating a great digital media platform for the industry and consumers," said Microsoft Windows Digital Media Division lead product manager Michael Aldridge. "We're about creating a platform to enable a broad bouquet of services.

"RealOne has taken a subscription service and applied it to everything they are doing. There are some features of the player that I can't get unless I'm a subscriber."

Though Real may have inked 500,000 subscribers for its service, "we are the leading technology for subscription services," contended Aldridge, who put Microsoft ahead of pressplay, Intertainer, FullAudio and several European-based services.

Microsoft entered the DRM space before Real Networks.

"In 1999, we introduced the first comprehensive DRM for audio and video," he said. "That's where we have a huge head start.

"We are in the second generation of that technology, with 11 million secure transactions that have been completed. We are the leading format for watching movies on the Web."

DRM technology has evolved to a point where it's no longer the factor holding back the proliferation of broadband content, argued Aldridge. Rather, it's a lack of rights deals and business models that's held things up, he claimed.

"For the content players, subscription services are a key priority for them, figuring out how to deliver it and do it in a way to make sense in their business," he said.

Last December, Microsoft introduced enhancements to its Media Player under the Corona label.

"We're focused on bringing a more TV-like experience to the Web," Aldridge said.

Microsoft's third-generation streaming products include new codecs, encoders, servers and player technology. Ninety percent of the DVD chips that shipped last year support Corona, said Aldridge, and integration is now occurring at the chip level.

Corona's Faststream technology essentially eliminates buffering by efficiently increasing the amount of content shipped through the pipe to the PC, according to Aldridge.

"The other key thing is being able to have an HD experience in downloads and high-fidelity sound," he said. "We could stream a movie at 750 kilobits and have multimedia channel surround experience.

"We can enable a home theater experience across the Web. We're improving audio and video quality by 20 percent efficiency across board."

On the server side, Corona technology enables playlist controls and ad-insertion capabilities, he added.

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