Video Streaming Gains Steam

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A sudden surge in the use of video-streaming technology
over the past few months is encouraging suppliers to take new steps toward minimizing the
incompatibilities among systems that once threatened to block market acceptance.

In the latest move in this direction, RealNetworks Inc., a
Seattle-based supplier of audio- and video-streaming technology, said last week that it
was acquiring Waltham, Mass.-based Vivo Software Inc. Vivo is a competitor with a strong
market position in the supply of simple-to-use tools that are employed in creating content
to be streamed over the Internet.

RN said it was exchanging 1.1 million of its shares for
ownership of Vivo, in a transaction valued at $17.1 million.

At the same time, industrywide efforts toward achieving
next-generation standards for multimedia within the framework of the International
Standards Organization's MPEG-4 initiative were accelerating. Talks were under way to
resolve differences between two rival camps backing different file formats to be used in
storing media for streaming.

It was widely reported that the ISO's Moving Picture
Expert Group had endorsed Apple ComputerInc.'s QuickTime file format,
which is backed by many Silicon Valley giants, but sources said the parties were moving to
develop a new format that draws on the advantages of both RN's active-streaming
format and QT. Microsoft Corp. backs RN.

"We've moved beyond the early adopter phase in
use of streaming technology into that chasm phase that leads to mainstream adoption,"
said Peter Zaballos, vice president of marketing for Vivo.

Zaballos pointed to the huge leaps in the usage numbers for
video streaming recorded by Vivo and RN over the past six months, noting that the number
of Web-document addresses making use of Vivo's software has increased fivefold, to
19,000, since August. Similarly, the number of Web pages using RN streaming software went
from 150,000 at the end of the third quarter to 350,000 at the latest count, Zaballos
said.

That trend has swept the industry since Microsoft led the
sector in a move toward consolidation and compatibility last summer, Zaballos said.

At that time, the software giant acquired one of the
streaming suppliers, VXtreme. It also won agreement from RN, Vivo, VDONet Corp. and others
for support of the Microsoft-developed ASF as a foundation for developing a standardized
approach to the "container" format, which allows multimedia files to be used
with different types of servers.

New browser releases from Microsoft and rival Netscape
Communications Corp. allowed users to access content across multiple-server software
platforms without having to download the "plug-in" software.

Agreement on a uniform platform for streaming as embodied
in the MPEG-4 effort is still a long way off. Still, the growing use of the technology in
conjunction with expanding access speeds is driving the standards-setting effort much
harder than was the case a few months ago.

Given the strength of QT as a ubiquitous factor in
multimedia clips used in CD-ROMs and Web files, the ISO endorsement of the QT file format
opens a way to bring together the legacy components with the new real-time streaming
capabilities embodied in ASF, parties to the discussion said.

RN, a longtime backer of ASF, has been invited to review
the specs developed by the QT backers, and it is not taking a position on the issue yet,
said Len Jordan, senior vice president for media systems at RN. For RN, the value-add in
its technology is not dependent on the specific makeup of the file format, so the company
is in a position to be flexible, he added.

Whatever form the final format takes, it will have to
incorporate concepts intrinsic to ASF simply because QT was never designed for use over
the Internet, Zaballos noted.

"The important thing is that there is an effort under
way to achieve agreement," he added.

Another sign of the growing cooperation across competing
factions was the recent signing of a porting and marketing agreement between RN and Sun
Microsystems Inc., which was reported to be aligned with Apple. Sun will make RN's
RealSystem 5.0 streaming-media products available on Sun's server computers, which
means that wider use of streaming will be possible at high-volume Web sites where Sun gear
is widely used.

For example, the deal paved the way for the use of
RN's streaming system over MediaOne networks, starting with the previously announced
delivery of news from MediaOne's New England Cable News over MediaOne Express links,
noted Kip Compton, director of Internet systems and services at MediaOne.

"RealNetworks and Sun allow us to provide extremely
scaleable, high-quality video to our MediaOne Express cable-modem customers, while
simultaneously delivering low-bit-rate video to general Internet users," Compton
said.

RN is acquiring Vivo primarily as a means to foster
development of tools that enhance the appeal of RN's client/server-based proprietary
system, Jordan said.

"One of the most critical areas of our focus is on
ways to lower the costs of content development, which is a key strength of Vivo," he
said.

RN will be working with Vivo's team of developers to
create tools that make it easier for Web spinners to use RN's proprietary RealAudio
and RealVideo streaming systems.

One of the key drivers in the expanded use of streaming
technology is the emergence of the 56-kilobit-per-second modem -- a doubling of
state-of-the-art throughput -- Jordan said.

This means that RN can deliver reasonably clear video to a
playing card-sized video window on the personal computer screen at an average of about 10
frames per second through the 56-kbps modems, Jordan said.

"We've seen much more aggressive use of video at
key sites, such as those operated by ABC, ESPN, CBS and Fox," he added.

While there has been some use of streaming technology in
cable, suppliers of high-speed-data content said the improvements in streaming technology
have opened an opportunity for much broader usage in the months to come.

Sources at Time Warner Cable's Road Runner and
MediaOne Express said they'll roll out a number of new applications once they
complete the merging of their two operations.

At Cablevision Systems Corp., work is under way to bring
video-enriched content to subscribers in a number of categories, many of them tied to
local sites that Cablevision has been developing apart from its new relationship with
@Home Network.

"People really like a lot of activity, a lot of
motion," said Wilt Hildenbrand, vice president of engineering and technology at
Cablevision.

Where Cablevision had been using graphics that employed
"slides," rather than video, it is now sufficiently comfortable with the quality
of streaming to go to full-motion video, Hildenbrand said. Cablevision is finding that
locally oriented content -- such as local school information, how-to instructions and help
with homework, as well as local news, sports and weather -- has "a lot of staying
power," he noted.

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