Streaming media

File:Sample Webcast Screenshot.png

A typical webcast, streaming in an embedded media player

A still from a live stream of a fish tank, Schou FishCam

Streaming media is multimedia that is constantly received by and presented to an end-user while being delivered by a provider. The verb "to stream" refers to the process of delivering or obtaining media in this manner; the term refers to the delivery method of the medium, rather than the medium itself, and is an alternative to file downloading, a process in which the end-user obtains the entire file for the content before watching or listening to it.

A client end-user can use their media player to start playing the data file (such as a digital file of a movie or song) before the entire file has been transmitted. Distinguishing delivery method from the media distributed applies specifically to telecommunications networks, as most of the delivery systems are either inherently streaming (e.g. radio, television, streaming apps) or inherently non-streaming (e.g. books, video cassettes, audio CDs). For example, in the 1930s, elevator music was among the earliest popularly available streaming media; nowadays Internet television is a common form of streamed media. The term "streaming media" can apply to media other than video and audio such as live closed captioning, ticker tape, and real-time text, which are all considered "streaming text".

The term "streaming" was first used for tape drives made by Data Electronics Inc. for drives meant to slowly ramp up and run for the entire track; the slow ramp times resulted in lower drive costs, making a more competitive product. "Streaming" was applied in the early 1990s as a better description for video on demand and later live video on IP networks first by Starlight Networks for video streaming and Real Networks for audio streaming; at the time such video was usually referred to as "store and forward video", which was misleading nomenclature.

Live streaming is the delivery of Internet content in real-time, as events happen, much as live television broadcasts its contents over the airwaves via a television signal. Live internet streaming requires a form of source media (e.g. a video camera, an audio interface, screen capture software), an encoder to digitize the content, a media publisher, and a content delivery network to distribute and deliver the content. Live streaming does not need to be recorded at the origination point, although it frequently is.

Streaming generally refers to the situation where a user watches digital video content or listens to digital audio content on a computer screen and speakers (ranging from a smartphone, through a desktop computer to a large-screen home entertainment system) over the Internet. With streaming content, the user does not have to download the entire digital video or digital audio file before they start to play it.

There are challenges with streaming content on the Internet. If the user does not have enough bandwidth in their Internet connection, they may experience stops in the content and some users may not be able to stream certain content due to not having compatible computer or software systems.

Some popular streaming services include the video sharing website YouTube, Twitch and Mixer, which live stream the playing of video games; Netflix and Amazon Video, which stream movies and TV shows; and Spotify, Apple Music and TIDAL, which stream music.

History

In the early 1920s, George O. Squier was granted patents for a system for the transmission and distribution of signals over electrical lines which was the technical basis for what later became Muzak, a technology streaming continuous music to commercial customers without the use of radio. Attempts to display media on computers date back to the earliest days of computing in the mid-20th century. However, little progress was made for several decades, primarily due to the high cost and limited capabilities of computer hardware. From the late 1980s through the 1990s, consumer-grade personal computers became powerful enough to display various media. The primary technical issues related to streaming were: having enough CPU power and bus bandwidth to support the required data rates and creating low-latency interrupt paths in the operating system to prevent buffer underrun and thus enable skip-free streaming of the content. However, computer networks were still limited in the mid-1990s, and audio and video media were usually delivered over non-streaming channels, such as by downloading a digital file from a remote server and then saving it to a local drive on the end user's computer or storing it as a digital file and playing it back from CD-ROMs.

Late 1990s – early 2000s

During the late 1990s and early 2000s, users had increased access to computer networks, especially the Internet, and especially during the early 2000s, users had access to increased network bandwidth, especially in the "last mile". These technological improvements facilitated the streaming of audio and video content to computer users in their homes and workplaces. As well, there was an increasing use of standard protocols and formats, such as TCP/IP, HTTP, HTML and the Internet became increasingly commercialized, which led to an infusion of investment into the sector. The band Severe Tire Damage was the first group to perform live on the Internet. On June 24, 1993, the band was playing a gig at Xerox PARC while elsewhere in the building, scientists were discussing new technology (the Mbone) for broadcasting on the Internet using multicasting. As proof of PARC's technology, the band's performance was broadcast and could be seen live in Australia and elsewhere. In a March 2017 interview, band member Russ Haines stated that the band had used approximately "half of the total bandwidth of the internet" to stream the performance, which was a 152-by-76 pixel video, updated eight to twelve times per second, with audio quality that was "at best, a bad telephone connection".

Microsoft Research developed a Microsoft TV application which was compiled under MS Windows Studio Suite and tested in conjunction with Connectix QuickCam. RealNetworks was also a pioneer in the streaming media markets, when it broadcast a baseball game between the New York Yankees and the Seattle Mariners over the Internet in 1995. The first symphonic concert on the Internet took place at the Paramount Theater in Seattle, Washington on November 10, 1995. The concert was a collaboration between The Seattle Symphony and various guest musicians such as Slash (Guns 'n Roses, Velvet Revolver), Matt Cameron (Soundgarden, Pearl Jam), and Barrett Martin (Screaming Trees). When Word Magazine launched in 1995, they featured the first-ever streaming soundtracks on the Internet.

Metropolitan Opera Live in HD is a program in which the Metropolitan Opera streams an opera performance "live", as the performance is taking place. In 2013–2014, 10 operas were transmitted via satellite into at least 2,000 theaters in 66 countries.

Business developments

The first commercial streaming product appeared in late 1992 and was named StarWorks and enabled on demand MPEG-1 full motion videos to be randomly accessed on corporate Ethernet networks. Starworks was from Starlight Networks, who also pioneered live video streaming on Ethernet and via Internet Protocol over satellites with Hughes Network Systems. Other early companies who created streaming media technology include RealNetworks (then known as Progressive Networks) and Protocomm both prior to wide spread World Wide Web usage and once the web became popular in the late 90s, streaming video on the internet blossomed from startups such as VDOnet, acquired by RealNetworks, and Precept, acquired by Cisco.

Microsoft developed a media player known as ActiveMovie in 1995 that allowed streaming media and included a proprietary streaming format, which was the precursor to the streaming feature later in Windows Media Player 6.4 in 1999. In June 1999 Apple also introduced a streaming media format in its QuickTime 4 application. It was later also widely adopted on websites along with RealPlayer and Windows Media streaming formats. The competing formats on websites required each user to download the respective applications for streaming and resulted in many users having to have all three applications on their computer for general compatibility.

In 2000 Industryview.com launched its "world's largest streaming video archive" website to help businesses promote themselves. Webcasting became an emerging tool for business marketing and advertising that combined the immersive nature of television with the interactivity of the Web. The ability to collect data and feedback from potential customers caused this technology to gain momentum quickly.

Around 2002, the interest in a single, unified, streaming format and the widespread adoption of Adobe Flash prompted the development of a video streaming format through Flash, which was the format used in Flash-based players on many popular video hosting sites, such as YouTube, now defaulting to HTML5 video. Increasing consumer demand for live streaming has prompted YouTube to implement a new live streaming service to users. Presently the company also offers a (secured) link returning the available connection speed of the user.

The Recording Industry Association of America (RIAA) revealed through its 2015 earnings report that streaming services were responsible for 34.3 percent of the year's total music industry's revenue, growing 29 percent from the previous year and becoming the largest source of income, pulling in around $2.4 billion. US streaming revenue grew 57 percent to $1.6 billion in the first half of 2016 and accounted for almost half of industry sales.

Use by consumers

Live streaming service at zoo by Niconico

These advances in computer networking, combined with powerful home computers and modern operating systems, made streaming media practical and affordable for ordinary consumers. Stand-alone Internet radio devices emerged to offer listeners a no-computer option for listening to audio streams. These audio streaming services have become increasingly popular over recent years, as streaming music hit a record of 118.1 billion streams in 2013. In general, multimedia content has a large volume, so media storage and transmission costs are still significant. To offset this somewhat, media are generally compressed for both storage and streaming. Increasing consumer demand for streaming of high definition (HD) content has led the industry to develop a number of technologies such as WirelessHD  or ITU-T G.hn, which are optimized for streaming HD content without forcing the user to install new networking cables. In 1996, digital pioneer Marc Scarpa produced the first large-scale, online, live broadcast in history, the Adam Yauch-led Tibetan Freedom Concert, an event that would define the format of social change broadcasts. Scarpa continued to pioneer in the streaming media world with projects such as Woodstock '99, Townhall with President Clinton, and more recently Covered CA's campaign "Tell a Friend Get Covered" which was live streamed on YouTube.

As of 2016, a media stream can be streamed either "live" or "on demand". Live streams are generally provided by a means called "true streaming". True streaming sends the information straight to the computer or device without saving the file to a hard disk. On-demand streaming is provided by a means called progressive streaming or progressive download. Progressive streaming saves the file to a hard disk and then is played from that location. On-demand streams are often saved to hard disks and servers for extended amounts of time; while the live streams are only available at one time only (e.g., during the football game). Streaming media is increasingly being coupled with use of social media. For example, sites such as YouTube encourage social interaction in webcasts through features such as live chat, online surveys, user posting of comments online and more. Furthermore, streaming media is increasingly being used for social business and e-learning. Due the popularity of the streaming medias, many developers have introduced free HD movie streaming apps for the people who use smaller devices such as tablets and smartphones for everyday purposes.

The Horowitz Research State of Pay TV, OTT and SVOD 2017 report said that 70 percent of those viewing content did so through a streaming service, and that 40 percent of TV viewing was done this way, twice the number from five years earlier. Millennials, the report said, streamed 60 percent of content.

Transition from a DVD based to streaming based viewing culture

One of the movie streaming industry’s largest impacts was on the DVD industry, which effectively met its demise with the mass popularization of online content. The rise of media streaming caused the downfall of many DVD rental companies such as Blockbuster. In July 2015 the New York Times published an article about Netflix's DVD services. It stated that Netflix was continuing their DVD services with 5.3 million subscribers, which was a significant drop from the previous year. On the other hand, their streaming services had 65 million members. In a March 2016 study assessing the “Impact of Movie Streaming over traditional DVD Movie Rental” it was found that respondents did not purchase DVD movies nearly as much anymore, if at all, as streaming had taken over the market. According to the study, viewers did not find movie quality to be significantly different between DVD and online streaming. Issues that respondents believed needed improvement with movie streaming included functions of fast forwarding or rewinding, as well as search functions. The article highlighted that the quality of movie streaming as an industry would only increase in time, as advertising revenue continued to soar on a yearly basis throughout the industry, providing incentive for quality content production.

Bandwidth and storage

Unicast connections require multiple connections from the same streaming server even when it streams the same content

A broadband speed of 2 Mbit/s or more is recommended for streaming standard definition video without experiencing buffering or skips, especially live video, for example to a Roku, Apple TV, Google TV or a Sony TV Blu-ray Disc Player. 5 Mbit/s is recommended for High Definition content and 9 Mbit/s for Ultra-High Definition content. Streaming media storage size is calculated from the streaming bandwidth and length of the media using the following formula (for a single user and file) requires a storage size in megabytes which is equal to length (in seconds) × bit rate (in bit/s) / (8 × 1024 × 1024). For example, one hour of digital video encoded at 300 kbit/s (this was a typical broadband video in 2005 and it was usually encoded in a 320 × 240 pixels window size) will be: (3,600 s × 300,000 bit/s) / (8×1024×1024) requires around 128 MB of storage.

If the file is stored on a server for on-demand streaming and this stream is viewed by 1,000 people at the same time using a Unicast protocol, the requirement is 300 kbit/s × 1,000 = 300,000 kbit/s = 300 Mbit/s of bandwidth. This is equivalent to around 135 GB per hour. Using a multicast protocol the server sends out only a single stream that is common to all users. Therefore, such a stream would only use 300 kbit/s of serving bandwidth. See below for more information on these protocols. The calculation for live streaming is similar. Assuming that the seed at the encoder is 500 kbit/s and if the show lasts for 3 hours with 3,000 viewers, then the calculation is number of MBs transferred = encoder speed (in bit/s) × number of seconds × number of viewers / (8*1024*1024). The results of this calculation are as follows: number of MBs transferred = 500 x 1024 (bit/s) × 3 × 3,600 ( = 3 hours) × 3,000 (number of viewers) / (8*1024*1024) = 1,977,539 MB

Protocols

The audio stream is compressed to make the file size smaller using an audio coding format such as MP3, Vorbis, AAC or Opus. The video stream is compressed using a video coding format to make the file size smaller. Video coding formats include H.264, HEVC, VP8 or VP9. Encoded audio and video streams are assembled in a container "bitstream" such as MP4, FLV, WebM, ASF or ISMA. The bitstream is delivered from a streaming server to a streaming client (e.g., the computer user with their Internet-connected laptop) using a transport protocol, such as Adobe's RTMP or RTP. In the 2010s, technologies such as Apple's HLS, Microsoft's Smooth Streaming, Adobe's HDS and non-proprietary formats such as MPEG-DASH have emerged to enable adaptive bitrate streaming over HTTP as an alternative to using proprietary transport protocols. Often, a streaming transport protocol is used to send video from an event venue to a "cloud" transcoding service and CDN, which then uses HTTP-based transport protocols to distribute the video to individual homes and users. The streaming client (the end user) may interact with the streaming server using a control protocol, such as MMS or RTSP.

Protocol challenges

Designing a network protocol to support streaming media raises many problems. Datagram protocols, such as the User Datagram Protocol (UDP), send the media stream as a series of small packets. This is simple and efficient; however, there is no mechanism within the protocol to guarantee delivery. It is up to the receiving application to detect loss or corruption and recover data using error correction techniques. If data is lost, the stream may suffer a dropout. The Real-time Streaming Protocol (RTSP), Real-time Transport Protocol (RTP) and the Real-time Transport Control Protocol (RTCP) were specifically designed to stream media over networks. RTSP runs over a variety of transport protocols, while the latter two are built on top of UDP.

Another approach that seems to incorporate both the advantages of using a standard web protocol and the ability to be used for streaming even live content is adaptive bitrate streaming. HTTP adaptive bitrate streaming is based on HTTP progressive download, but contrary to the previous approach, here the files are very small, so that they can be compared to the streaming of packets, much like the case of using RTSP and RTP. Reliable protocols, such as the Transmission Control Protocol (TCP), guarantee correct delivery of each bit in the media stream. However, they accomplish this with a system of timeouts and retries, which makes them more complex to implement. It also means that when there is data loss on the network, the media stream stalls while the protocol handlers detect the loss and retransmit the missing data. Clients can minimize this effect by buffering data for display. While delay due to buffering is acceptable in video on demand scenarios, users of interactive applications such as video conferencing will experience a loss of fidelity if the delay caused by buffering exceeds 200 ms.

Multicasting broadcasts the same copy of the multimedia over the entire network to a group of clients

Unicast protocols send a separate copy of the media stream from the server to each recipient. Unicast is the norm for most Internet connections, but does not scale well when many users want to view the same television program concurrently. Multicast protocols were developed to reduce the server/network loads resulting from duplicate data streams that occur when many recipients receive unicast content streams independently. These protocols send a single stream from the source to a group of recipients. Depending on the network infrastructure and type, multicast transmission may or may not be feasible. One potential disadvantage of multicasting is the loss of video on demand functionality. Continuous streaming of radio or television material usually precludes the recipient's ability to control playback. However, this problem can be mitigated by elements such as caching servers, digital set-top boxes, and buffered media players.

IP Multicast provides a means to send a single media stream to a group of recipients on a computer network. A multicast protocol, usually Internet Group Management Protocol, is used to manage delivery of multicast streams to the groups of recipients on a LAN. One of the challenges in deploying IP multicast is that routers and firewalls between LANs must allow the passage of packets destined to multicast groups. If the organization that is serving the content has control over the network between server and recipients (i.e., educational, government, and corporate intranets), then routing protocols such as Protocol Independent Multicast can be used to deliver stream content to multiple Local Area Network segments. As in mass delivery of content, multicast protocols need much less energy and other resources, widespread introduction of reliable multicast (broadcast-like) protocols and their preferential use, wherever possible, is a significant ecological and economic challenge. Peer-to-peer (P2P) protocols arrange for prerecorded streams to be sent between computers. This prevents the server and its network connections from becoming a bottleneck. However, it raises technical, performance, security, quality, and business issues.

Applications and marketing

Useful – and typical – applications of the "streaming" concept are, for example, long video lectures performed "online" on the Internet. An advantage of this presentation is that these lectures can be very long, indeed, although they can always be interrupted or repeated at arbitrary places. There are also new marketing concepts. For example, the Berlin Philharmonic Orchestra sells Internet live streams of whole concerts, instead of several CDs or similar fixed media, by their so-called "Digital Concert Hall" using YouTube for "trailing" purposes only. These "online concerts" are also spread over a lot of different places – cinemas – at various places on the globe. A similar concept is used by the Metropolitan Opera in New York. Many successful startup ventures have based their business on streaming media. There also is a livestream from the International Space Station.

Recording

Media that is live streamed can be recorded through certain media players such as VLC player, or through the use of a Screen Recorder. Livestreaming platforms such as Twitch may also incorporate a video on demand system that allows automatic recording of live broadcasts so that they can be watched later.

Copyright

See also: Copyright aspects of downloading and streaming

Streaming copyrighted content can involve making infringing copies of the works in question. Streaming, or looking at content on the Internet, is legal in Europe, even if that material is copyrighted.

The disruption of the music and video industry

Disruption of the music industry

The music industry has undergone a significant disruption. As came forward in the history, in 1999 the traditional music industry encountered the first digital innovations. The file sharing service of Napster allowed consumers to share mp3 files all over the world. However, the music industry destroyed this new business model by means of lawsuits. The response can be characterized as racing response, in which new threats are fought to extend the existing technology. However, it was the beginning of a new era in which the music industry would change forever.

From 2000 to 2008 several companies started to deliver digital music for consumers and slow transition from the traditional CD towards streaming has started. Napster came back with a legitimized business, Rhapsody delivered a special audio player to deliver their music and Spotify started their unlimited streaming services in 2008. This meant that the established industry faced a significant change in the way the they operates. Initially, record labels were controlling the publishing rights of music. But, the streaming services enabled the possibility to decouple it from a physical format (CD’s) into a digital format and share it via internet networks.

Unfortunately, Napster and Rhapsody didn’t had a long lasting success. A complementary asset was missing for these companies at the moment of introduction: the smartphone. However, this doesn’t mean that a disrupting technology isn’t developing. A technological disruption can be analyzed through the S-curve model. The model indicates that this is one of the typical situations a disrupting innovation can face. We see here that the new technology is facing difficulty during the process, but the old technology has little chance to develop further. Eventually, this means that the substitution of streaming is delayed until these challenges are solved. This is also what happened in the music industry. The number of smartphone users kept rising during the following years and the industry accepted that the sales of physical music would not last much longer. They decided to open up and start focussing on the new way of delivering music to consumers.

However, this was not without any consequences. At first, it had a negative influence on the business model of record labels since they slightly lost the control over the distribution of music. It also meant that revenue streams for artists and record labels were changing significantly. For example, in 2012, it led to a missed revenue from about 240 billion for the record labels and artist.

The acceptance of the streaming technology by the record labels also had a positive impact on the music industry, especially for artists. Some artists identified streaming as opportunity to get their music to a wider audience and earn missed revenue by using their increased popularity to sell out concerts and sell merchandize. Besides, streaming services created an all round increase in revenue in the year 2015. But the royalties paid by streaming services, still creates dissatisfaction among artists, since the royalties must be splitted between record labels, producers, artist and songwriters. However, there is light at the end of the tunnel, on the 20th of september 2018 Spotify announced “Spotify for Artists” which provides artists the opportunity to upload their music independently directly on Spotify. This could be a massive breakthrough in the long term discussion about how much artists should receive, since they now can start working independently without the need to share the royalties among the other stakeholders

Disruption of the video industry

The video industry has also undergone a significant disruption with the appearance of streaming services. In the beginning of the year 2000, six major television companies were dominating the US television market for years and created an inviolable position in the market.. However, from 2000 until 2009 these companies lost on average 82,5% of their stock value. The market was changing and the power of the established order was diminishing. No longer were the cable providers and large television companies calling the shots about which media was available during the year. The on-demand availability of media was arasing and streaming slowly started disrupting the market.

In the beginning the providers of cabling television had a lot of leverage, since they were the only ones able to provide the consumer with access to television media. However, streaming services cause that this model is changing. The business to consumer model of streaming makes it possible to offer a substitute for a much lower price. Similar to music streaming, the disruption is again based on a simple characteristic: a more convenient product offered at a lower price. Companies like Hulu, Netflix, Amazon Prime and YouTube TV are stepping in a new potential market with a new business model.

Since, streaming technology can provide on-demand streaming as an inexpensive substitute for the expensive cable television, it turns out that it also have a big influence on the industry dynamics. In the beginning, the media firms were offering a wide package of channels for a reasonable price. However, the prices slowly went up which led to high profit margins. Streaming services are disrupting this model step by step. Under the new generation streaming services gained popularity, which led in recent year to a loss of many customers. The previously loyal customers are switching towards the on-demand streaming possibilities against lower costs. The media firms are fighting this change by offering all in package, which contains TV, Internet and telephone services. The response of the media companies can be seen as a typical retreat response. The old technology is placed in a new market model, which gains attraction in the market. This create a temporary more sustaining position until the streaming technology takes over the market. Again the S-curve model can explain the process of disruption in the movie industry. The streaming services are facing little to no challenges, but the old technology can extend the business model with the new offerings. This creates a sturdy competition in which both offerings will coexist in the market.

Currently, consumer do have reliable alternatives for the streaming of movies and series. However the access to streaming of the available tv-channels, as offered by cable companies, is still limited. This is seen by experts as the critical turning point for complete adoption of streaming. As soon as streaming services will be able to take over the rights for the on-demand streaming of tv-channels, the media business model will change indefinite. However, also cabling companies are trying to make the step towards streaming options, but with less success. Consumers do not seem willing to pay extra subscription costs to media providers next to their original subscription with the same provide.

The driving change of dynamics

Broadband infrastructure

A key element for the success of streaming services is the broadband infrastructure. The broadband infrastructure must provide the consumers with the needed internet access to use the available services. The numbers show that in North America and Europe the users do have the availability over sufficient infrastructure to deliver the required internet speed to successfully use streaming. Besides, the increase wireless connectivity around the world ensured that the accessibility of the services has increased significantly. These elements are key drivers behind the successfully disruption of the markets.

Complementary assets

As discussed in the characteristics of streaming, the connectivity of streaming forms another driving force behind it. It ensures that consumers can access music or video from all kind of devices, which allows them to access video content anywhere. For example, your personal spotify account can be used on your mobile phone, laptop and TV.

High quality content

A driving force for the success of the movie industry is the availability of high quality content. Traditional movie studios have chosen to partner up with streaming services to provide quality content to the consumer. It appears that the abundance of the high-quality online content has created a shift in consumer behaviour towards watching on-demand streaming.

Consumer demand change

The disruptions of the music and television industry are not only technical in nature. A change in demand of the consumers towards a model where the consumer wants access to video and music content the want and whenever they want, on their device of choice. The streaming services are fulfilling these wishes for their consumers, but also have another advantage: high-quality and original content. The research of Deloitte shows that the consumer demand change and the high quality content are the reason that consumers here are willing to pay that extra subscription and eventually make the step towards paid streaming services.

Specific firms disrupted

Spotify and Apple

Spotify is a music streaming service that started providing services in 2008. Spotify provides a “freemium” service which means they have the option of free basic features with advertisements or a premium monthly subscription without ads. On the other hand, Apple had already entered the music industry years before and launched the iPod in 2001. The iPod was a music device where you could download and listen to MP3 music. Two years after, in 2003, Apple launched the iTunes Store, aiming to provide a legitimate source for downloading music and audios. Also as a key step to eliminate all illegal download from P2P sites, like Napster that were its main competence.

For entering the US market, Spotify had a lot of troubles overcoming the legal obstacles that record companies and Apple imposed. With a smart move, Spotify opened its platform and launched “Spotify Platform” where developers were encouraged to build on their platform, this way music channels and third parties started to get involved in Spotify´s business and the US market had no other option than allowing Spotify in its country in 2011. Apple, was not going to be left behind and launched on 2015 Apple Music, a direct competitor that share some of the same characteristics than Spotify. Although Apple Music doesn't allow the free basic features that make Spotify so attractive, Apple still has a greater selection of Music and podcasts than Spotify. Apple has a strong connectivity and interoperability with the rest of Apple devices, while Spotify has a strong connectivity with Google applications and a wider range of devices like Xbox and Playstation.

In the online streaming market, the number of Spotify's and Apple´s Music competitors is growing. For example, Deezer offers a free year trial before needing to pay for it, the only requirement is to have a Facebook account. The industry is growing without limits and that means there will also come more competitors. It is necessary that current incumbents keep their innovating efforts, in order to not become obsolete.

Netflix and Blockbuster

Netflix entered the video rental market with a new business model offering mail-rentals in 1997. In comparison with Blockbuster and its rent per movie fee, this new and innovative business model offered a flat monthly subscription of unlimited movies with no time limitations for return and with no additional fees. The movies were ordered online and delivered by post directly to your house. Sharing the characteristics of a disruptive innovation, Netflix offered a cheaper and more convenient alternative for renting movies. They also had less operating costs, as they didn't have any physical stores. Initially, with just a thousand movies to offer and only through DVD format (a format that was still not adopted by a majority) Netflix tacked a lower and unattractive customer segment for Blockbuster, the dominant incumbent of the market by that time. In 2007, Netflix disrupted again the video-industry with their fast adoption of streaming technology, this time leaving Blockbuster out of the game. To understand this better we will use the Technology Improvement S-curve.

Pioneering: In 2007, a company named Computer Networks introduced to the market a new technology called HTTP-based adaptive streaming. This new technology allowed streaming media to be finally distributed eliminating buffering and connectivity issues. Netflix, had been investing in efforts towards streaming for some years. During this same year, through HTTP-based adaptive streaming they finally expanded its rental business and launched their first version of their own streaming platform. Meanwhile, Blockbuster, had just entered the mail-rental service and finally decided to eliminate late fees, they started a pricing fight against Netflix.

Technical obstacles overcome: Moving to streaming services implied technical difficulties and obstacles to overcome for Netflix, such as how to acquire customers and the lack of content that was available at that moment for online streaming. One of their ways for tackling this issue was to promote independent films, in 2012, Netflix launched its first original-content. Additionally, streaming was only possible through computers and customers were not used to watch movies through the computer instead of the TV. Blockbuster on the other hand, also tried to incursionate the streaming services and finally filed for bankruptcy in 2010.

Master technology: Netflix streaming service offered certain additional characteristics that made them the preferred service for the average customer: Netflix streaming application allowed connectivity as it can be viewed and synchronized in multiple devices. Through intentional traces like ratings and likes for movies, and unintentional traces of their consumers (hour of streaming, geolocation, type of content, frequency) Netflix can gather enough data for improving their services but also for creating more original content that match better the likes of their customers. Netflix application has been reprogrammed to allow customization through profiles, then algorithms give recommendations based on the consumer habits of each profile, 80 percent of what people watch on Netflix comes from this recommendations.

Physical limits: Many other companies have entered the streaming service competition, some of the main competitors are HBO, Hulu, YouTube and Amazon Video. Due to the high price that it would cost to have multiple streaming service subscriptions, P2P downloading sites like Bitorrent are re-gaining importance. As customers find cheaper and more convenient to just acquire one subscription from a streaming service and download the additional specific content from P2P networks. This might be a hint of where the video streaming industry could be disrupted in the future.

In the end, Netflix had perfectioned its own streaming technology over the years and had disrupted not only video rentals, but also cable and television industries, by providing tv series and movies for all ages and tastes, in a cheaper and more convenient way.

Blockbuster took a racing response towards Netflix, competing on prices or additional features instead of adapting to the new model and the new streaming technology. Blockbuster realized Netflix was a threat since the beginning but they underestimated their capacity to influence a market where they were dominants but also the speed at which digital technologies would evolve. Blockbuster had a very strong and efficient business but lacked of capacity to adapt to network externalities brought by the introduction of digital technologies so by the time they tried to copy the new business model it was too late and they had become obsolete.

See also

• Comparison of music streaming systems
• Comparison of streaming media systems
• Comparison of video streaming aggregators
• Comparison of video hosting services
• Content delivery platform
• Digital Living Network Alliance (DLNA)
• Digital television
• HTTP Live Streaming
• IPTV
• List of streaming media systems
• Live streaming
• M3U playlists
• P2PTV
• Protection of Broadcasts and Broadcasting Organizations Treaty
• Push technology
• Real-time data
• Stream processing
• Stream recorder
• Web syndication

Further reading

• J. Preston. "Occupy Video Showcases Live Streaming," New York Times, December 11, 2011

External links

• What is Streaming? A high-level view of streaming media technology, history, retrieved 2016-03-25
• The Early History Of The Streaming Media Industry and The Battle Between Microsoft & Real, retrieved 2016-03-25