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Research analyst, streaming and online video
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Almost five years to the day, the NYT published an article proclaiming that, “TV is becoming obsolete” and was joined by plenty of other media outlets claiming that within a few short years, streaming video could displace the traditional means of video distribution. While some in the industry still want to set false expectations that streaming media technology is somehow going to replace the primary means of delivering video to the living room, the fact remains that five years later, cable TV is here to stay and is still the primary way to get video into the home.

While reading a post on another site on a similar topic, a reader left a comment saying, “streaming is still in its relative infancy”, a false statement I hear often. Some seem to want to use the argument that streaming media technology is new and will improve as a reason why it will one day replace cable TV distribution. But in reality, 2013 marks the 19th year since streaming media was first used on the Internet. And while the industry has made advances and will continue to do so, the improvements in the technology over the last few years have been small. Compression technology gets better, protocols start to get standardized but year-over-year, we aren’t seeing huge leaps and bounds. That because today, the primary building blocks of all streaming media services, like storage, encoding and delivery can’t get that much better. Infrastructure vendors are spending most of their time to make these services more reliable and scalable and others are using these fundamental technologies to build out ecosystems, protect content and monetize it. But it can only go so far.

Streaming media has limitations and that’s not a bad thing, you simply have to apply it to the best set of applications as you would any other technology. But many are hell-bent on the concept that one technology has to replace another, when in fact, most times, one complements the other. Streaming media is never going to be as reliable, scalable or as high-quality as cable TV, even in the future. Those who suggest that do so as they don’t understand how streaming works and the limitations to the technology. Think of all the companies over the past 10 years who said their technology, be it better compression or P2P delivery etc. could solve the issues with delivering high-quality video to “TV sized” audience. They couldn’t. And even with guys like Netflix (NASDAQ:NFLX) taking the smart approach of placing caches for free inside ISP networks, there is a limitation to what can be achieved.

In 2009, Akamai (NASDAQ:AKAM), the largest CDN on the Internet peaked at 7.7M simultaneous video streams during the Obama inauguration, for all of their customers combined. It was so much traffic on their network that they had to cap customers and they made it clear that there is no such thing as “unlimited” capacity on the Internet. Last year, YouTube claimed they did the largest live event on the web with 8M simultaneous streams. So three years in between events and the largest live event numbers didn’t grow that much. Of course years later, both Akamai and YouTube’s network have grown and their capacity improved, but the 8M number puts things into perspective.

CBS Sports said the NFL Playoff game (Broncos vs. Jaguars) from this past weekend had 35.3M viewers and peaked at over 40M. Even if half of those were simultaneous viewers, that would be nearly 18M streams, for one show. Multiply that times the number of shows going on at the same time and the numbers are huge. The Internet can’t and won’t be able to handle that kind of volume, now, or in the future, at cable TV quality. People love to argue the point, but the numbers, facts and data proves otherwise. When you turn on the TV, it works and you know what type of experience you will get from an HD channel. On the web, you don’t even know what HD really means as some call video HD when it isn’t, when compared to broadcast standards.

With streaming, there is no guarantee what the experience will be. Content services like Netflix and Amazon (NASDAQ:AMZN) and CDNs like Akamai are working hard to give consumers the best experience they can, but they are working with technology that has limitations when it comes to scaling. Sometimes you can get good quality video with no problems. Many times you can’t, or you don’t have a consistent experience or there is some other computer/browser/player/app issue. There are a lot of moving pieces in the entire video ecosystem as opposed to cable TV which has very few.

It seems many outsiders want to judge the “success” of the streaming media industry and the technology on how quickly it can “displace” cable TV as a broadcast distribution medium. What a false idea. The fact is, the technology is already proven and for the right applications, we’ve already seen plenty of success stories. All streaming services combined, the size of the industry is in the billions of dollars, content owners are starting to get paid and business models evolve each year. That’s the definition of success. For those in the industry who understand this, don’t let those who try to set false expectations of streaming replacing cable TV distract you from staying focused and applying the technology where it is best suited.

Disclosure: None

Source: Streaming Video Can't Scale At Cable TV Quality, Will Never Replace Traditional TV Distribution