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Could Destiny Media's Clipstream G2 Disrupt The Online Media Industry? (DSNY)

Streaming video data currently comprises over 50% of the traffic on the Net, and even more importantly, is growing at a 52% compounded rate annually.

On a conference call in July, Destiny Media's CEO Steve Vestergaard described ClipstreamG2 as "extremely disruptive to an existing paradigm" (conference call July 2012)

In November 2011 Destiny Media Technologies (OTCQB:DSNY) announced a new cross platform video solution which eliminates transcoding costs and could completely disrupt the online streaming video industry.

As it stands now there is no standard for video formats. Advertisers and websites must create multiple formats of the same video in order to accommodate all devices, operating systems and browsers. That all changes with Destiny's Clipstream G2 format.

With G2, Destiny has developed a single video file format that acts like any other web object, streaming directly from a web server and rendering directly by the browser without a player plug-in. The technology works across a wide number of computers and smart phones, including Mac, Windows, Android, iPhone, iPad, Blackberry and any other recent device that is standards compliant.

With every video you see or play on the Net, there are many steps necessary in order for EVERY viewer to be able to play the.

When a brand puts out a new Internet ad, they turn to their ad agency for online help. The ad agency has to format EACH and every one so all devices; browsers and operating systems can play them. The ad agency has to transcode each ad into the Windows, QuickTime and Flash format. Some agencies go so far as to format in several other formats, but the top three are mandatory

Google's YouTube has to do as well this for every video that is uploaded.

The proliferation of new computing devices (tablets and smartphones) and multiple browsers (Chrome, Safari, Explorer, Firefox) have added even more "players" just making it even more costly for media publishers to get their content "played". For every new ad and video produced, EACH and EVERY one has to be formatted (the technical term is called transcoding) in multiple versions just to be sure every device can even see it.

Producing multiple versions of the SAME ad unnecessarily costs publishers over $1B per year. The transcoding industry is the first industry Destiny's technology impacts.

Content delivery network industry gets disrupted too with G2.

Not only do these publishers have to make multiple versions of the same ad, but they have to pay a content delivery network to store them on computers (streaming servers) all over the world. The video file is not stored on the same server (computer) as the website. Storing and moving all of those media files require a content delivery network provider. The content delivery network industry is approximately$ 3B per year, and there you have industry number two, a larger multi-billion opportunity impacted by Destiny's technology.

With the new version of Clipstream, publishers can keep video in one single format, eliminating patent and licensing fees and transcoding expenses (costs associated with converting, storing and streaming multiple video formats). This solution which will reach nearly 100% of site visitors, thereby generating more impressions will mean higher advertising revenues for site owners and a much lower cost of delivery.

In February they announced that they had successfully tested the cross streaming video prototype and in June they filed for seven patents around this disruptive technology.

Also, the current media players (Quicktime, Flash and Window Media) are not always safe. They are executable files. That means when you click to play the video, you expose your device to viruses, trojan horses, and unstable code that can even gain control of your computer. For that reason, the most popular video format (Flash) is not available for iPads and iPhones.

The days of plug in updates, crashes, and malware from media players are over because a G2 formatted video is played on the Net, not through the Net.

The soon to be released version of Clipstream (G2) is an innovative "instant play" solution for playback of streaming audio and streaming video. Unlike Windows Media Player or Quicktime, there is no player involved that has to launch for the content to playback. Unlike Flash, multiple Clipstream videos can play on the same page and content can be uploaded to any website.

By keeping the videos on the Net, there will be up to 90% less bandwidth used than the 3 current solutions, and this also provides a 98% playback rate. With a G2 video, the website owner can simply store the ad/ video on just the web server. With Clipstream G2, the video file can be stored on the web server, just like regular text or images. Say goodbye to unnecessary hosting (streaming servers).

A Clipstream video can be embedded directly inside an email or web page, eliminating the need to wait for a player to launch a second browser window to actually play it.

Having an application that converts/creates ALL media into a playerless form will save billions in transcoding and bandwidth costs.

How is Clipstream's G2 impacted by HTML5?

While everyone is excited about HTML5 being the next generation "standard", publishers are STILL required to produce at least 3 formats (Windows, Quicktime and Flash) and store ALL of them on streaming servers. In other words, publishers must still pay to have their ad transcoded and stored.

HTML5 versus Clipstream's G2

This is how HTML5 works:
1. The browser hits web page
2. detects the device/OS/device
3. redirects them to a compatible streaming server for the file
4. file is loaded on to device and "player" is launched

How Clipstream's G2 works:
1. browser hits the webpage
2. grabs the video as easily as it would an image off the screen.
There is only ONE file (no transcoding) and NO streaming servers.

Destiny is no stranger to the digital content industry. The recording industry, including the four major labels, use their PlayMPE to securely distribute songs, albums and artistic work to record stations all over the world. This division is quite profitable and enables Destiny to fund G2.

DSNY has 52 million shares oustanding and a market cap of approximately $39m (price .75 8/17/12)

Two multi-billion dollar industries (transcoding and content delivery networks) could be disrupted with universal video format that is "playerless".

Disclosure: I am long OTCQB:DSNY.