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“Codec Silos” Limit Choice and Market Growth

July 4th, 2006

On June, 30 2006 Mark Glaser wrote:

Movie Download Services Still Need Work. He cites Roberta Zouain’s pack2go blog as saying: “portability is also important — I want to be able to watch the movie not only on my computer, but also on my TV, my iPod, my cell phone, etc. So I should be able to have my content on any format and whenever I want.”

These aspirations are blocked by video technology vendors who use their proprietary file formats and codecs as ways of locking users into their systems. I call these “codec silos”.

I don’t expect iTunes or iPods to support Adobe’s Flash format and codecs. This precludes a terrific opportunity to distribute YouTube’s Flash-based video content on the iPod and iTunes. Hackers do have conversion guides but they are fairly tedious for regular users. However, it is not the goal of YouTube to allow this to happen. Why am I complaining? After all, they are playing $1MM per month in bandwidth to host this video for us. Well, I’m complaining because they use Flash video from Adobe which is just the latest “codec silo” of online media. However, larger distribution opportunities await YouTube beyond the iPod to a broader base of mobile devices.

Why didn’t Adobe (actually Macromedia in this case) choose the H264 standard rather than use a proprietary codec? On2 is the developer of the video codec for Adobe’s Flash video product. It is a significant competitor in terms of quality and it is the clear market leader in terms of client ubiquity. On2 cites the licensing burden of H264 as a core criticism of the standard. Learn more about it here. Adobe and On2 claim that 98% of all computers on the Internet are capable of playing Flash video. Flash support is available on nearly every desktop operating system. They are confident that this will become the defacto standard for video on the Internet. Too confident.

Apple has implemented H264. It helps that their licensing costs are paid to a body, the MPEG LA, which includes themselves. While the H264 codec is a standard, their file format and digital rights management technology creates a silo as their content can only be viewed and edited with their software. Windows users who wish to download Apple’s quicktime player are forced to download and install the 34MB iTunes application. This limits playback of content that has been created for Quicktime as some Windows users wont install all of this software. This does not seem to be a substantial burden however. Apple is seeding its Quicktime technology as a way to force more people into the iTunes network. It seems to be working. Quicktime seems to be the format of choice for vloggers, many of whom use Apple video editing and publishing software to create this content. One recent objection, however, has been from the French government that is seeking to prevent a single vendor lock in for online media distribution. [source]

As for Microsoft Windows Media, its support on the Mac is not certain. “Microsoft will continue to offer Windows Media Player 9 as a free download for Macintosh users, but has no plans to provide future updates or product support for Windows Media Player for Mac.” [source] Microsoft, unlike, Apple had not been willing to sacrifice its core operating software sales to its longer term vision for being a media network. I bet that they are rethinking this now. My hunch is that MS wont open source its codecs (even though it would like to) because this would expose it to further claims that it should be paying for some of the technology within their codec. I expect a steady decline of market share for Windows Media Technologies.

As for RealVideo and the RealPlayer, while support exists on many platforms (MAC and PC OS, Treo, set top box, and handheld) for RealVideo content and while RealNetworks has created the Helix Community Project to move most of their technology into open source, market share for their video format is declining. This despite recent articles citing it as the best codec, including this one from Jan Ozer. RealNetworks’ goal of being a media network made them too heavy-handed with monetizing the RealPlayer with advertising and invasive features like system tray message popups. These decisions have angered many. While their player technology is losing share their services like Rhapsody and the Real Broadcast Network (content distribution) seem to be growing in use. RealNetworks has expanded into casual games and Real.com continues to be a top trafficed site with substantial ad revenue. This will keep RealNetworks alive as a contender in the wings as the market evolves. Recently their Helix Community has made progress with its H264 implementation which is with a standard file format as well (3GPP). Their focus has been on mobile devices which promises to be a much larger distribution opportunity for vloggers than the desktop or the ipod.

Adobe has been developing Flash Lite and FlashCast for mobile devices but it does not support video without another native video playback system which will probably be MPEG4/H264/3GPP anyway.

My prediction is that both Apple and RealNetworks will create interoperable video encoding and distribution systems that will use the H264 codec, the 3GPP file format, RTSP/RTP transport as well as simple HTTP download targeted for mobile platforms that will play well in both the desktop Quicktime player and the RealPlayer. This will enable content distributors to encode video once and reach nearly every consumer. When this happens expect a substantial increase in online video content and market growth.

Hopefully YouTube will make it easy to consume their video on mobile devices. I recommend that they begin to adopt H264 sooner rather than later. This will make it easier to transfer their content to the forthcoming mobile platform of H264/3GP. The sooner this happens, the sooner all video content will be free of the “codec silos”.

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