Report: Streaming Media To Create New High-Tech Market

As more consumers gain access to broadband technology and interactive television, a new market for the sale of audio and video content and streaming-media advertising is developing, according to a report released Monday by the Yankee Group.

Yankee analyst Steven Vonder Haar said the rise of "on-demand marketing" will be fueled by the widespread use of sophisticated online audio and video technologies for the delivery of content and advertising messages, resulting in a new market sector.

"It's a market segment that can be defined as businesses in the streaming media industry that sell audio and video tools and services to other businesses, (which) in turn use the technology to streamline the ways they communicate with their customers," Vonder Haar wrote in the report.

Video with a Purpose

Vonder Haar used the example of a consumer who wants to buy a new car. Streaming media makes it possible for that person to view infomercials with detailed descriptions of various models, narrowing the field of potential purchases before visiting dealerships.

The technology is a way for car companies to reach consumers at the point of purchase, Vonder Haar said.

"This is multimedia content that helps people get things done," said Vonder Haar. "It represents how the Web is best suited for delivering video with a purpose, rather than video for couch potatoes."

On Target

Companies are already beginning to take advantage of streaming media, said Yankee, which estimated that the market will grow to US$3.1 billion by 2005 from $44 million last year.

"A substantial opportunity exists for offering and distributing advertising via streaming media that consumers ask to see or hear," the Yankee report said.

On-demand marketing, according to Yankee, lets consumers see or hear ads that are relevant to their needs.

Stand and Deliver

Companies that can benefit from the rise of streaming-media advertising include technology companies like RealNetworks (Nasdaq: RNWK) and Windows Media, and content distributors like Akamai Technologies (Nasdaq: AKAM) and Digital Island (Nasdaq: ISLD).

In addition, production and other companies that allow the ads to be broadcast are likely to benefit from the growth in the market, according to Vonder Haar.

Other companies positioning themselves to take advantage of the trend are HiWire, LightningCast, HitPlay and Coollink. According to the study, those companies are busy developing approaches for selling and/or distributing online streaming media ads.

Even though the streaming media market is expected to boom, it does face obstacles. Because streaming media only plays "a small role" in the media landscape currently, those in the business face the challenge of attracting the attention and the spending budgets of major Madison Avenue advertising agencies, the report said.