The Early History Of The Streaming Media Industry and The Battle Between Microsoft & Real

2015 marked the 20th year of the streaming media industry and for many who weren’t around in the early days of the Internet, the history of how the streaming media industry started isn’t a story they know. Fewer still are aware of the role that RealNetworks and Microsoft played in growing the industry and helping to foster the adoption of streaming media content, thanks to their deep pockets and marketing muscle in the late 90’s. If you didn’t work in the streaming media industry during that time period, you would have no idea just how fierce the battle between Microsoft and RealNetworks really was. Words can’t describe how competitive the market was at the time or the amount of advancements that took place in the industry within a two-year period. You really had to live through it and be working in the industry during the early years to appreciate it. So for those that want a history lesson, or want to re-live the old days, here’s how it all started.

Progressive Networks is considered by many to have started the streaming media industry with their launch of RealAudio 1.0 in April of 1995. While they ushered in the era of the early days of the industry, with audio only streaming, they weren’t the only company at the time working on streaming technology. Others including Vivo, Xing, VDOnet, VXtreme and Microsoft were also developing their own platforms. Xing, which had an MPEG tool suite at the time, launched their StreamWorks platform, which supported not just audio, but video as well, just after Progressive Networks. So while many want to point to just one company that founded or started the industry, the fact is that no single entity or person deserves all the credit.

Microsoft was already working on video technology as early as 1993, when their video for Windows development kit was sent to developers that year. Microsoft’s video server technologies, originally code named Tiger, (because it sliced data into “stripes” for storage) led to its innovation in streaming media and was first demonstrated in 1994. Microsoft tried to provide the answer with “My TV” Microsoft Interactive Television, or MITV for short, but aside from the catchy acronym, MITV didn’t have much going for it. Progressive Networks spent more money and had an aggressive expansion plan and out executed everyone else. Progressive Networks got all the traction in the market and quickly became the default platform in the industry.

Progressive Networks radio webcast on September 5, 1995 between the Mariners and Yankees is considered by most to be the first major live sports webcast on the Internet, but no one truly knows who did the first webcast. Some say it was the Rolling Stones concert in November of 1994 over the Mbone, but others disagree. Frankly, it doesn’t matter. There were a lot of very smart people working on audio and video technology at the time that helped contribute to getting the industry off the ground. But Progressive Networks rightly deserves a lot of the credit and was the primary company responsible for the wide adoption of audio and video streaming with content owners, and consumers, from 1995 to 2002.

In October of 1995, Progressive Networks launched version two of their platform, RealAudio 2.0, and pretty much owned the entire audio streaming market at the time. Then in September of 1996 they launched RealAudio 3.0, with the help of Sheryl Crow’s single “If It Makes You Happy”. This ushered in the era of good quality music streaming as well as Microsoft’s entry into the industry. In 1996, Microsoft made an investment in VDOnet, a small company with some Internet video broadcasting technology, acquiring a 5% stake in the company. Microsoft then launched version 1.0 of their own player, called NetShow, in conjunction with the launch of Microsoft Internet Information Server 3.0 at Internet World. A year later, in 1997 Microsoft announced a licensing and standards development deal with Progressive Networks and made a minority investment, taking a 10% ownership in the company. For a short time, it looked like both companies were going to work with one another on streaming media protocols and technology, but their partnership would soon fall apart.

In August of 1997, just two weeks after Microsoft announced their deal with Progressive Networks, Microsoft purchased VXtreme, a small audio and video startup that was Progressive Networks number one competitor at the time. Founded in 1995, with Cisco and Informix Software as investors, VXtreme had a line of Internet video products including Web Theatre Server, LiveStation and a Web Theatre Client plugin for Netscape and Microsoft browsers. Adding VXtreme’s technology to Microsoft’s streaming platform really gave them the foundation they needed to begin to challenge Progressive Networks, which changed their name to RealNetworks in September of 1997 and went public in November later that year.

Also in 1997, RealNetworks announced a new broadcast network in a deal with MCI that layered RealNetworks software on top of MCI’s Internet backbone, with the goal of being able to support up to 50,000 simultaneous streams. This was the early incarnation of what would later become RBN (Real Broadcast Network) and was the first major effort to try and bring video to the masses via a dedicated content delivery network. The company also announced the fourth version of their platform in 1997, RealNetworks 4.0, which saw the debut of RealVideo and only a few months later, released RealSystem 5.0, adding support for Macromedia Flash. RealNetworks still dominated the market with more than 500 radio stations using their platform and announcing more than 15M users of their software.

By the end of 1997, things in the industry had started to change. Companies realized that streaming media technology and the services that went along with them including encoding, delivery and hardware was going to be a real business. Vendors like Sun, Cisco and others latched onto the streaming market with hardware that others needed to deploy and use platforms from RealNetworks and Microsoft. Technology that was once only thought of as low bitrate, poor quality audio streaming was now being applied to video centric, high-bandwidth (100Kbps) applications. The race in the industry was now on and Microsoft decided they wanted a piece of the pie and would start to aggressively compete against RealNetworks. As 1998 rolled around, the streaming media market really started to mature and big business was now at stake.

After Microsoft’s acquisition of VXtreme, Microsoft used their new technology and really started directly competing against RealNetworks with the launch of NetShow 3.0 in mid 1998. Bad blood between the companies soon ensued. RealNetworks CEO Rob Glaser accused Microsoft of purposely taking measures to break RealNetworks RealPlayer software in order to stifle competition. In July of 1998, after a Senate Judiciary Committee hearing on competition in the software industry, which Rob Glaser testified at accusing Microsoft of unfair practices, Microsoft sold their 10% stake in RealNetworks saying that the companies would go in different directions. By now, the battle was on.

RealNetworks added to their technology portfolio and acquired Vivo in March of 1998 and a month later, launched RealSystem G2. Real’s new platform was a complete re-architecture of their system and provided support for RTSP, SMIL, JPEG and GIF. VDOnet fell on hard times and after their CEO resigned, the company laid off employees and closed up shop. In July of 1998, Citrix acquired VDOnet’s assets and came out with a product called VideoFrame, which failed less than a year in the market.

This left RealNetworks as the still dominate force in the market in 1998, but Microsoft was starting to get traction. Later that year, Microsoft put a ton of money, marketing and man power behind their audio and video platform, hired a lot of employees and went after the media and entertainment market that RealNetworks had always owned. Microsoft started closing deals and getting content owners to use their platform in addition to RealNetworks and this was the period of time in the industry when many content owners started making their content available in both RealNetworks and Microsoft’s formats. It was the first concrete sign that RealNetworks domination of the market was being challenged. Microsoft also got a big win later that year when they foot the bill to have President Clinton’s grand jury testimony streamed in their format for many of the major news websites.

Screen Shot 2015-01-14 at 5.28.12 PMBy the start of 1999, streaming media usage exploded and really became mainstream when on February 5th of 1999, Victoria Secret did a live webcast of their annual fashion show. The video window wasn’t much larger than the size of a postage stamp and the frame rate and buffering was terrible. But viewership numbers released after the event were in the millions and even though many complained about the poor quality, live streaming was here to stay and was about to be catapulted into the stratosphere. Later that year, another large-scale live event, NetAid, brought even more exposure to streaming media industry when Cisco pooled together many vendors in the market to try and bring the event to a worldwide audience. Then when Yahoo bought for $5.7B, the deal cemented the enormous expectations people had for where everyone thought the streaming media industry was headed.

In April of 1999, RealNetworks acquired Xing Technology and in October, Microsoft renamed their platform Windows Media. Microsoft’s strategy of bundling their Windows Media Server software with their Windows NT Server, as opposed to RealNetworks approach of making large companies pay hundreds of thousands of dollars for it was starting to pay off. The service provider I worked for at the time, Globix, paid $187,500 for a RealServer software license to be able to support 7,500 simultaneous streams and then on top of it, had to buy servers, at least until Linux came along. In some cases, Windows Media Server deployments inside CDNs at the time cost 75% less than RealServer to deploy. As a result, some content delivery networks started charging content owners a premium to deliver content in RealNetwork’s format versus Microsoft’s. Content owners started re-thinking why they should spend more money to deliver content using RealNetworks’ platform when Microsoft’s media server elements, encoder and player software was all free. Microsoft really ramped up their marketing that year and even brought out Bill Gates as their keynote speaker at the Streaming Media West conference in December of 1999 to highlight the use of digital audio and video, as the “next major wave of Internet computing.”

At the same time, little known to anyone outside of a small group of industry insiders, throughout 1999 and 2000, Microsoft had been quietly giving content delivery networks and webcasting production companies millions of dollars in what they called “net credits”. The idea was that these vendors could go to content owners and tell them that they would convert and host the customers content in the Windows Media format, and Microsoft would pay the cost, usually for the year. The service provider I worked for at the time got hundreds of thousands of dollars in net credits in just one year, and larger CDNs like InterVU, iBEAM and others got millions. This was the peak of the streaming media industry, late 1999, with lots of Microsoft dollars flowing into the market, which helped many of these vendors, like InterVU, build out their network for scale. Only a year later, InterVU would be bought by Akamai in a stock swap valued at roughly $2.8 billion and Microsoft’s net credit dollars was a big reason for InterVU’s growth.

While Microsoft and RealNetworks competed with one another, both companies really had a different strategy and vision for their platforms. Microsoft’s primary interest wasn’t in defeating RealNetworks as a format/player, its real motive was in containing licensing costs for codecs. Taking the then license for MP3 and MPEG2 and including those technologies in Windows was going to cost Microsoft as insane $600 million per year of top line revenue. Had RealNetworks established their own codecs as the defacto standard, Microsoft could have been forced to license RealNetwork’s technology for even more money. It cost far, far less for Microsoft to buy a codec company and spend a fortune developing an ecosystem then it did to take these licenses.

Another big difference was that unlike RealNetworks, Microsoft didn’t care as much about their player, it was created to make Windows better. It was considered a Windows component and important, but much of the development effort went into the server, format, and codecs. RealNetworks was much more of a “front-end” company and the main thing RealNetworks cared about was their player and the revenue from it. Everything else they did was designed to support their player, which was evident by the fact that even though RealPlayer was free, there was also a plus version that came with more functionality but cost users $29.99.

In 2000, at the crest of the Internet bubble, RealNetworks and Microsoft both came out with newer versions of their platforms and worked hard to out maneuver one another with more features and functionality. RealNetworks also announced they had more than “75 million regular users” of their RealPlayer. While it looked like that nothing was going to stop the growth of the streaming media industry, and the progression of the technology, cracks in the market were already starting to show. The streaming market, and entire Internet industry for that matter, was soon headed for a fall that would take most vendors by surprise.

Companies that had raised millions, and in some cases billions in venture capital, weren’t growing revenue as fast as many had predicted. Some companies had no real revenue or business plan at all and never should have been invested in to begin with. Most vendors weren’t anywhere close to turning a profit, with some losing hundreds of millions a year. Companies tried to grow too big, too fast and assumed that market growth rates would exceed their own growth numbers, but they didn’t. RealNetworks saw what was coming, but like many, didn’t think the impact would be so severe. As RealNetworks CEO said in a letter to shareholders in 2000, “the underlying drivers for the change in our financial results are not trivial”, but the company felt the impact of these changes would only take “several months to work through.” They and others were severely wrong.

In reality, the industry had been setting itself up for failure by setting financial expectations and guidance that vendors had no shot of reaching. Many originally dismissed this as market growing pains because they were blinded by greed, a wave of exuberance and were sacrificing growth over profits. They wanted to believe all was well. But in late 2000, the unrealistic and self-inflated numbers finally started to catch up with the majority of companies, in all Internet sectors, and investors took notice. For many the money was gone and funding dried up as investors begun to realize they were on the losing end of tens, if not hundreds of billions of dollars. The dot com bubble burst caused the loss of $5 trillion in the market value of companies between 2000-2002.

When the larger Internet bubble burst, it trickled down into every segment of the market, including the streaming media industry. Content owners that were rushing to get all their content online quickly realized they had no way to make money from it and started to pull back. Advertising dollars dried up. Some vendors literally closed their doors overnight and started going under at the end of 2000, but it was really 2001 that it all fell apart. Even larger companies like Cisco, who had a legitimate business felt the pressure, with their stock losing 86% of its value in a short period of time. For the majority of the vendors in the streaming media industry, it was all over. Those vendors that did survive, really scaled down their operations and stopped spending money, cutting costs anywhere they could. By my estimate, at least 75% of all the vendors in the streaming media industry went out of business between late 2000 through the end of 2002. To put it in perspective, at the 2000 Streaming Media West trade show, there were over 700 exhibitors on the show floor. When the show was started back up again in 2004, there was a total of 24 exhibitors.

In March of 2001, RealNetworks announced a three-year deal with Major League Baseball to create a subscription service including live audio webcasts. While it was the biggest premium content deal in the market at the time, and important for the progression of the industry, it came as the market was crashing. Only four months later, in July, RealNetworks laid off 15% of their employees as their revenue from server licenses to companies that had gone bankrupt and advertising revenue started to disappear fast. Contracts went into default, companies couldn’t collect what they were owed and many vendors had to lay off employees. RealNetworks quickly tried to change their business model and source of revenue by starting a content subscription service called RealOne, which they launched in December of 2001. A month later they had 500,000 paying subscribers, but it wasn’t enough.

Seven months later, in August of 2002, RealNetworks did another round of layoffs, this time 11% of their company, closed selected offices and canceled their annual user conference. By now, the battle between RealNetworks and Microsoft was almost over, as the market for video services on the Internet literally disappeared. New content wasn’t going online and no major improvements to streaming media technology was being developed. The industry was at a stand still.

In 2002, RealNetworks introduced their Helix initiative, along with their Helix Universal Server and released substantial parts of the source code under an open source license. But it was the end of RealNetworks as an audio and video platform. Between 2000-2002, RealNetworks lost 51% of their revenue from software license fees and 83% of their advertising revenue. Microsoft came out with Windows Media 9 in September of 2002 and it offered better quality than Real, was free as part of the Windows platform and had the tools and ecosystem that content owners needed. It was at this time in the industry, when the market shifted and it was no longer about codecs and formats. Helix was the last major software release for RealNetworks which then got into the music business, including a partnership with Sony later that year, and launched one of the first major efforts to sell and deliver music from major record labels over the Internet. In the following years RealNetworks acquired music services and gaming companies and was out of the streaming media platform market.

And just like that, in less than 18 months, arguably the most important company responsible for the growth of the streaming media industry was no longer in the market they started. But that wouldn’t be the last the industry would hear from them. In 2003, RealNetworks filed a federal antitrust lawsuit against Microsoft for anti-competitive practices, for amongst other things, bundling their Windows Media Player with the Windows operating system and bundling its media-server software with its server operating system. Two years later, in October of 2005, Microsoft settled with RealNetworks agreeing to pay a $460 million up-front cash payment to resolve all damages claims and gave RealNetworks long-term access to important Windows Media technologies that enhanced Real’s media software solutions. RealNetworks is still around today, but gets most of their revenue from games and other sources of online content and software.

By 2005, Microsoft’s streaming media division, which had been renamed to the Digital Media Division with over 1,500 employees, and fell under the Windows Platform team, had served its purpose. Windows Media streaming won out and as result, Windows Servers had value over Linux. And with Microsoft being involved in codec development that lead to many patents, and these becoming part of H.264, Microsoft directly changed the pricing for H.264 through years of effort. As a result, Microsoft could license it for Windows unlike MPEG2, which clearly helped the industry as a whole. With the format battle now over, the Digital Media Division was looking for new competitors and reasons to exist. Enter Apple.

Apple had released iPod and iTunes for Windows, and Microsoft was struggling to figure out how to compete. The Digital Media Division owned this problem for Microsoft and came up with things like PlaysForSure to ‘unite’ the industry in a non-Apple ecosystem. But Microsoft really did not have any good solutions on how to challenge Apple as this was a whole different type of competitor. So post Vista, Microsoft execs did not see entertainment and streaming technologies as core to competing with the resurgent Apple. Streaming and codecs – “who cares, we won, and Macromedia and Adobe are not real competitors”, was the attitude of many inside Microsoft.

After much debate at the Ballmer/Gates level, it was decided that Robbie Bach (head of Xbox) would ‘own the Apple compete problem’ since Apple was viewed as entertainment threat, not an OS threat, and certainly not a threat to the Windows Mobile group. With that mandate handover, the Digital Media Division was broken up in late 2005. The devices folks and subset of Windows Media Player went to work on Zune (but under the hardware device team from Xbox), and codecs and DRM went to phone group. Some also went to the tools team that was an offshoot group of .net that became the Silverlight group to try to compete with Flash. But as many who worked at Microsoft at the time would tell you, when there isn’t a competitor, Microsoft loses focus, and Flash wasn’t yet a threat.

While Microsoft beat RealNetworks in the end, years later, Apple would beat everyone following the intro of the iPod and iPhone. Adobe would then take over with Flash, but even that became irrelevant with HTML5 and also lead to the death of Silverlight. In the end, Microsoft, Real and Adobe would all lose out in the video format/platform market, twenty years after it started. It’s also worth noting that all of these video platforms would have gone nowhere if it wasn’t for content. Software wouldn’t have driven downloads without nothing to listen to or watch. Content has and always will be king.

While this isn’t the complete history of the streaming media industry, talk to any veteran of the space and they will tell you what the early days were really like. It’s hard to capture in words the excitement, excess, competitiveness and startup culture that existed at the time, something the streaming media industry will never see again. For me personally, the twenty years have gone by fast and the advancement in the technology, and adoption of streaming applications, has taken far longer than most predicted. But that hasn’t stopped many people from continuing to try to improve on it every single day. Here’s to the next twenty years.

Note: My thanks to the numerous former Microsoft and RealNetworks employees and execs that I interviewed for this piece that provided much of the details I had already forgotten.

  • John Pillsbury

    Dan, an excellent summary given the length of article to cover 20 years of streaming! Glad you have been here as storyteller over the years. I have been in the streaming industry for 15 of those years with Destiny Media Technologies; makers of (2000 to today) and pirate radio (1995- 2005…first internet radio stations). So we have also been innovators and survivors, even as larger elephants have played in streaming forest. The Adventure continues…..see you on the journey!

  • Scott S Grizzle

    Dan Thanks for the walk down memory lane. So many have forgotten the true history of streaming and where it came from. Im currently looking at 18 years in the industry which is really scary and during the Intervu / Akamai acquisition it was a fun time. Back then you had to do both Windows and Real to be competitive plus SMIL or SYMM. The Association markets including The American Bar Association adopted streaming and online video early on for continual education credits.

    Its going to be fun to see where the industry goes in the next 10 to 20 years. Who will be around and who will pop up out of no where. Like i always say Thanks for all of the Great work you guys do at Streaming Media. Keep up the great work and keeping us with the great information.

  • Mike Beckerman

    Fun read!

    NetShow was started by Jim Durkin, Steven Levi and me as one of the off-shoots of the MITV break-up. Over the years of NetShow (you missed it’s precursor — ActiveRadio), Windows Media, and the Digital Media Division, one of the best things was that you could wake up and read something in the newspaper every day that involved our software and its use around the world.

  • Excellent recap. I worked closely with Windows Media in 2001-2007 while at MusicMatch and Yahoo! Music and it was evident at that time that Microsoft was playing the wrong game, but for the life of me I couldn’t figure out why. Microsoft was saddling content companies with ridiculously convoluted DRM protocols that made the delivery of today’s generation of streaming music and video services (ie Pandora, Spotify, YouTube) impossible. As often happens big technology companies stumble when trying to understand the media business.

  • Adolfo Rosas

    Hi Dan. This is a very good exposition of the OTT industry origins. I really appreciate some of the insights that you provide about the intricate relationship between the actors of this drama that may have been difficult to grasp out of the USA at that time. I´d like to add some touches about the video streaming industry that existed prior to internet-streaming. I have not googled any of these ´touches’, I lived and built my part of those times myself. Yes. There was video streaming over IP much earlier than internet streaming was practical or it was a business for anyone. In early nineties IPTV was coined as a concept and several prototypic services were put in place by Telcos/Carriers. IP was the emerging solution then, but there were many doubts about its performance. I had the opportunity to build several services using MPEG1 and MPEG2 over ATM (Asynchronous Transfer Mode) via AAL5 and via AAL1 in those times. Of course this was only possible working in a R&D department (in my case in a big Carrier). We had to build our own HW for video playback using the first available MPEG chips, which, by the way did not much more than inverse DCTs leaving to your SW the task of stream synchronization and system/transport stream formatting. At those times the strong standards were coming from ITU much more than from ISO. We had Px64 (aka H.261) and H.263 firmly established in the Carrier market (no other market was there at that time for video transmission). MPEG1 arrived in this early times and it was considered ‘a toy’ by Carriers for many years. In fact during its whole life. The failure of the laser disc did not help to make it look a professional solution. But toys were good for PCs, that at the time were the technological toy in every house, so MPEG1 was good for those with some money (a lot really) and the dream to see digital video in their home computers. By the way MJPEG was way more satisfactory at that time for professional video. The amount of storage required by MJPEG, which is essentially the same as MPEG1 pure I frames was 20 times the average MPEG1 storage requirements and that impulse MPEG1 for PCs. Going back to business, services, the Telco industry and internet, during the whole decade 1990-2000 many R&D departments were pushing for video services to put a foot in internet. Some bet for multicast (Mbone) as you have correctly pointed out. Some others (we did) pushed for personal services in the real of video conferencing and VoD. That effort was prohibitive at the time. An MPEG2 video encoder board became available for PCs at the end of the nineties but it was for a price over US$ 2,000 (in 1998). And it required SW beyond the retail channels just to save a few medium quality minutes to hard disk. It required the most powerful PC you could buy at the moment which was expensive but cost half the price of the video board itself. R&D departments worked frequently with PC ‘toys’ as video boards and many video servers were created over IP. Many streaming protocols were created trying to overcome the lack of appropriateness that IP offered to video streaming. Those efforts reached interesting results with RSVP, DSMCC, RTP, and a number of video companies started offering video over UDP. Microsoft was playing a strange game in these years. Everyone recognized that they had the money and the knowledge to give the video streaming over IP a serious push, but they kept themselves just toying with PC enthusiast products for a decade. Some smaller companies took the torch and tried to push (RealNetworks, DIVX). Internet was really hostile to sustained UDP flows. Internet fabric builders like CISCO, JUNIPER, cache providers, storage providers were getting much more money from transactions than from flows. HTTP over TCP was winning every battle until 2005. So video was relegated to the curiosity niche in internet. Video technologist wanted to use a transport better than IP but we had to assume that ATM was dead for the rest, and also B-ISDN and also private links. But during that struggling decade for digital video transmission over IP something much worse happened : hey IP was no longer the target, firewalls were now all over the place, UDP cannot make it through!. Trying to transport video over TCP was horrible, and transporting video over HTTP over TCP was the greatest sacrilege. In the internet that existed in the year 2000 the video quality that you could get by tunnelling a video stream over HTTP was incredibly bad. That problem attracted the newly born CDNs. Akamai (and others) turned their eyes to the video problem. They started making changes to their caches so ‘some’ video could make it through. At the beginning they started caching UDP packets allowing RTMP and WMV to travel the internet using their original transports. This approach did something to help but definitely internet was becoming more and more a HTTP network and UDP was a suspicious intruder, so no, video was not a relevant part of the industry yet. Then Youtube came. The illusion of streaming reached the masses. Illusion because in a proper video technology sense a progressive download has never been considered streaming. But who cares? We had video at last in internet!. The rest of the story has been told by the current web generation: we moved from progressive downloads of files over HTTP to ABR (Adaptive Bitrate) streaming over HTTP. For those that never faced the problem of transporting video over (ANY) protocol in a data network it may be revealing to know that current ABR over HTTP over TCP are yet less performing than 20 year older solutions over ATM(B-ISDN). But it is true that ABR+HTTP+TCP is the only technology that will have acceptance today to bring video to the masses. As it frequently happens in engineering the problem is redefined while you work on it so you will need to discard the best solution in favour of the most current best adapted to the times. Best Regards.

  • Fred

    This is a great story. Many of the details were long ago forgotten, but were refreshed, pleasantly so. I started working for MCI International Network Engineering in May of 1991. Sometime in the summer of 1993, I think it was, I was given an assignment to represent the company in an ITU Rapporteur’s Group on PSTN Videophone Standards that became the basis for H.324. By 1995, MCI had turned into a hot bed of “Multimedia”. It seemed like every Director or VP couldn’t hire talent fast enough. I was offered an attractive transfer to MCI Labs. One of our development projects involved an Atlanta based company, Iterated Systems. Founded by Michael Barnsley and Alan Sloan. The idea was to develop compression algorithms that could run inside the network across any and all traffic, Voice, Data, Video or anything that could be received over an access facility. I can remember being part of a team that set up a demonstration of IP Multicast (IPTV) with a trial license of Real Networks Server and RealPlayer. My videophone standards had me traveling far and wide and multiple standards activities and special interest groups. I represented MCI as a founding member of Video Services Forum. Attended one of Leonardo’s MPEG Meetings in Oslo Norway which was intentionally organized adjacent to a PSTN Videophone meeting. Another similar adjacent meeting of VSF and SMPTE was hosted by Microsoft. MCI was the successful bidder in one of the first, if not the first FCC Auction for a DBS Satellite slot. We were part of a 9-Company Joint-Venture Partnership lead by David Sarnoff Researh Center (RCA Labs); charged with developing a service that could transport HDTV through the network. Our first successful transmission demo was at NAB 1998. We could see the potential for IP and extended the work to demonstrate the first HDTV over IP on MCI’s VNET Backbone. It was a fun time. We did lots of good work. And then Bernie Ebbers and his cohorts found sympathetic ears in MCI Leadership for their “Merger” pitch. I made it through two major layoff actions and left in December 2002. Hope this is not too long winded. It glosses over or omits many, many details. Hopefully it triggers a memory or two if you’ve read this far. Thanks again for your post, Dan, for which I’m very appreciative and grateful.
    Fred Huffman, MCI -May 1991 – December 2002

  • Mika

    I worked at Real 1996-1997 and you forgot one important competitor back then – Macromedia (bought by Adobe). Their audio format was a serious competitor in 1996 and as you point out, Flash video was a major force later. Flash was the key technology that allowed companies like YouTube to be born.

    • Jonathan

      Future Splash, I believe is what the company was called before it got acquired by adobe and became Flash…right?

  • Alexander Harrowell

    Real had a stand at this year’s MWC! I have no idea why…

  • Dom Robinson

    Great trip down memory lane – glad to have been there throughout!

    For my book last year i had to find out who did the first stream – and it was waaay before the commercial ones of ’94…


  • stevehollywood

    Dan, Great recap… It was fun working with InterVU, Globix (your team) and iBeam back in the day.. Many great lessons learned that still resonate today.

  • Matthew Quinn

    Brilliant read, loved every year of it. If this were to be a film at any point can we get cameos?

  • Alex Zambelli

    Thanks for writing this up, Dan, you did a great job researching this “ancient” history! 🙂

    BTW, there was one stepping stone between Microsoft’s refusal to include MPEG-2 in Windows and the eventual inclusion of H.264, and that was the standardization of WMV9 as VC-1. By getting WMV9 standardized and then widely adopted as VC-1 in HD-DVD and Blu-ray (not to mention millions of WMV videos online) enough leverage was created for the entire industry to negotiate better licensing terms for H.264 from MPEG-LA. I remember that at the time (2005-2007) a lot folks saw Microsoft as being pro-VC1 and anti-H264, but in reality Microsoft had patents in both VC-1 and H.264 and was essentially driving adoption of both (and paying and receiving royalties for both).

    • George Preston

      Yes, and didn’t microsoft also have a confusingly-named early version of Windows Media Video called MSMPEG-4, that they named after assuming it would pass ratification, but in the end was rejected?

  • Carleton Foxx

    An amazing history, but I have a question: If Silverlight i dead, how come Netflix i always bugging me to update my Silverlight player?

  • Its fun after all these years to think back on the early days. I was at VDOnet which was a technical innovator but business failure… an early example of the ‘fail often’ and ‘take risks’ mantras that pervade the “thought” conferences of today.

    I remember well the massive budget parties, marketing, software licenses, etc and absolutely negotiated our Real server license for Speedera.

    But the one tidbit that you left out of the history is the exact problem that drove all of the “streaming” industry into the ground: the economics of bandwidth.

    In the end the only unit that could be standardized upon to charge a client for media services was bandwidth. And since the marginal cost of bandwidth was rapidly in decline, so too was the marginal revenue. The business models of most of the players didn’t account for those simple forces of economics. If one couldn’t get some kind of swap, marketing dollars, etc then one was suffering from rapidly declining marginal revenue from bandwidth… and it all washed away except for a few lucky stars who understood this and began to focus on network performance and become profitable… because there was and always will be value in performance. VDOnet was a failure but Speedera a massive success- finally got it right that time around 🙂

  • how

    Excellent article, brought back memories. I was a tech support person at VXTreme and moved to redmond when Microsoft bought us. I helped put together the competitive analysis lab which showed upper management how Real Networks, Apple’s Darwin server and Microsoft’s fledgeling Windows Media (formerly Netshow) compared with each other.

  • Pat Greer

    Great review Dan. I built and ran the first streaming network at Sandpiper Networks (later Digital Island and other names), and was involved in the negotiation with RealNetworks for our licenses for the CDN. After writing a check for to Real for multi-millions of $$, we received one six-pack of beer as a thank you. We dubbed it the $5 million dollar six pack and never drank a single bottle. The most expensive 6-pack of beer any of us at Sandpiper had ever seen. I think it might still be a record.