Streaming Goes Mainstream

Dec. 21, 2004
Manufacturers reap benefits from video on the Web.

Some new technologies, such as the facsimile machine, take many years before they are embraced by manufacturing. Not so with streaming media. Sometimes called streaming video, it was the technology of choice for Minneapolis-based General Mills Inc. last July when the food manufacturer announced it would acquire Pillsbury Co. To get the word out to 11,000 employees around the globe, General Mills streamed the event live to office PCs and computer kiosks in plants. "For our employees, it was a very big moment," recalls Tom Forsythe, corporate communications director. "All employees were hearing the same story at the same time to understand why we were making the acquisition." Other manufacturers such as Boeing Co., Mercedes-Benz USA, and Hewlett-Packard Co. are using streaming media, which transmits video and audio over the Web in real time or on demand, for a host of business purposes. These include both corporate and external communications, employee training, marketing, product launches, business-to-business collaboration, and customer training. "Chief executive officers and senior management can reach out to all employees and communicate strategic goals, objectives, and initiatives in a much more compelling fashion, especially if something significant has occurred," says Lawrence Orans, a senior analyst at Gartner Inc., a business research firm in Stamford, Conn. Gartner projects that 80% of the world's largest corporations will depend on streaming media for corporate communications and training by 2006. The percentage of large companies (those with 500 or more employees) in service and manufacturing industries that use streaming media grew from 10% in August 1999 to 25% in April 2001, says Portland, Oreg.-based research firm Market Decisions Corp. Adds Gartner's Orans, "The technology is available, relatively inexpensive, and it has a quantifiable return on investment that comes from reduced travel and conference expenses." Price Tag And Payback Although the technology promises to save companies money, it can come with a hefty price tag. It would cost $650,000 for a large company to install a streaming-media system that would enable a firm to broadcast live events and provide video-on-demand capabilities to 50 locations, Gartner estimates. On the other hand, the research firm calculates it would cost about $370,000 to hold a training conference for 500 employees. "The payback would be two, one-day training seminars," Orans says. "Companies will still need to conduct meetings in person but streaming is a good supplement to traditional forms of communications, especially in slow economic times." The overall cost to adopt streaming media, however, can vary greatly depending on the needs, capabilities, and resources of the company. General Mills, for example, paid about $60,000 for the cost of two servers and Microsoft Corp. software to deliver streaming media over the existing corporate intranet with high-bandwidth connections. The company saved money, however, because as a Microsoft enterprise-wide customer it received free Windows Media Player software that is installed on desktops or in computer kiosks at factories. Other cost savings were realized because General Mills' IT staff installed the system. Hewlett-Packard's worldwide marketing group began using streaming media two years ago to deliver new-product launches, says a case study compiled by Boston-based Aberdeen Group Inc., a business research firm. Traditional product launches at HP involve major road shows to dozens of North American and European cities, or live broadcasts via satellite. Internal or public briefings also may be held using audioconferencing via an ISDN-based videoconference. The problem is that all of these options are expensive and have a limited reach. In its first year of using streaming media, Palo Alto, Calif.-based HP saved an estimated $1.2 million, in addition to other benefits such as being able to reach twice as many reporters and analysts. Another advantage is that streaming media can help reduce the launch time of a new product, which is especially critical in high-tech markets where products have short life cycles. HP's system also tracks, polls, and collects feedback from users of streaming-media presentations. Seattle-based Boeing, which dedicates an entire Web page to its external streaming-media files, uses it to display maiden flights of new aircraft in real time. Both customers and suppliers of the new aircraft are invited to watch first flights live, says David Weitz, Boeing senior manager of communications, who adds that some of the streaming events have attracted as many as 3,000 viewers. The aircraft manufacturer also uses video-on-demand on its corporate intranet to train employees on plant safety, ergonomics, tool certification, energy conservation, computers, and personnel procedures. "I suspect in the next year or so we are going to see more and more . . . ways we can communicate with vendors, suppliers, the public, our employees through streaming media," Weitz says. Hosting a streaming-media presentation on its Web site helped Mercedes-Benz USA, Montvale, N.J., recruit technicians for its 300 dealerships. "We had a very good response rate from prospective employees, and a very high percentage of them enrolled in our [technician] program," says Rick Thomas, a media development and e-learning specialist for the auto manufacturer. Mercedes-Benz also is reaping productivity gains through its online video-on-demand feature used primarily for training and repair instruction for dealership technicians. "If a technician needs to remove the trim on a vehicle, he can go to the Web site and call up the file that would feature the text of the procedure and show a video clip on how to remove the trim," Thomas explains. "The big thing for us is quick access to current information." Also, the streaming-media files are easy to update for new models that roll out of the factory. Manufacturers that are considering streaming media first must determine whether their IT networks can handle the bandwidth demands required for online video to produce quality images. "Video is a bandwidth hog, so it can threaten the network stability," says Gartner's Orans. "The second concern is quality. If there is network instability you'll receive poor quality." Some companies, including Boeing, are addressing this issue by hiring content-delivery-network (CDN) service providers such as Akamai Technologies Inc., Cambridge, Mass., or Activate Corp., South Seattle, Wash. CDNs stream content over their network of servers to avoid potential bottlenecks on corporate systems.

Leading Streaming-Media Providers Apple Computer Inc. QuickTime Inc.www.realnetworks.comMicrosoft Corp. Windows Media Technologies

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!