Codec Wars: The Battle in Seattle
ERadio Magazine January, 2000
John Silliman Dodge
In November of 1999, cool and civilized Seattle took a shiner when
local police skirmished in the streets with World Trade Organization
protesters. Behind the scenes in the Web World, another battle was
raging between two streaming media titans, one ensconced in new digs
near the city's bustling waterfront, the other in sprawling campuses
across Lake Washington in the Eastside city of Redmond. Because the
winner of this conflict may well set media delivery standards for
the next generation of the Internet, we should take a closer look
at the competitors.
Welcome to Codec Wars: the battle for audio/video control
of the Web. In this corner, the pugnacious, the upstart, the innovative
Mister Streaming Media himself, Rob Glaser, CEO of RealNetworks. In
the opposite corner, the Golden Gorilla, the undisputed heavyweight
champion of the Operating System, the Mighty Microsoft.
The fight is waged on two fronts, technical and marketing.
And the two companies take a fundamentally different approach to both
challenges. The story begins way back in digital history before the
World Wide Web...
A young Microsoft manager chugs along the typical career
trajectory. Bright, energetic MBA full of brains and big ideas gets
a project assignment, achieves excellent results, gets a promotion
and a bigger assignment, delivers even better results, etc. If your
smarts come with good political skills, this can be the fast track
up the ladder of MS or any corporate hierarchy. But something else
happened here. Some say there were philosophical differences. Others
claim it was merely the ten-year burn, statistically how long the
average employee lasts before "retiring." Glaser worked
at Microsoft from 1983 to 1993. He managed Microsoft Word, then moved
to the company's networking group before becoming Vice President of
Multimedia and Consumer Systems.
Whatever occurred, I prefer to imagine that one day
Rob Glaser was sipping a triple Starbucks when Eureka! A moment of
extraordinary vision when he clearly saw the Internet as the Next
Big Mass Communications Medium on par with Gutenberg, the telephone
and TV. He left Microsoft and in 1994 founded Progressive Networks,
which later renamed itself after its anchor product, RealAudio and
became known as RealNetworks. Rob's done OK. As of October 1999,
more than 85% of all streaming media Web pages on the Internet used
Meanwhile back at the ranch in Redmond, the Windows
team had their own audio/video codec called NetShow. It shipped as
a feature with Windows so it was then and continues today to be the
dominant player in terms of sheer desktop penetration.
(Sidebar: the word codec is condensed from coder/decoder.
Media software takes analog content, digitally encodes and compresses
it, then transmits or streams it in packets via the Internet to your
computer where the signal is decoded, uncompressed and played. An
oversimplification, but you get the picture.)
Apparently nobody at Microsoft who was influential enough
to do anything about it saw the Internet in terms of the next revolutionary
medium along the lines of the printing press, radio and television.
Bill Gates had yet to issue his famous "Embrace and Extend the
Internet" email. Perhaps in the truly skinny pipe world of 14.4
Kbps modems, they thought that delivering heavy media like full motion
video was quite literally a pipe dream. Is this how Rob Glaser got
such a head start? Kevin Unangst, group product manager for Microsoft's
Digital Media Division says, "Rob saw the opportunity. He had
a vision that streaming media had potential. He created a whole new
niche and awareness and got an early lead in that space."/p>
Today RealNetworks is up to version #7 of their media
player. They've developed a media language called SMIL (synchronized
media integration language) and they have the #1 jukebox ripper/player
on the market. By many accounts they have their eye on the music business;
scuttlebutt says at least part of RealNetworks will morph into a music
and video portal site and even spin off as a separate division. All
this driven by a Microsoft alum and a one-time business partner. Now
Microsoft is really mad.
NetShow is out and Microsoft has renamed their software
the Windows Media Player. They're up to version 6.4 and serious
as a heart attack about overtaking their rival. They';ve hired
hundreds of smart engineers to mount this challenge. Kevin Unangst:
"If you saw Bill Gates" keynote address at Streaming Media
99, you know that we see digital media as the next significant wave
of computing. Consumer awareness is high, ubiquity is right around
the corner, and we're building the best platform." They
may do it. The way that Internet Explorer came from behind to overpower
Netscape in the browser war should demonstrate one thing very clearly:
never underestimate the power of a six hundred billion dollar company
once they find their range and focus.
That's the back story. Time to pit these two technologies
against one another. Here are seven questions we want answers to:
- Which format is better, Real or Windows?
- Which has more and better features?
- Which has more consumer use?
- Do users really need two?
- What are you missing if you have one and not the other?
- What are the shortcomings of both?
- Does any of this really matter or are we simply being manipulated, er, influenced by each company's marketing machinery?
The blindfold, please.
Remember the taste tests they used to run on TV commercials? I wanted
to experience a sonic bake-off between the Real and Microsoft codecs.
I wanted a respected, neutral judge to step in there, put headphones
on the average American and ask, "Which sounds better, A or B?" Consumer
Reports didn't return my call so I rooted around on the Web until
I found a test site with side-by-side comparisons. There are modern
rock, classic rock and classical music clips in multiple bit rates
in Windows Media Audio, MP3, RealSystem G2 and the original uncompressed
wave file. There are even links to download the players if you require.
I'll keep my personal opinions to myself for the time being but go
click and compare at http://www.media.globix.net/ms_webaudio/default.htm
Four out of five doctors agree...
In an attempt to sway business and consumers into their respective
camps, MS and Real put significant effort into independent testing
of their codecs. What amazes me is how polar opposite these test results
Regarding a head to head test in the popular MP3 format, a press release
from the Real site dated November 18, 1999 states, "RealNetworks
today announced the results of a study by KeyLabs, the industry's
largest independent full service testing lab, which demonstrated that
7 out of 10 consumers prefer the sound quality of RealAudio or RealNetworks
MP3 over Microsoft Windows Media Audio." The report goes on
to describe a test involving 250 participants who listened to six
different sessions of clips from songs encoded with different codecs.
People listened to the original CD then each codec in turn. "Of
the 1500 total responses, 71% of consumers preferred the RealNetworks
format over the Windows Media Audio format. Of the 1354 responses
in which consumers indicated a preference, 79% of test participants
preferred the RealNetworks format over the Windows Media Audio format.
RealAudio and RealNetworks MP3 codecs outperformed the Windows Media
Audio codecs in all major test groups: mono and stereo, low bit rate
and high bit rate, and local and streamed." Sounds darned convincing,
doesn't it? Until you talk to Microsoft.
Kevin Unangst (MS Digital Media) described a recent consumer study
conducted by the National Software Testing Laboratories. They compared
Microsoft Windows Media Technologies 4.0 to RealNetworks RealSystem
G2 at both 20 and 32 Kbps from 16bit 44kz stereo source material.
Seventy-seven consumers participated in audio testing using both Rock
and Classical music. Consumers were played a clip from an original
CD, followed by a Windows Media clip and a G2 clip (in random order),
and asked which sounded closer to the original. This test was performed
at 20 kilobits per second (Kbps) and 32 Kbps data rates. After 308
comparisons, roughly 80% of those tested said that Windows Media sounded
more like the original signal compared with slightly fewer than 20%
Back and forth the reviewers go. In January, Gregg Keizer
of C/Net wrote, "RealPlayer has the best sound around...Its audio
provides richer, fuller stereo than the competition, and the video
looks smooth and crisp and nearly always syncs with the audio." Next
month someone may opine, "The new Windows Media Player smokes the
competition...actually better than the original wave file!" But sound
quality is just one issue. Let's hear from two different business
Quotes from the field
RealNetworks is up to version seven of their player software. Though
this is the second iteration of the G2 SuresStream technology, Tracy
Barnes, president of HardRadio.com still prefers Real 5. "Old
reliable," he calls it. "The best server out there. There
are lots of performance issues with G2, notably memory leaks. The
MS server has gotten better with each new version. Their codecs are
improving. Real 7 is still unstable for my money. You need a system
administrator on it all the time." The Real bottom line? "The
codecs sound great but the servers have problems. Plus you're
paying server license fees. Plus you see ads for all of Real's
content partners in the player window." He recommends that budget
conscious webcasters or those just starting out to go with Microsoft
and their NT servers. "If you're big, then go with Real,
Microsoft and Apple Quicktime and cover all the bases."
It's easy to focus on the server license issue, but the server
is only a portion of the overall streaming deployment cost, dwarfed
in most cases by bandwidth and vendor support expenses. Make sure
you do a Total Cost of Ownership comparison between any solutions
you're considering. TCO is the total expenditure over a specific
period of time that an enterprise spends on a technology. It includes
both direct costs for software licensing, hardware purchasing and
vendor support contracts, and indirect costs such as internal software/hardware/end-user
support, training, learning, lost productivity due to product downtime,
and other hidden costs you need to include to arrive at the grand
I talked to another major streaming media player (executive, not software)
who asked to go off-record for the sake of protecting relationships.
"We've done comparisons with audiophiles and technical
bench tests. And we've found that with lower bit rate codecs,
32 Kbps or below, the edge goes to Real. The MS stereo codec at that
rate is a bit better. We ended up going with Real's lower bit
rate mono codecs over MS stereo. (Remember, bandwidth and storage
requirements double when you stream in stereo. Given the current state
of the art, many decision makers feel the degree of added sound quality
isn't worth the cost.) MS kind of cheats a bit by reducing the
file size by removing more material. To the listener this results
in sibilance. It does reduce encoding time and reduced file size though."
SureStream technology is Real's solution to net congestion and
the problem of interruption or rebuffering. Their research told them
that users valued a constant flow of audio even more than the quality
of sound. So when net traffic or other factors affect transmission,
the G2 stream responds by shifting up or down in bandwidth and quality.
Contrarily, Microsoft determined that consistent sound quality was
paramount. They would have to live with rebuffering for the time being.
When I asked my associate why he went with Real, "Degradation
is better than silence" was the response. "At higher bit
rates the two codecs are comparable. If stereo is important, MS is
better. At 20K mono G2 sounds better. As Real becomes more of a content
player, their benefits may start to disappear. Real encroaches on
the content space and forces some users to look at alternatives. Their
apparent move toward becoming a music and video portal crosses the
line as far as we're concerned. Alternately, Microsoft doesn't
appear to be focused on a content play."
Let's circle back to our original seven questions. The answers
differ with your point of view, whether you're a consumer or
- Which format is better, Real or Windows?
This is a toss-up. If you mean "sounds better" then at the average listening
rate, between 20 and 32 Kbps, the mono winner would be Real. In stereo,
MS has the edge. At higher bit rates, the codecs are roughly comparable.
The fact is that any sonic lead one technology has over the other is
so slight today that the advantage could shift tomorrow.
- Which has more and better features? Real
has more bells and whistles but among the most prominent are 90+ channels,
gateways to content providers such as CNN, Bloomberg, NPR and ESPN.
Decide whether you want your users to face persistent temptations to
click away. And whether you want your desktop to help build Real's CPM.
MS is quick to point out this marketing tactic and counter that "we're
not in competition with you like they are." Real correctly points out
that users don't have to display these links if they don't wish to.
- Which has more consumer use? Real capitalized
on their first-mover advantage and kills Microsoft in player downloads
and usage. In an October, 1999 report of top media players, Nielsen/NetRatings
reported that usage of RealPlayer outpaced Windows Media Player by a
factor of 10 to one. PC Data Online's first Media Player Usage Study
concluded that RealPlayer is used by more than 80% of Internet consumers
who experience streaming media, and the number of active RealPlayer
users outpaces the number of active users of any other streaming media
player by a factor of more than 15 to 1. RealPlayer 7, first released
by RealNetworks on November 8, 1999 reached the four million download
mark in ten days, bringing Real's reach to more than 88 million unique
users and more than doubling the RealPlayer installed base in 1999.
Stats as of January 2000 have Real at 95M, MS at 50M players. Alternately,
the Media Metrix Software Usage report ending September 1999 found that
Windows Media Player was used by 14.3 percent of home PC users. By comparison,
the RealPlayer was used by 16.8 percent, demonstrating that Microsoft
continues to narrow the gap in consumer usage. This report is consistent
with a recent independent study from PC Data which showed Windows Media
Player as the fastest-growing player available, with a 34 percent usage
increase month over month (September to October 1999), compared to 5.3
percent growth from its nearest competitor. Are these back-and-forth
stats beginning to sound familiar?
- Do users really need two? Users need
two, absolutely. Why not, the software is free. Since good content is
available in both formats you need both players. If you're a content
provider your decision process is different. (Unless you outsource your
hosting and streaming to a service vendor, in which case this decision
has likely been made for you.) Webcasters don't need both formats. Going
with two systems is expensive. Double the hardware, maintenance, encoding
and storage. Do yourself a favor, pick a flavor and run with it. If
your content is attractive and your marketing plan is sound, your audience
will find you.
- What are you missing if you have
one and not the other? As we've discussed, some content comes
exclusively in one flavor or the other.
- What are the shortcomings of
both? If sound quality is relatively on par, the hot button
for webcasters should be cost. RealNetworks and Microsoft differ in
their product licensing models; RealNetworks bills on a per-client
license whereas Microsoft includes this feature in the Microsoft Windows
NT Server 4.0 operating system. Vendor support for RealNetworks RealSystem
G2 must be purchased in an annual support and upgrade contract, while
support for Microsoft Windows Media Technologies can be purchased
on a per incident basis. When you take the basics into consideration-hardware,
software and vendor support-Real's server license model makes it more
expensive to deploy. The Microsoft solution is cheaper. Microsoft,
however, has a much smaller and less-active user base. Even with the
lure of good content, there are people who still hesitate to download
devices of any kind from the Internet. Expect this to diminish with
faster connections, more pervasive virus software, increased familiarity
and source trust.
Do any of these differences really
matter or are we simply being manipulated, er, influenced by each
company';s marketing efforts? Are you kidding? This hardball
is happening across all channels-in the press, in the labs, in the
business development offices, at the conventions, on the Web and on
your desktop. Everyone's "why we're best" message is turned up to
Coke or Pepsi?
Cutting through and creating true brand benefit is a challenge. Consumers
are about as loyal to software companies as they are to record labels
or television networks. Jay Samit, Senior VP of New Media for EMI
Records says as much when he admits, "The band is the brand." When
was the last time you heard somebody say, "Hey, I'm an CBS guy. I
don't watch NBC." It's all about attractive content. If I'm on the
Web and I see that the manned Mars landing is going to be streamed
over the Web by a codec that I don't have, I'll download that sucker
so fast your head will spin. Because I want the show.
Real and MS know this and they both jockey to create better and often
exclusive content deals. You want CNN video? You need the Windows
Media Player. Prefer ABCNews.com? Exclusively Real. Want to watch
the Star Wars trailer? Go get Quicktime. The race to cut technical
integration and support deals is equally competitive because as the
Web evolves beyond the desktop, wireless handheld devices, "information
appliances" and TV set-top boxes are juicy growth targets for both
companies. And the digital music industry, the "$100B business in
a $40B suit," is exploding. Music and webcasting are quickly moving
toward an unwired world. As AOL's Steve Case said in the February
7 issue of Business Week, "Ten to 20 years from now we'll think it
was a silly notion that music was so tethered to a physical disk."
What's best, Real or Windows Media? Might as well ask BP or Texaco?
Macy's or Bloomingdales? They all do a pretty good job. Beyond certain
features I'm not sure there's enough true difference to make a stink
over. What does matter is a marketing strategy designed to achieve
ubiquity, omnipresence, being in an indefinite number of places at
once. This has been both companies' angle since day one. Give the
product away to gain market share and eventually become the defacto
Web media delivery standard. For Real, the play is CPM and the sale
of software licensing, support and upgrades. For Microsoft, the play
is to keep adding richer features in the operating system and thus
extend the reach of the OS beyond the desktop, whether that's Windows,
Windows CE, Pocket PC or whatever comes next.
Who will win the Codec Wars? It's way too soon to tell. Both Microsoft
and Real are filled with smart, driven people. In the film, "Tora,
Tora, Tora" after the surprise attack on Pearl Harbor, one sober member
of the Japanese admiralty warns his celebrating comrades, "I fear
we have awakened a sleeping giant." Some mornings when he faces the
shaving mirror, I suspect Rob Glaser feels the same way. But he puts
on the armor and goes to work just the same. I have immense respect
for people who do battle with giants. It isn't a foregone conclusion
that Microsoft will dominate. I wish (I mean really wish) I had scooped
up depressed AOL stock the day after Microsoft launched MSN. Today
the would-be AOL killer is just another ISP. Whatever the outcome,
this competition on a grand scale benefits business and consumers
alike. This is the way capitalism is supposed to work, isn't it? We
want these teams to duke it out because in the process they move the
entire streaming media experience forward. The benefit for everyone
is a better, cheaper, faster, richer Web. And since we're talking
about the mass medium of the 21st century, you can't beat that with