But in reality, these two worlds are really not exclusive as they might seem.

Some content may start as paid content, and later on may be distributed in the clear with commercials and eventually distributed freely. Other business models allow users to chose between paid but ad-free version or ad-supported version of the same content. Content providers or service operators are not likely to transcode each content for different distribution models if they can avoid it.

As a comment on Google’s apparent position here, I don’t see why an open source codec or open standard should be fundamentally incompatible with revenue generating services. This has been disproved by several standards organizations including MPEG, DVB or OMA, but that is a discussion for another day. The bottom line is that if valuable content will eventually be encoded and distributed using VP8, we’ll be able to protect it if the business model requires it (it is open source after all, isn’t it?) Read on NewTeeVee why open sourcing VP8 matters.

The other issue in debate is whether open source VP8 will stay free. It is unlikely that after a quarter of a century of digital video compression research, Google (or On2) would be able to come up with a codec that is of comparable quality as those developed by MPEG/ITU without infringing on anybody’s patents. If I remember correctly, Microsoft tried something similar with VC-1 and it did not work according to the original plan.

I don’t believe that any serious service provider will jump on the VP8 bandwagon without being able to accommodate all licensing fees into their business model upfront.  Maybe this will speed up MPEG’s effort to create a royalty-free version of MPEG codec, which will avoid splitting the pay-TV and free-TV worlds.

I guess we will wait and see . . .

It would seem that it’s about time that someone called Adobe’s bluff here! This might be construed as a clash of CEO personalities, a Silicon Valley technology tiff or simply good PR tactics, but I sense something more profound at work. Why should a single proprietary video codec, file format and delivery protocol become the de-facto delivery standard for OTT services?

Doesn’t this go against every other basic tenet of  standards use in web publishing? And doesn’t it fundamentally limit the ecosystems that help to monetize video in every other delivery system globally? H.264 video is the acknowledged open standard – yes backed by Apple, but also by every other vendor in the video world. Even Microsoft is on board now after trying to bend the world to their own video codec and file standards.

We should not confuse Flash video with Flash as a presentation engine. Lets face it – if you want to use Flash as an authoring system for animated web pages – good luck. It’s obviously found a niche there. But please don’t try and pass it off as the salvation of Internet video delivery.

As one of the more future looking alternatives, Apple’s HTTP adaptive video treaming proposal provides video monetization options that doesn’t lock us into siloed Flash delivery systems. It enables the use of best of breed hardware and software subsystems woven into the fabric of the web that lies behind HTML 5. And as we can see the iPad (and perhaps its imitators) being the preeminent non-TV video device in the home of the next few years. That’s probably a good thing for the video industry as a whole.

Am I overstating the issues here? Please share your thoughts.

And for more insights into HTTP streaming and its effect on OTT video delivery, please download our white paper, Adaptive Rate Streaming: Pay-TV at an Inflection Point.