In Mobile Video Standards Fight, Consumers Are Poised to Lose

Last Updated Apr 30, 2010 1:21 PM EDT

Two years ago, most Americans rarely thought about software; now they're inundated by it. There are now 200,000 apps in Apple's (AAPL) iTunes store; almost 4,000 iPad apps have cropped up in just a few weeks. Those of us with both a smartphone and a tablet device will be doubly swamped, especially if one device is, say, an HP-built (HPQ) webOS tablet and the other runs Android; how many app stores can we actually navigate?

App fatigue could drive more people to simply use their Web browsers for many of the tasks they now accomplish with specialized apps, which may be one reason that companies like Google (GOOG) are skipping the native-app trend altogether and simply building great mobile Web sites. (Why have an Amazon (AMZN) app on your phone, for example, when you can simply go to Amazon's mobile site and have it work equally well?)

The new importance of the Web browser is the backdrop for all this Apple vs. Adobe business. If you're wondering why anyone cares about Steve Jobs' open remonstration of Flash, software that lets Web browsers play videos, the reason is that Flash is what underpins much of the video we watch in our browsers. But those standards are changing, and it has a lot of major tech players wondering which technology to support.

Apple mobile devices (and now Microsoft's Internet Explorer) have opted only to support something called H.264 video, instead of Adobe's Flash. Apple might eventually pull Flash support from its desktop version of Safari, too.

Mozilla's Firefox browser, which is used by a vast plurality of Web surfers, doesn't support H.264 because the $5 million license fee is too expensive for the open-source Mozilla consortium to afford. Instead, it supports a video technology called Ogg Theora, which is open-source. (Opera, another browser popular in Europe, also supports only Ogg Theora.)

This befuddling disagreement over Web video has real implications for regular computer users, who may find themselves unable to view certain videos depending on which Web browser (or phone) they're using. But the stakes are even higher for content producers because these standards have huge implications for advertising. Ad platforms and their partners have been waiting a long time to cash in on video ads, which are predicted to be much more lucrative than text-based ads. With smartphone usership growing, this was supposed to be the golden age of video advertising. But should this software roadblock remain, the number of hits received by a monetized Web video will be dependent on which tranche of video technologies it supports. A World Wide Web with several different video standards means a smaller audience -- and less money -- for everyone involved.

If video advertising takes a hit, the consumer gets bit all over again. Less lucrative Web videos means a slowdown in some of the nascent video technology we're all looking forward to: movie rentals on YouTube, a bigger "Watch Instantly" selection from Netflix (NFLX), and smartphone apps from Hulu. It also means that the traditional media -- cable TV, movie theaters, DVD rentals -- can maintain their dying grip on viewership just that much longer while they hem and haw over how to build their next-gen delivery systems.

The arbiter in this scenario might be Google (GOOG), which is working on another arcanely-named video technology called VP8, which it will make free and open-source. NewTeeVee says Google will unveil the new technology at its I/O conference next month, with Firefox as a partner. Google's own browser, Chrome, supports both H.264 and Ogg Theora, and will now add VP8. It's always possible that the video stalemate could be bridged by a new technology like VP8, but as NewTeeVee says, Microsoft has never been enthusiastic about open-source standards. Apple, for its part, may be too deeply committed to its H.264 frameworks, which it has tweaked to provide excellent battery life on its iPad and iPhone. Whatever happens, consumers will be the ones to suffer.