Since 1998, your dog aged 14 dog years while the internet aged a cyber-century. And webcasting... well, webcasting became a word
Everyone had their hand up. There may have been one or two I couldn't see, but no more than that. It was a round table discussion at Niri's annual conference and all of the 70-odd people in this room were IROs from telecoms-related companies. They were responding to a question WorldCom's director of IR Blair Bingham had asked: 'How many of you webcast your last earnings call?' The response was unanimous.
Sure, I had expected the people from AT&T and Cisco and Motorola to raise their hands, but the room was also filled with plenty of people from microcap telecoms upstarts whose core businesses are things like phone jacks and little, curly cables. Some of these companies had only been public for one quarter but they were already webcasting.
Just two short years ago, you could have counted all the webcast users on one hand. (According to StreetFusion's VP of content, Blake Hayunga, there were four: Microsoft, Intel, 3Com and GTE.) By the end of 1998 the trend began to catch on and then, over the subsequent two quarters, the floodgates opened.
'I remember with an almost acute sense of pain the nature of those first calls I made to sell the concept of webcasting. Companies thought they were pretty much crank calls,' Hayunga admits. 'We now estimate that over 4,000 companies in the US hold a quarterly earnings conference call, and over 75 percent webcast them.'
'What it comes down to is a couple of leaders and a lot of laggards. And the laggards are really reticent to cross the technology chasm. Like anything else, you get a few people who are willing to take a leap of faith and come across, and the rest just come on in droves after that,' StreetFusion senior vice president Athan Demakos observes. 'Five or six years ago very few companies even did conference calls.'
First application
The earnings call certainly was one of the first applications of webcasting technology. In the financial world it sprang from a handful of IROs who wanted to offer their analysts and institutional investors an alternative to the phone call. They sent an audio stream to the internet, which not only allowed analysts to access the event after it was over, it also helped drive traffic to their IR sites. The process was simple and more cost effective per listener than the telephone conference.
Demakos says the first calls were modeled after analyst conferences, which prohibited participation from individual investors. All that has changed as the debate over selective disclosure became widespread. 'A year ago we probably did 50 retail calls and this quarter we may reach as many as 900.'
Once a few companies got the ball rolling, investors themselves helped the momentum by encouraging other companies in their portfolio to follow suit. Add to the mix the SEC's push for full disclosure, and soon everyone was scrambling to webcast their calls.
'SEC chairman Levitt came out and said companies should make their information readily available. That really had an influence on the individual investor side of the market,' Hayunga recounts.
As IROs quickly discovered, webcasting is an easy, economical way of satisfying disclosure regulations. It also exposes them to much wider audiences than the call alone.
Hayunga describes 1999 as the year of audio. Slide presentations started to become popular towards the summer and fall. Then in 2000, many companies began supporting their audio broadcast with Powerpoint slides and other visual material. He now predicts that in the second half of 2000 and the first half of 2001, slides will be replaced by video.
'The streaming media industry has just exploded and it's going through what the internet went through five years ago,' says Jeff Schulz, vice president of marketing at MediaOnDemand.com. 'For a long time, users were very confused about how to download a browser and what it actually does and how you use it. As that learning curve comes around, it just makes the event much more compelling and easy to do. And that's what is happening with streaming media right now.'
Webcasting does have its obstacles, however. On the one hand it requires a lot of bandwidth. Video streaming gobbles the lion's share of bandwidth and simple audio streaming isn't that far behind. The average 56K modem may be perfectly satisfactory for browsing the web, but when it comes to streaming media it's problematic. Audiences really need broadband or high speed connections to get a good, consistent signal. Even then, streaming is prone to net congestion, or traffic jams on the information highway.
On the other hand, there's the obstacle of firewalls, especially for analysts and fund managers. Firewalls originally served as a security measure to protect proprietary data from outside intrusions. Their annoying side effect is that they keep out otherwise desirable content like streaming media. This means many key audiences still rely on the good, old telephone to access conference calls.
More events
New trends will begin to arise as web streaming becomes more popular. First, there are going to be a lot more types of webcast events. Companies are now moving past the earnings call and including annual shareholder meetings, analyst days and roadshows (the next issue of Investor Relations will feature an account of the first ever live webcast of an analysts' day, held at the end of June by Infonet Services Corp at its Los Angeles headquarters). Even the sell side has found webcasting useful for getting analyst reports to portfolio managers.
'The information of the quarterly earnings call is almost a commodity at this point. It was very important a year ago. Now in order to keep up, companies are moving up-market and expanding into other events,' StreetFusion's Hayunga observes. 'Between Q1 and Q2 of this year, the volume of non-earnings-related events that we webcast increased by 100 percent. This tracks almost perfectly with the growth in quarterly earnings calls quarter-to-quarter over the last year or so.'
Online presentations are also going to get much more sophisticated. They are bringing in new elements like slides, video and links to other web sites. They are becoming less like TV and more like the net - that is, interactive. The frequency of webcasts will continue to rise, the cost will continue to fall, and soon the streamed event will be ubiquitous, just as the internet has become.'
The technology itself will be really common even a year from now. This is just a no-brainer. But what will gain increasing value is the ability to distribute the content. And so companies will be paying very close attention to not just digitization of the annual shareholder meeting, but also where that ends up once it's digitized,' Hayunga predicts.
Many service vendors are striking deals with financial portals like Yahoo Finance, CBS Marketwatch and Individual Investor to give their webcasts larger exposure. The next step may be to bring them to the point of transaction itself and syndicate them to online brokerages. These events will be pushed to work stations and soon big institutions will make them a part of their daily work flow.
In a year or two, when quality video streaming is no longer a novelty, we may wonder what life was like without it, as many of us now wonder about the internet. I have a feeling all those IROs who put up their hands at last month's Niri conference will soon be forgotten. We'll look back and say, 'Duh! Of course everyone webcasts their earnings calls.'
Fast moves
'Reading the information about an annual report or an annual meeting or analyst conference call is just not going to cut it,' declares MediaOnDemand.com's Jeff Schulz. 'Webcasting is way more enhanced. It's way more interesting. It's much more interactive.'
CCBN research indicates that interactive and multimedia applications (such as webcasting) can increase web site traffic significantly. The company compared 'text and data' clients to 'multimedia' clients and found a quarter to quarter increase in site traffic of 97 percent for sites using multimedia components, compared to an increase of only 15 percent for sites using just text and data.
A February 2000 Niri survey showed that 48 percent of the companies conducting conference calls were at that time webcasting them. Of the internet group, 15 percent said they also webcast other forms of investor and analyst meetings, and another 34 percent said they were considering doing so.
Mother of invention
Necessity is the mother of invention, so it was only a question of time before people began scaling firewalls.
UK's Raw Communications is among the most successful to date. Raw has developed a network infrastructure originally targeted to fund managers which bypasses both the firewall and the bandwidth obstacles, as well as generating a video stream of higher quality than the public internet. So what's the catch? As with any proprietary network, fund managers have to buy and install the backbone on an individual basis. Thankfully, this is something many have been willing to do.
'We had to build a network rather than wait for the internet to become broadband over time,' explains Raw's CEO, Ab Banerjee. 'In European equities, there are probably about 70 leading tier-one institutions on an international basis that manage significant amounts of money and about half of them use our product. We capture the content, we host it for them, stream it out onto the desktops of fund managers, and we also put it out onto the public internet.' This last point is important as it enables the events to be seen by web audiences, though the quality isn't as high.
MediaOnDemand.com has also created its own video streaming format in the form of media modules, turbo-charging the standard Windows media player software. Viewers then see presentations in a larger, higher quality window that includes flash animation, web links and other enhancements.
Tiny, glitchy video windows will soon be relics. In the meantime, the latest generation firewall is less discriminatory than its predecessors. Most new ones allow media streaming to pass, and soon they all will.
CEO celebs
No one is surprised anymore when the paparazzi hound Bill Gates, Jeff Bezos or Jerry Yang. The CEO is the latest entrant into the limelight and webcasting will only enhance the chief executive's celebrity status. The next generation of executives will include fewer quiet visionaries and more media-savvy politicians. Will they act like rock stars and prima donnas? Will they hobnob with the Hollywood glitterati and crash Oscar parties? Will they take out insurance policies on their toothy smiles? How can the answer be anything but Yes. Stay tuned.