What The Web Needs Now
So you need a streaming system. You need a streaming architecture that can figure out what to do with all that data.

Enter the Codec
Streaming architectures are made up of codecs. Codecs, short for compressor-decompressor, are basically mathematical formulas for handing your video information. As stated in their name, they do two things. They mathematically compress video data into something smaller. On the receiving end, they decompress that data into some form of displaying the video.

So the goal for a mathematically based codec is to do all this work as efficiently as possible. On the compression side, this usually means playing garbage man. The golden question becomes "how much can the codec throw away before the video is basically unusable?" After all, if you throw away data, you don’t have to pack it and ship it.

Obviously, quality is the first cost of this kind of process. You have to make things smaller in memory size so you shrink display size. Or you might cut down on the number of frames per second that are shown. You might throw out the fine details. Or make the audio sound less clear. Or, as is most common, do all of these steps and then some.

At this point most traditional video people get very righteous. "Look at that junk," they proclaim. "How can people use this stuff?"

It’s the Access, Stupid!
What critics of streaming video miss is the most obvious part. The game is about access to content. Streaming video is incredibly hot not because of the quality, but because that video can be effectively transmitted, on-demand, to any Internet connected device in the world. As bandwidth gradually improves, the long awaited age of interactive television is finally coming to pass.

What person with a good story to tell wouldn't accept some loss in quality in exchange for worldwide access to their content?

Understanding the Codec
So how does a compression formula (algorithm) really work. It gets pretty complicated. But there are some basics that apply to most compression technologies. Take advantage of those basics and you are well on your way.