This article originally appeared in the Feb. 2011 issue of Unified Communications Magazine

Statistics show what everyone knows: Video usage on the Internet continues to grow.

In September, Limelight Networks (News - Alert) estimated that more than 50 percent of Internet traffic was video; the Cisco Visual Networking Index predicts that by 2014 this will be 90 percent. Around 40 percent of Skype’s (News - Alert) calls are now video. If you combine this with the fact that Skype now represents 24.7 percent of all worldwide international long-distance traffic, it means that almost 10 percent of all ILD traffic is video.

All video is not the same, however. There are three different types found on the Internet today:

Streaming:  Non-real-time, unidirectional delivery of stored content to a user’s computer. An example of this is Hulu (News - Alert).

Broadcast: Real-time unidirectional delivery of video from a source to one or more receivers. An example of this is Qik (News - Alert) (recently acquired by Skype).

Chat: Real-time, bidirectional delivery of video between users. An example of this is Skype.

Chat and streaming are at the opposite ends of the spectrum, with broadcast somewhere in the middle. For a non-technologist, the differences may seem subtle, but they make all of the difference in the world in the quality of the experience. I’m often asked why Skype-to-Skype video chat doesn’t look as good as watching an HD movie trailer on Apple (News - Alert). There are three technical differences that account for this.

The first key difference is that streaming video is heavily buffered, while chat video is not. What does this mean? Because streaming video is not being watched in real time, the server can begin sending content to the user’s computer, which can store it, and begin playing it out after it has stored a few seconds worth. While the user is watching, the server can send more of the content, so that the user has the next few seconds or minutes, and eventually the entirety of the content is stored on their computer. Because of this, hiccups in delivery of the video over the Internet do not interrupt the user’s viewing experience.

However, video chat is real time. Because it is used in an interactive conversation, it cannot be buffered up on the recipient’s computer, leaving little to no time for retransmissions and correction of errors. For this reason, video chat will appear more choppy or have more errors (blockiness or odd coloration), relative to streaming video.

The second key difference is the encoding process. The process of encoding a video is extremely compute-intensive. For streaming video, the encoding process can be done by powerful servers, and that process can take as long as needed. This means that high-quality and high-resolution encoding can be used. For chat, the video is encoded in real time: The computer cannot take longer than 1 second to encode 1 second’s worth of video, or else it would fall behind.

Furthermore, the encoding process is done by the user’s own computer or mobile device. Today’s average computer is not yet capable of encoding HD video in real time. Mobile devices are even farther away from being able to do it. For this reason, the quality and resolution of streaming video is typically much better than video chat.

The final key difference is the asymmetry of bandwidth usage. In streaming video, a user utilizes his or her Internet connection to download the video, but he or she does not need to upload any data at the same time. For video chat, the user will be uploading video (to send to the other participants) while downloading video at the same time. For many users, home networks provide asymmetric bandwidth – they have much more bandwidth for downloading then uploading. In a video chat, the overall experience is constrained by the slowest upload speed among the participants. In video streaming, it is constrained by the download speed of the single viewer. In the United States, the ratio of download to upload speeds is approximately 5:1. This means that streaming video has five times as much bandwidth available as video chat!

Next time you are watching a video on Hulu or making a call on Skype, take a closer look and you will be able to appreciate the differences between the experiences.

Jonathan Rosenberg is chief technology strategist at Skype.