On-demand Internet video is to live video as videotapes are to broadcast TV. You can view an on-demand video clip anytime it's convenient. Live video, however, is scheduled to run at a specific time, and if you tune in late, you'll miss part of the broadcast.

Viewer requirements are the same for on-demand or live Internet video. Server requirements, however, are different. An on-demand server need not perform at the same high level that a live video server must reach, because the number of simultaneous connections to an on-demand server is usually low. For example, 1000 viewers of an on-demand video will not watch the video at the same time. But 1000 viewers might watch a scheduled broadcast event, and the server must be able to handle 1000 simultaneous streams.

Major differences exist between the creation of live video content and on-demand video content. To produce an on-demand video, you shoot the content, digitize the file, and encode the file, taking as much time as necessary to do the job properly. But to produce a live video, you must shoot, digitize, and encode at the same time. This simultaneous processing of data and preparing it for viewing on the Internet means you must have nearly four times as much processing power as you need for creating an on-demand video.