Forget multitouch: By far the most disruptive — and overlooked — feature of the Flash Player 10.1 beta that Adobe launched this week is the ability to transmit video via P2P multicast. In fact, Adobe built some enhanced P2P capabilities into both the new Flash Player and Air 2 beta that could be used to replicate BitTorrent functionality within Flash, build large-scale P2P groupware solutions that work right within the browser and stream video to millions of viewers without having to pay a fortune for bandwidth.

Adobe has been hinting at big plans for P2P ever since it bought a small P2P startup called amicima in early 2007. It made some of amicima’s technology available to developers about a year ago, but restricted it to small-scale use cases like P2P video conferencing or multiplayer games based on a few Flash players directly connected to each other via P2P. With Flash Player 10.1, Adobe appears ready to open the floodgates. CDNs and P2P video solutions providers would be well-advised to take notice.

Adobe’s P2P technology is based on its proprietary Real-Time Media Flow Protocol (RTMFP), which was previously restricted to one-to-one connections. That means your Flash Player 10 could directly exchange data with another client, but not relay the data. Transmitting video to 10 other clients meant opening 10 connections to other Flash Players, a method that doesn’t scale very well.

All of that changed with 10.1, which supports true P2P multicast, making it possible to retransmit a video stream from a single source to a large number of viewers. And not just a few hundred viewers, or even thousands. “When we think of large, we think of millions,” amicima co-founder and Adobe P2P Project Lead Matthew Kaufmann said when he introduced the technology to developers at last month’s Adobe MAX event. In fact, he said, it should be capable of handing viewing audiences larger than that of the U.S. presidential inauguration, which has to date been the largest live-streaming event ever.

Kaufmann’s MAX presentation, which is available as an archived video online, is fairly technical, but it contains a few very interesting tidbits. Adobe put a lot of work into making Flash P2P both scalable and reliable, which is why it combined a number of cutting-edge video delivery mechanisms. Publishers can, for example, distribute a video stream via IPv6 multicast and back it up with P2P multicast, or they can source a stream from a server and then opt to distribute it via P2P. Kaufmann also claimed that the latency of Adobe’s P2P implementation is a lot lower than many of the existing P2P video solutions out there.

The whole experience should be pretty painless for the end user. “A permission dialog box will pop up for people using Flash Player 10.1 in the browser for P2Pmulticast,” I was told by Adobe’s Flash Media Server product manager, Kevin Towes.

But wait — Adobe’s got a few more P2P tricks up its sleeves. Developers will also be able to use Flash player 10.1 to build various other P2P applications right within the browser as well as within Air. One possible scenario mentioned includes object replication, more commonly known as file-sharing. “It’s a lot like BitTorrent”, explained Kaufmann, adding that one could use this to “write a crazy file-sharing application” or to “replicate how Groove worked in Actionscript.” Adding to that, Air 2 now supports writing your own file servers and similar stuff through a dedicated API.

We’ll probably still have to wait a few months before we can get a true grasp on what all of this is going to mean for online video delivery, but there’s obviously a potential for huge disruptions. For starters, P2P video companies might have a hard time convincing publishers to opt for their solution, if only for the fact that end users won’t have to install any additional plug-ins to access Flash P2P video streams. At the same time, P2P adoption could skyrocket, as live-streaming sites and others start to leverage Flash Player 10.1 to cut down on bandwidth costs.

So what’s in it for Adobe? Well, RTMFP is true P2P, but you still need a so-called rendezvous server to connect users to the P2P swarm before they can access the video. Adobe already offers this functionality though a hosted service called Stratus, which is capable of serving hundreds of thousands of simultaneous users. In the future, you’ll just use your own Flash Media Server as a rendezvous server. In other words: Adobe’s use of P2P may cut out a whole bunch of middlemen, but it still places the company itself squarely in the center of the online video world.

UK-based P2P video platform VODO published its second feature film on dozens of file-sharing sites Thursday, hoping that worldwide exposure will bring in donations, subscriptions and traditional distribution deals. David Miller’s documentary In Guantanamo, which is the result of a press tour of the controversial detention facility, has been downloaded around 15,000 times within the first 24 hours, according toVODO founder Jamie King.

The site’s first feature, Us Now, got downloaded around 250,000 times since its release in mid-October. Part of the volume is due to VODO’s relationships with a number of well-known BitTorrrent sites, with Isohunt and The Pirate Bay currently featuring In Guantanamo on their front pages. VODO hasn’t been quite as successful in making money from these downloads, but King hopes that a combination of one-off donations and a subscription level for documentary geeks and movie buffs will help eventually make the site sustainable and provide an additional revenue stream for filmmakers.

VODO is short for voluntary donations, and King is no newcomer to the idea of giving content away in exchange for contributions from viewers. He is the maker of the pro-piracy documentaries Steal this Film and Steal this Film 2, both of which were released for free online. Viewers donated around $30,000 since the first part of Steal This Film got released three years ago.

The new site’s first documentary Us Now hasn’t been quite as successful yet. The film has brought in less than $1,000 in donations since its release in October, according to King. “If we can get it closer to $5,000 we’ll be doing well,” he told me, adding that he views donations as only one piece of the puzzle for filmmakers. King was able to sell his documentaries to several TV networks around the globe in part because the films were so successful online, and he hopes that others can follow in his footsteps.

VODO passes 100 percent of its donations directly onto filmmakers, but it also asks viewers to become paying members of the site. VODO supporters who pay around $5 a month get access to a pool of movies that are considered for distribution. “We’ve got (around) 15 films we’re considering right now,” explained King. Paying supporters can vote on which of these movies will get picked up for P2P distribution, and VODO also wants to organize online events with the filmmakers for these members. So far, around 50 people have signed up for this online film club. VODO hopes to grow this number to at least 1,500 in the near future.

King and his collaborators have received grants from the Channel 4 British Documentary Film Foundation, the Arts Council England and the Emerald Fund to start VODO , with the total funding being just shy of $250,000. King isn’t sure whether VODO will sign up corporate sponsors in the future. Right now, the funding is enough to keep the site and its development going for a year, and filmmakers seem to be eager to sign up. King told me that he has another dozen movies in the queue, and is talking to a couple dozen more filmmakers who want to get their movies out to P2P sites. “We’re building the new world here,” he said.

Chinese P2P startup Xunlei has sued its competitor Sohu for copyright infringement, according to the Shenzen Daily. Xunlei is alleging that Sohu’s search engine, Sogou, is infringing on copyrights related to Xunlei’s P2P software as well as its own search engine, Gougou.com. Sohu had previously filed its own copyright infringement lawsuits against Xunlei and other Chinese P2P vendors.

China has long been a P2P video wunderkind of sorts. Efforts to establish P2P-based consumer video platforms like Joost and Babelgum have largely failed in the U.S. and Europe, but similar offerings attract millions of users in China. However, the Chinese market is saturated with literally dozens of video vendors, and efforts to grow their business beyond the PC have stalled due to strict government licensing requirements.

Xunlei is a popular Chinese P2P client that combines BitTorrent with web-based downloads. The company’s Gougou.com search engine links to TV shows and movies hosted on various ftp servers and web sites. Users can download these files and automatically accelerate their downloads through Xunlei’s P2P functionality. Gougou obfuscates these links in order to get users to access the content with its own client and sign up for its premium services, which include remote downloading to Xunlei’s servers.

However, that didn’t stop Sohu from allegedly crawling these sites as well and publishing the direct download links without any Xunlei-specific code. Xunlei wasn’t too happy about that and decided to sue last week. Some reports suggest the lawsuits include complaints about cracked versions of Xunlei appearing in Sohu search results. Sohu previously sued Xunlei for broadcasting a TV series that the company had exclusive online rights for, and it recently announced further lawsuits against Xunlei and other competitors under the helm of a newly formed “Online Video Copyright Union.”

You know the fight for market share is getting ugly when online video companies do the dirty work for rights holders and sue each other for copyright infringement. The irony of these lawsuits is that much of the content indexed by both search engines clearly isn’t licensed to begin with. We asked both companies for their side of the story, but haven’t heard back from Xunlei, and just got a brief “no comment” from Sohu.

The lawsuits shouldn’t really surprise anyone who has been following the Chinese online video industry. The country is home to a number of large P2P video platforms as well as YouTube-like sites. P2P streaming service PPLive, for example, touts up to 30 million active viewers per month, and YouTube-like Youku boasts 140 million visitors per month. Both compete with at least a handful of similar services, many of which also have an impressive user base. There isn’t one clear market leader like YouTube in the U.S., and Chinese online video business models still seem to be in a flux.

At the same time, it’s been getting harder for Chinese video ventures to grow their market beyond the PC audience. PPStream and Xunlei have tried to get their platforms on set-top boxes and connected TV sets, but those efforts have stalled because of the Chinese State Administration of Radio, Film and Television. The government agency views set-top box offerings as equal to over-the-air or cable television programming, which means that online video startups would need to get a special Internet TV license. That hurdle seems to be so high that a Chinese TV set manufacturer actually canceled plans to include PPStream in one of its connected TV sets in September.

Streaming video and audio from the likes of YouTube and Hulu now account for roughly 27 percent of global Internet traffic, according to a new study from network management company Sandvine (hat tip to Multichannel News), which surveyed the top 20 ISPs worldwide. This stat is up from 13 percent in 2008.

The window for peak Internet usage, when most everyone is using their connection at the same time, condensed to 7 – 10 p.m. this year, a more primetime version of last year’s 6 – 11 p.m. peak period.

While the overall video numbers are up, Sandvine reports that P2P usage is down to 20 percent of total Internet traffic, from 32 percent in 2008. Sandvine said that the amount of P2P usage is growing on an absolute basis, but VOD applications are growing faster. Sandvine looked at the bits per second, per protocol, along with how many active hosts per protocol on the network.

This dip in P2P echoes other recent reports from Cisco and Arbor Networks that show use of peer-to-peer file-sharing as a percentage of broadband usage is on the decline. In June of last year, Sandvine said that P2P traffic was hogging up bandwidth, generating 43.5 percent of Internet traffic, but that study was just of several, unnamed “leading” service providers, which could explain the discrepancy from the 32 percent number released today.

P2P may be seeing its dominance lessen, but as Janko wrote the other week, “[T]hat doesn’t exactly mean that P2P is dead. It’s just not growing as fast as web-based video streaming, which has been largely responsible for a huge overall growth of net traffic. In other words: A smaller piece of a much larger pie can still be a whole lot of pie.”

Comcast has filed its appeal of an FCC decision issued last August that censured the cable company for blocking P2P files, arguing that the commission doesn’t have the authority to impose the broadband principles that define network neutrality in the U.S. absent a federal law or a full public hearing to make those principles binding as regulatory policy. Indeed, Comcast’s appeal will test the FCC’s ability to enforce network neutrality without either of those things.

Comcast’s intent to appeal the FCC’s ruling was announced last September, but initial briefs, which it filed July 27, are just now hitting the courts. Comcast initially got into trouble in October 2007, after an Associated Press investigation revealed the company was forging packets that would cause BitTorrent connections of some users to drop and failing to inform them of the practice — a serious net neutrality no-no. For more, keep reading over at GigaOM.

The verdict against The Pirate Bay could turn out to be something of a game changer for P2P file sharing. Granted, the four defendants have already filed their appeals, and the site is currently up and running. In fact, there are 22 million peers connected as I write this, which suggests that most Pirate Bay users don’t feel threatened in any way by the court’s decision.

However, history has shown that court verdicts against high-profile file-sharing services can lead to the emergence of newer and technically superior platforms. This trend could be accelerated by renewed attempts to take down The Pirate Bay’s infrastructure. So what’s in store for the future of P2P?

Matt Mason, author of the book The Pirate’s Dilemma, recently tweeted that “[The] Pirate Bay trial will change things the way the Napster shutdown changed things.” That’s an interesting thought. Of course, the Napster shutdown didn’t change too much for file sharers, who just migrated to other platforms. But the trial against and eventual demise of Napster changed P2P as a whole, because it led to the emergence of Gnutella and KaZaa, both of which eventually became more mature technologies, capable of handling far greater numbers of file sharers with a lot less infrastructure.

The same happened when Kazaa and its siblings Grokster and Morpheus were sued and eventually lost in U.S. Supreme court in 2005. The court verdict, commonly known as the Grokster decision, led to the emergence of a number of commercial outlets based on BitTorrent technology as well as an increased focus on Torrent and other P2P community web sites.

There has been a lot of speculation in recent weeks as to whether The Pirate Bay will eventually be forced to shut down as well, and what impact that might have. Some believe that any takedown of The Pirate Bay’s trackers (the servers that facilitate the actual P2P connections between its users) will lead to a complete meltdown of the BitTorrent world, while others hope that competing sites would just take over.

A third faction thinks that The Bay will live on forever. However, that notion doesn’t seem to be shared by Peter Sunde aka brokep. The outspoken Pirate Bay spokesperson has more than once stated that BitTorrent in its current state will be surpassed by a more advanced technology which will eventually make The Pirate Bay obsolete. So how will this post-Pirate Bay future look like? There are already two important trends emerging:

P2P is becoming part of the media web. BitTorrent was a first step towards web-centric P2P, but its implementation to date has been rather clunky, depending on both a browser for search and a client for downloads. Attempts to bridge this gap have been getting more and more sophisticated in recent months, with plug-ins like Littleshoot bringing BitTorrent to the browser and web services like BTaccel utilizing cloud computing as a web proxy for P2P.

At the same time, clients are becoming more web-aware, with both Limewire and Miro using P2P to power open content directories, and Vuze opening up to third-party search. Eventually, P2P could become something like the engine under the hood that powers the media web, regardless of whether the browser is called Firefox or Miro.

P2P is also becoming more social. Another emerging trend that BitTorrent itself hasn’t been particularly good at is being social. BitTorrent has reduced social interaction to a mathematical formula — upload bits to others in order to get good download rates — and left it up to Torrent sites to facilitate community. Some have been really good at this, but even successful communities generally lack tools for direct and real-time user-to-user interaction and discovery.

Limewire and other dedicated social sharing clients have started to fill this gap. Tribler is proving that social recommendations can be used to discover new content in a P2P environment, and Wua.la has shown that users want to self-organize in small communities that are much more like Facebook groups than private torrent sites.

Combine these two trends and you get an idea of what future file-sharing services will look like. Personally, I wouldn’t be too surprised to see such services become more popular than today’s BitTorrent sites while The Pirate Bay is still tied up in court.

P2P video platform Vuze today announced that users can now watch content downloaded to their Mac or PC on mobile and TV screens. The Vuze software update supports viewing via iPhone, iPod, Apple TV, PS3, and Xbox 360.

In the latest version of Vuze, there is a “Devices” tab listing the various viewing options. Users drag and drop videos from their Vuze library to one of these destinations and the software will determine whether the file can play on the device selected, convert the file and make it available for playback. For iTunes users, the video will be pushed into the iTunes library, where it can be moved around to various Apple devices. For Xbox and PlayStation users, the content will be streamed to the game console from the computer.

Last year was a rough one for Vuze as the company went through two rounds of layoffs, losing half of its work force. In October, Vuze launched a revamped client that was aimed at both beginners and power users (read: pirates), and around that time switched from a paid download model to ad-supported content in an effort regain some of the losses it experienced as users moved to other BitTorrent clients.

Why Being a Hit on iTunes Isn’t So Great; Robert Seidman looks at the economics of being number one at Apple’s download store and find there just isn’t enough there yet. (TVbytheNumbers)

FYI Signs Six-Figure Watchmen Promo Deal; deal includes integration into three episodes of Kyle Piccolo: Comic Shop Therapist. (Tubefilter)

All Day I Dream About Streaming? Adidas to launch Adidas.tv as a global hub for video content produced by the shoemaker. (AdWeek)

BitTorrent Rules the P2P School; BitTorrent protocol responsible for 45 – 78 percent of all P2P traffic. (TorrentFreak)

Economy Hits Comcast; cable company loses more basic subscribers and gains fewer digital subscribers than Wall Street had hoped. (GigaOM)

Five Million Homes Not Ready for DTV; despite 641 stations going digital as of yesterday, 4.4 percent of the country was unprepared for the switch. (Broadcasting & Cable)

Why YouTube and Music Companies Can’t Get Along; like most disputes, it boils down to fear and money. (paidContent)

The Recording Industry Association of America has decided to end its five-year-long lawsuit campaign against music file sharers, the Wall Street Journal reported today, with the major record labels opting to instead work with ISPs to combat the practice. Some major ISPs have apparently already agreed to take part in a graduated response program: Share once, and you’ll get a slap on the wrist. Get caught the third time, and your contract gets canceled.

Mathew Ingram over at GigaOM thinks this is a bad idea because it privatizes copyright enforcement, meaning that alleged offenders won’t have any clear recourse when they’re wrongly accused. That’s true, and definitely something to be worried about, but it’s not exactly new. ISPs took on the role of copyright cops a long time ago; for some, the new agreement only formalizes policies that are already in place. And not much changes for the users, either. They can still get sued, despite the agreement. And yet, they will still continue to share music, and a whole lot of video as well.

There are many things we don’t know yet about the RIAA’s new copyright policies. The organization isn’t sharing too many details, it would only tell the Wall Street Journal that it had “agreements in principle” with some ISPs, and that these ISPs may cut off Internet access after two or three warnings, a measure known as “three strikes.” The truth is, however, that some ISPs have already been doing this for months.

Take RoadRunner, for example. Customers of the Time Warner-owned cable ISP caught infringing once get a warning email. The second warning is delivered in the form of a temporary suspension of the customer’s Internet access, according to reports from those affected. Road Runner simply redirects all of their web page requests to a customized proxy page that informs them about their alleged infringement, complete with the warning that “RoadRunner has a policy of terminating the accounts of repeat copyright offenders.”

Infringe three times, and you’ll have to call the ISP to explain yourself in person, the page warns. Fellow cable ISP Cox uses a similar splash page that orders customers to delete the file in question and disable file any file-sharing software — something that would most likely be seen as destruction of evidence if the customer ever faced a lawsuit related to the infringement.

But there won’t be anymore lawsuits, right? Wrong. First of all, the RIAA reserves the right to sue repeat infringers or users that are “particularly heavy file sharers,” according to the Journal. Also, the music of the major labels is far from the only thing shared on P2P networks, and other content owners are more than eager to fill the void and start their own lawsuit campaigns.

Witness the UK, where the music industry brokered similar agreements with ISPs. The country has seen an explosion of copycat lawsuits in recent months. Most of these lawsuits are related to shared porn, video games and similar content, and initiated by a single copyright enforcement company that promises its customers to “turn piracy into profit” through costly out-of-court settlements — a tactic that was pioneered by the RIAA.

Finally, we shouldn’t kid ourselves into thinking that people will stop sharing files because they receive a warning from their ISP. Companies like Comcast have been sending out countless warning messages on behalf of major movie studios and TV networks via email for years, and video file-sharing is as popular as ever.

Users that face termination of their service due to P2P activity will just stop using P2P, not stop downloading movies and music. This means a whole lot of people will make a whole lot of money: Usenet providers will get more premium customers, one-click-hosters and Russian YouTube clones will sell more advertising. The only one left out will be content owners that concentrate on enforcement instead of monetization, which is just like it’s always been.

Joost has informed its users via email that it will discontinue the support of its desktop client today and instead completely concentrate on its new web site. This is a big step for a company that once aimed to revolutionize online video with P2P technology, and whose founders previously succeeded with P2P apps like Kazaa and Skype. But it’s way too early to declare the death of P2P video streaming, as some seem eager to do in light of Joost shifting course.

Not only are others far more successful with P2P video clients, but it looks like Joost may bring back some elements of its software sooner or later. This includes P2P distribution, but also other social and interactive features that made Joost’s software unique. Maybe we’ll have to hold off writing the obituaries for both Joost and P2P just a little longer.

Joost has obviously spent a lot of resources developing a working P2P infrastructure for its client. Initially, it had some scalability issues, but it worked fairly well later on. We asked Joost CEO Mike Volpi what’s going to happen to his company’s P2P technology now, and he was quick to point out that this effort is not going to be wasted. “As we find the right application for that technology, we will reintroduce it into a service,” he told us, without specifying further what application this might be.

One possible scenario would be live sports or music programming. P2P works best when many people access the same video simultaneously. In fact, Chinese P2P start-up PPLive was able to handle 1.6 million concurrent viewers for the opening ceremony of the Olympic games. Numbers like these tend to still cause hiccups for traditional CDNs, but a well-done P2P solution is able to scale up without any major issues.

That being said, Joost did run into some trouble when it tried to live-stream March Madness earlier this year. But hey, there’s always next year, right? Major sports events could also help Joost to overcome a big obstacle of its previous client-only model: Joost essentially forced users to install a dedicated video client — only to discover that the content wasn’t worth the effort. Video distribution companies like Move Networks have demonstrated that people don’t mind installing a little plug-in when it gives them content they actually want.

There also have been some speculations about Joost-enabled set-top boxes in the past, and some people have wondered in recent days whether this could be a way for Joost to leverage P2P. Honestly, I wouldn’t hold my breath for it. First of all, Joost never seriously developed a Linux implementation, which is a must for traditional set-top boxes. Secondly, a new generation of boxes plays Flash, and Joost has started to embrace these devices with its web API. The company’s content is already available on DivX Connected and Neuros boxes, and a Boxee plug-in also seems inevitable.

Speaking of APIs: One of the many unfulfilled promises of Joost’s client was its API, which in theory allowed pretty sophisticated interaction with the service’s users, as well as its content. The API had great potential, but hardly anyone developed for it because hardly anyone used Joost. It seems that the company now wants to get a larger audience with its web platform and then gradually re-introduce some of the client’s more advanced features.

Volpi promised that one of the upcoming releases of Joost’s service will feature the ability to tag and comment on specific points within a video. It also plans to open its web site to widgets from third-party developers some time in the future, but this “will require more development,” as Volpi told us.

In 2008, ISPs started to really feel the heat when it comes to video file-sharing. Comcast got reprimanded by the FCC for blocking BitTorrent transfers and consumers rebbelled against P2P throttling. Meanwhile the entertainment industry has been demanding harsher enforcement and HD-swapping users have been eating up more and more bandwidth. In other words: It’s been a big mess.

The good news is that the increased pressure from all sides has forced ISPs to come to terms with the reality of file-sharing and other forms of P2P video distribution, which is essentially: You can’t stop it, so you might as well find ways to make it run more smoothly on your network.  

For most of the year, the spotlight in the debate about P2P and ISPs has been on Comcast, and the cable operator has subsequently provided us with lots of headline fodder. The company was caught blocking the upload of files through the BitTorrent protocol in late summer of 2007, but denied any such actions well into the spring of 2008. The FCC started to investigate Comcast’s actions in January, and the company reacted by paying people to “save seats” at public hearings.

The company finally did a complete turnabout in March, teaming up with BitTorrent and promising to stop the blocking that it had previously denied. Comcast also briefly championed an ill-fated “consumer’s bill of rights.” Many of these actions were obviously designed to appease the FCC and avoid any federal regulation, something that eventually proved to be futile. But they also forced Comcast and other ISPs to look at technical solutions for the ever-increasing amount of bandwidth used up by P2P applications that didn’t involve sabotaging their customers’ Internet use.

One of the solutions that quickly gained traction within the industry was an idea developed by a handful of Yale researchers. What if, they asked, ISPs could actually help P2P users find the closest link to other users downloading the same videos? What if a BitTorent user on Comcast’s network exchanged bits with another Comcast customer in the same city, as opposed to someone in Tokyo? And what if there was a system that allowed P2P applications to access this type of routing information across the networks of multiple ISPs?

The idea, cleverly branded P4P, has been championed by P2P vendor Pando, and initial field tests with a number of ISPs show very promising results. A lot of the details are still unclear, however, and some P2P users remain wary of any involvement of ISPs. If the industry starts to meddle with their downloads, they fear, then what stops them from just accelerating licensed P2P and in effect slowing down unlicensed content?

The answer is simple: Licensed P2P traffic is growing, but it’s still not anywhere near the amount of bandwidth eaten up by torrents from the Pirate Bay and similar sites. In fact, even optimistic market researchers estimate that in five years, piracy will still account for more than twice the amount of traffic as legal P2P. Any P4P solution that does not include unlicensed content would essentially have no effect on the health of the network.

But in the meantime, ISPs finally got real about P2P video. They realized that TV torrents won’t go away, and that the only way to effectively deal with this traffic is to optimize it, instead of trying to block it. That’s a big blow for content owners that were hoping for ISP-based anti-piracy filters, but it’s actually a boon for content owners that embrace P2P technology. Just as pirated torrents run more smoothly over P4P-assisted networks, so will downloads from NBC Direct.

As for bandwidth caps, well, that’s another story. But you can’t really expect company’s like Comcast to learn from all of their mistakes in the same year, can you?

2008 was supposed to be the year when Internet video finally reached the living room, thanks to a whole bunch of set-top boxes. Part of that mix was supposed to be P2P, either in the form of distributed streaming, or good old BitTorrent downloads. Well, guess what: It hasn’t really happened — at least not on a large scale. Most of us still watch YouTube and Hulu on our laptops, and file-sharing continues to be almost exclusively PC-based.

So whatever happened to all those P2P set-top boxes that were supposed to revolutionize not only how we watch video, but also how those bits reach our living room? With the year coming to a close, we decided to check back, report about progress (and failures) and give an outlook for the fate of these boxes in 2009.

Here are five P2P set top boxes that made headlines in 2008: Myka was the big P2P-device story of the spring. It promised licensed content from major studios as well as BitTorrent in a nice box that looked a little like an over-sized Apple TV, and it got enthusiastic coverage from Wired.com, Gizmodo, Engadget and others. It’s web site however hasn’t been updated since spring and is still taking pre-orders for a supposed release in the summer of ‘08. Its forum has been taken over by spammers, and one former affiliate partner complained to us that he hasn’t seen any money nor heard from the company since April. We tried to get in touch with Myka, but didn’t receive any reply — enough reasons to call this vaporware.

Vudu is definitely not vaporware, but the company has faced its own set of obstacles this year. Vudu offers its customers progressive, P2P-powered downloads of 1,100 HD movies for $4 a pop. It’s been struggling to get a bigger audience for its box despite price cuts, and it went through a round of layoffs and the departure of its CEO. On the plus side, it did just introduce a new high-end device. TheVudu XL 2 features “aerospace-grade aluminum bezel,” is available only through home-theater installers and comes with a hefty price tag of $1,299. That seems to be just the right business model for a recession…

China-based Vatata promises to bring its own streaming P2P video platform Vakaka as well as popular file-sharing protocols like BitTorrent to the living room. The company doesn’t actually produce it’s own set top boxes, but it licenses its platform to hardware makers. We covered the company earlier this year when it had just struck three such licensing agreements.Vatata’s CEO Jian Song told us that these devices have now reached the shelves of retailers in China, but customers have only bought around 10,000 of them so far. The company is looking for a partner in the U.S. right now and is actively working on the next generation of its platform, which will also feature Hulu playback, according to Song. This one could get interesting — if it ever actually makes its way to U.S. retailers.

Boxee also doesn’t have its own box, but instead runs amongst other things on Apple TVs, offering Apple users not only the chance to download torrents straight to their living room thanks to a built-in BitTorrent client, but also to use other people’s guilty torrent pleasures as a recommendation engine for Hulu streams and other legitimate content sources. That’s pretty clever, but the whole setup has one downside: Apple tightly controls its own platform, as evident by the latest Apple TV update that broke Boxee. Granted, the Boxee community came up with a fix in no time, but Boxee will remain a niche product if it depends on its users capability to jailbreak their set-top box after every new update.

NextshareTV is a set-top box developed by Pioneer and P2P Next, a European research project backed by a couple million Euros of EU funding that aims to figure out better P2P streaming solutions. Pioneer has apparently produced a working prototype of this box for an extensive field test of the technology. Don’t expect these boxes to reach the shelves in 2009 though: The P2P Next project is scheduled to run for four years, and it’s unlikely that content partners like the BBC will allow anything to reach the marketplace before issues like rights management and territorial restrictions are solved.

Adobe officially unveiled the P2P video streaming capabilities of Flash 10 to developers this week. The technology itself is still in its infancy, but the mere fact that Adobe decided to embrace P2P for Flash 10 made a lot of headlines earlier this year. Many people, including Om over at GigaOM, wondered whether Adobe was taking aim at the CDN market with this technology and whether we will soon all watch our YouTube videos in a P2P fashion.

The short answer is: We won’t — at least not with Adobe’s help. The current P2P implementation, which goes by the name Real-Time Media Flow Protocol (RTMFP), isn’t really suited for mass-scale video delivery. Instead, it focuses solely on scenarios in which one client exchanges live video or audio data with another client. Think video conferences, Flash-based VOIP or even multi-player games. Just not YouTube. Not anytime soon.

RTMFP is essentially based on the idea that real-time video or voice interaction between two users of Flash or Air applications shouldn’t have to deal with the latency and bandwidth burden of a server-based relay. It’s just faster and cheaper to let the kids talk amongst themselves. Adobe does use a central server to authenticate users and facilitate the exchange of the data, but the actual video streams flow directly between the users of the application in question.

Graphic from Adobe’s RTMFP FAQ.

So who is running that server? RTMFP will eventually be supported by future versions of Adobe’s Flash Media Server, but the company wants to first integrate it into its new Cocomo cloud services, which went into beta last month. For now, only a subset of all Cocomo servers run by Adobe support RTMFP, but Adobe developer Nigel Pegg assured me that his team hasn’t seen any capacity problems just yet.

Pegg first wrote about the new protocol earlier this week on Adobe’s Collaborative Methods blog, detailing how Flex developers can add RTMFP support to their applications with a few lines of extra code. He told me that one of the big advantages of this solution is that it switches effortlessly between centralized and P2P data delivery. “We tend to see performance degradations after a certain number of receiving participants is reached,” he said.

One example for such a problem would be if you use a Flash P2P video chat and your broadband connection simply can’t support to serve all participants. “What’s cool about how Cocomo approaches this is that, once that limit is reached, Cocomo’s foundation classes swap down automatically, in mid-stream (to server-based video delivery)”, Pegg explained.

Speaking of video delivery: Adobe goes to great lengths to dispel the myth that it plans to P2P-ify all web-based Flash video with this new protocol. “Flash player 10 will not enable swarming, multi-cast or broadcast quality live video,” the protocol’s FAQ (PDF) reads, and it goes on: “RTMFP will have no impact on the business of a CDN.” The company even tries to avoid the acronym P2P completely, instead talking about client-to-client streaming.

Of course, the fact that Adobe doesn’t support any YouTube — or even Ustream-like environments — with RTMFP doesn’t mean that the company won’t go down that road eventually. Adobe CTO Kevin Lynch told Om earlier this year that the company is “taking small steps” and “using P2P in a very basic form” to make sure it doesn’t break web video. Which could mean that this is a first step down a potentially very disrupting path.

The popular BitTorrent client, uTorrent, is now available for Macs. TorrentFreak writes that the long-awaited Mac version only runs on Leopard/Intel Macs right now and is in beta.

UTorrent for Windows has been around since September of 2005. BitTorrent Inc. acquired uTorrent in 2006, and roughly two years ago work on a Mac version began. An alpha version of the Mac client leaked on to the public earlier this year, but this version has significant improvements.

A BitTorrent Inc. rep told TorrentFreak that the company is now working to fix bugs with the PowerPC as well getting uTorrent to run on the Tiger OS.

The new Mac uTorrent can be downloaded here.

Forget filters, DRM and locked-down set-top boxes. The makers of the open-source media center Boxee have a novel approach aimed at getting people to watch TV from legitimate sources. The idea behind it is not to punish pirates, but to instead use them as taste makers that could drive others to Hulu, Joost and similar streaming media web sites.

I sat down with Boxee’s head of products, Dave Mathews, at the DCIA’s P2P and Video conference a few days ago. Boxee has been enjoying a busy month, issuing a major announcement almost every week. First it was unveiled that Boxee is now running on the Apple TV platform. Then Hulu came to Boxee, and most recently, the Boxee team won the CES i-stage competition, earning not only $50,000 but a booth at the next CES in Las Vegas. Boxee won the award, in part, because of its social features, which could help turn potential pirates into Hulu users.

Boxee, which is in the process of trying to raise a Series A round of funding of an undisclosed amount, is touting itself as a social media center, but the true meaning of that moniker really becomes clear when it comes to sharing content. The Boxee software includes a BitTorrent client, but Mathews told me that the system only lists legal torrents. Still, many users will probably have gigabytes of pirated content on their hard drives, and quite a few of them will get new TV shows’ episodes from sites like The Pirate Bay or Mininova.

Boxee plays any content, no matter where it’s from. It does, however, try to identify each video through a combination of keywords, metadata analysis, and video fingerprinting, and it makes use of various social features to communicate what Boxee users are watching, provided they want to share their media consumption habits. Boxee users can befriend and see what one another is doing on the platform through Facebook-like activity feeds; the system can also publish users’ recommendations and viewing habits via Twitter, Friendfeed and Tumblr. A Facebook integration is also in the works.

What it won’t do is reveal that you just watched a torrented file like Heroes.S03E07.HDTV.XviD-LOL.avi. Instead, it will link to the episode in question on Hulu. “We identify the content, and we identify a legitimate location on the Internet for it,” explained Mathews. “So an illegal downloader watches a torrent, his friends will see the legitimate stream with commercials from Hulu or CBS…or whoever our partners may be that host that video.”

Granted, Hulu and CBS streams come with commercials, whereas BitTorrent downloads are usually completely commercial-free. Mathews, however, doesn’t think this will stop users from clicking through to a Hulu video. “Typically P2P has had a bad name,” he told me. “We think we can use the alpha geeks that go out and create these torrents, and their friends, which just want an easier experience, will be able to watch commerciable streams. They won’t go to another computer and download a torrent. If we can send you to a Hulu stream of that immediately, that means there is no waiting, buffering, it just starts playing.”

That does sound great, but what’s in it for Boxee? The company eventually wants to strike affiliate agreements to get a few cents of every advertising dollar Hulu and other content platforms make from showing its videos on Boxee. There are no such agreements in place right now, and it seems like getting them will require some major arm-wrestling, especially since Boxee currently needs Hulu more than the other way around.

But Boxee has already made some progress. Joost has agreed to let Boxee use its content, and the struggling video service might be more willing to share its ad revenue in order to increase its user base than a market leader like Hulu.

Despite numerous examples of legitimate uses, most people still associate P2P with illegal file-sharing. That perception might be due for a change, according to a new report from research firm MultiMedia Intelligence. It predicts that licensed P2P transfers will grow 10 times faster than P2P piracy over the next five years.

Granted, forecasts like these should always be taken with a grain of salt, especially since at least part of the online video space appears to be moving away from P2P right now, with Joost a prominent example of abandoning peer-supported streaming for traditional Flash streams. And one shouldn’t disregard the huge amount of data transferred for less than legal purposes just yet.

MultiMedia Intelligence is predicting that the overall traffic caused by P2P applications will grow some 400 percent to almost 8 petabytes per month by 2012, up from 1.6 petabytes per month in 2007. This growth will be driven largely by online video, with the move to higher video resolutions giving the segment a big bump.

The market researchers don’t, however, believe this will knock out our broadband infrastructure, since a growing part of this traffic will be optimized through P4P-type technologies that make it possible to download data from your nearest neighbor rather than someone halfway around the world. They see P2P-supported CDNs and P2P caching solutions for licensed content becoming more important as well.

Still, rights holders shouldn’t hope for the death of online piracy just yet. Licensed P2P will grow much faster than its pirate cousin, but that’s primarily because it’s just getting started. MultiMedia Intelligence’s chief research officer, Frank Dickson, told me they don’t see a decline in unlicensed file-sharing coming any time soon, but expect that growth in the segment will just slow down.

“The reduction in the growth rate is due to saturation in developed countries,” Dickson told me. Developing countries, on the other hand, could see a boom of online piracy as a result of the rise in broadband penetration rates. Five years from now, MultiMedia Intelligence predicts, piracy will still account for more than twice the amount of traffic as legal P2P.