Youtube does the samething too. They store the video on their servers and let us view the video. Their flash player acts like the "virtual desktop" that lets me view the video. Still I have to download something on my comp - the steaming video :)
I would actually believe and bet on some other guy who says he going to create a better media encoding format. That would be a better investment of time and money.
I can't believe the comparison between the Internet and tubes ala http://en.wikipedia.org/wiki/Series_of_tubes