I was reading about the thin clients and streaming videos. How is it different from downloading a file locally and then playing it on a browser. I mean internally how does streaming work? does streaming take less CPU and memory than playing from a file?
Difference between playing a video stream and a video file on a browser
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The concept behind streaming is very simple - essentially you can imagine the server sending the video either byte by byte, or in 'chunks' and the client receiving the bytes or chunks into a 'first in first out' queue and then playing them in the order they are received (and at the speed required to play the video properly).
More sophisticated streaming techniques will allow the client switch between different bit rate encodings while downloading the chunks of a file - this means that if the network conditions change during video playback the client can choose a lower or higher bit rate chunk as the next chunk to download appropriately. This is referred to as Adaptive Bit Rate streaming.
Advantages of streaming include fast video start up and seeking, better utilisation of bandwidth and no need to download the whole video if the user decides to seek or stop watching.
The following article gives a very good overview: http://www.jwplayer.com/blog/what-is-video-streaming/