A web video company that is most likely a hoax

So my brother just called - he said that a friend of his told him about a "magnificent investment opportunity" on a company called RayStream. He said "there's no way to go but up if you bet on this".

My brother wants me to make sure. I navigate to this company's webpage, and I see that it claims that they can revolutionize Web video, by...

"Before Raystream, a one hour video converted to 720p using the best compression algorithms resulted in files in excess of 1 GB, far too large to be streamed over commercial Internet connections. Using Raystream, the same one hour 720p video can be compressed up to 90% of its original file size, which makes it easily streamable over connection speeds ranging from 0.4 to 1.0 Mbs per second." ... "Raystream compresses online videos, reducing their file size by up to 90%, with no loss in video quality or clarity."

Indeed! How interesting. A new codec, maybe?

Nope:

"No playback modifications required (codec, browser player, set top box, smart phones, etc.)" ... "Our breakthrough optimization technology works flawlessly with modern cell phones, delivering Mobile TV in a never-before-seen video quality over standard 3G connections."

OK, at this point, if you know anything about video compression, you start to see a red flag waving in your face. The only way one can encode videos so that they (a) play on mobile phones, and (b) need no playback modifications (codecs, etc) is... if you use an existing codec.

But how can an existing codec compress to 10% of what it... already can do?

Oh-oh... time to double check this.

The test

So I "View/Source" of their "See for yourself" page... and I quickly locate their "proof" videos. Sure enough, they are MP4 files:

bash$ wget 'http://us.raystream.com/_inc/media/ray_480p.mp4'
bash$ wget 'http://us.raystream.com/_inc/media/ray_480p_normal.mp4'
bash$ ls -l
-rw-r--r-- 1 ihatelaywers users  28467321 Oct 27 20:37 ray_480p.mp4
-rw-r--r-- 1 ihatelaywers users 224248391 Nov  2 17:06 ray_480p_normal.mp4

Hmm... I see a 8x reduction, so their claim seems to hold so far. Doesn't it?

Let me do a quick transcode - checking mencoder x264 settings, use recipe from the bottom of that page ("Very high quality"), and on we go...

bash$ mencoder  -ovc x264 -oac mp3lame -x264encopts \
	subq=6:partitions=all:8x8dct:me=umh:frameref=5:bframes=3:b_pyramid=normal:weight_b  \
	-o hoax.avi ray_480p_normal.mp4 
bash$ ls -l
-rw-r--r-- 1 ihatelaywers users  26658020 Nov  8 16:51 hoax.avi
-rw-r--r-- 1 ihatelaywers users  28467321 Oct 27 20:37 ray_480p.mp4
-rw-r--r-- 1 ihatelaywers users 224248391 Nov  2 17:06 ray_480p_normal.mp4

Oh God. Oh God.

These people are fraudsters!

How in God's name do they sell stock?!

I hate this world. And lawyers and DMCA, too. OK, time to setup a one-off account on Yahoo and Github...