There are pro's and con's to both ways of doing it.
If you have the pipe and a good streaming server, streaming is the better solution. If you find a working DRM solution you can prevent your videos from being plastered all over Usenet and P2P. And on the user's side, the stream will adjust to the amount of pipe available. Plus they get fast forward. So they can sample a video very well without downloading the entire thing.
The downside? If the user has low bandwidth or you do not have enough pipe and server online to keep up with demand, the viewing experience is going to suck, and they're going to cancel. Remember, you'll need a streaming server, not just a normal webserver.
Letting users download reasonable sized MPEG clips (4-5 minutes) will insure that they see good quality videos on virtually any machine with virtually any linespeed. However, they cant fast forward, so they'll usually download the entire clip. You can run it on a normal server, but expect your bandwidth to take an ass whipping if you offer a lot of these. Also, expect to see your clips being traded on Usenet and P2P. This can be used to yield some traffic....albeit piss poor traffic.
In either case, the quality of the clips will ultimately drive user satisfaction. It's currently easier to get it right with downloads...it's tough to sustain enough bandwidth on a big site to have streaming look good and stay in a window larger than a postage stamp.
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