We are happy with our Flash Media Server. Luke is partially correct, because the on the fly conversions are one of the small abilities of Flash Media Server. From what I understand from our Flash guys if you aren't using Flash Media Server then you are doing a progressive download of the file, rather than a true stream.

If someone is savvy enough they could save the .flv file that you are serving to them. Adobe has already announced that they are coming out with an FLV player for FREE. This could now be a big drawback to those people that are not doing a true stream. Even Youtube does progressive download.