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I tried to give an overview on the technical details of the HTML5 MSE/EME, which is used e.g. by Netflix and Youtube. If you are interested in any details, just post it here, happy to answer.

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What 3rd party players do you recommend for HTML5 MSE/EME based playback across popular browsers?

on the open source side, shaka (https://github.com/google/shaka-player), dash.js (https://github.com/Dash-Industry-Forum/dash.js/wiki) and hls.js (http://dailymotion.github.io/hls.js/demo/) are good.

on the commercial prodcut side, the bitmovin player https://bitmovin.com/player/ is best one covering HLS & DASH on all browsers. There are also a lot of demos at http://www.dash-player.com/demo/

So, does every website need to build their own Javascript MSE player?

Why isn't this built into the browser?

there are of the shelf players supporting the EME (see above), thus you can just use one of them. It makes actually sense to seperate the player from the decoding (MSE), as the browser manufacturers might not be able to provide a good implementation of streaming formats. We saw this already with poor implementations of streaming formats/players on TV-sets, so it's good to have specialized and good working player vendors/projects.

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