You are right that broadcasts go out all interfaces. But multicasts do not; you can configure a switched network so that they only go out the ports where there are clients actually listening to the multicast. There are two ways you can do this, the old Cisco proprietary way called CGMP, and the more recent standards-based way call "IGMP snooping".
Let's look at IGMP snooping first. When a client wants to listen to a multicast stream, it does a short multicast called an IGMP that does get sent to all ports, and in particular to the routers and the multicast sources. This reassures the multicast source (or the router) that there is someone listening, and it is still worthwhile transmitting the stream. The switches see the IGMP, and know that they should send the stream to the listener. The listener (called the "reporter" just to confuse you) repeats the IGMP at regular intervals to keep the stream open. If the switch has not heard an IGMP for the stream from a particular port, then it does not send the stream to that port.
The older Cisco-proprietary way, CGMP, relies on the router seeing the IGMP from the listener. It then puts out a multicast to all switches, saying "the guy with MAC address such-and-such is listening to stream so-and-so. The switches then know that they have to open that guy's port to the stream.
That is a rather simplistic explanation. There is a lot more goodstuff on the TAC about multicasting, starting at http://www.cisco.com/pcgi-bin/Support/browse/psp_view.pl?p=Technologies:Multicast
Good luck in your research.
Kevin Dorrell
Luxembourg.
