The Economy Of The Video Ecosystem: Finding Ways To Reduce Costs

2009-SM-Think-Series-1 In today’s economic climate, everyone is being asked to do more with less. Online video publishers are no exception, and they face the dual challenge of having to increase their traffic while at the same time reducing their costs. Rather than pulling back on the amount of video that they publish, content owners need to continue to publish as much as possible and do everything in their power to generate revenue faster.

Of course, content owners have to pay for the encoding, hosting, and delivery of every piece of content that goes online, on top of video creation and acquisition costs. And while traditional broadcasters incur no additional cost for each viewer, online video doesn’t scale in the same manner. Adding more videos and more viewers for online content only increases your costs and, in some cases, that cost means the difference between content owners publishing their entire catalogs versus only a portion. While these fundamental challenges have always existed for publishers, recent budget cuts make cost savings more crucial than ever. Publishers need to look at the entire video ecosystem and find ways to reduce their costs while they increase both the quantity of content and the overall quality of the online viewing experience.

Since the vast majority of content owners use a third-party content delivery network (CDN) to deliver their videos, most publishers are well aware that they can quickly reduce their costs by simply cutting their bandwidth bill. While that may work for content owners that previously signed long-term contracts at a higher rate or for a publisher whose contract is about to expire—and who can therefore shop around for a lower price—many content owners are already locked into a contract. Contract issues aside, most publishers can’t simply cut their bandwidth bills since they push more bits when they increase their traffic and deliver more bits when they encode their content at higher quality.

Content owners that know their traffic spikes can make the decision to commit to less traffic per month, use a second CDN for overflow traffic to avoid overages, or commit to bandwidth on a quarterly or yearly basis instead of a monthly one. But for the vast majority of content owners whose online video business is new or for publishers that have varying and unpredictable levels of traffic, it’s not that easy to save money on the delivery of video. That’s not to say that publishers can’t get the best of both worlds—cutting costs while still growing traffic—from a CDN. To do so, content owners have to look beyond bandwidth and consider other services CDNs provide that can reduce their costs while they increase both the quantity of content and the overall quality of the online viewing experience.

Since the vast majority of content owners use a third-party content delivery bandwidth bills since they push more bits when they increase their traffic and deliver more bits when they encode their content at higher quality. Content owners that know their traffic spikes can make the decision to commit to less traffic per month, use a second CDN for overflow traffic to avoid overages, or commit to bandwidth on a quarterly or yearly basis instead of a reduce overall video costs. While all content owners should look at ways they might be able to save on bandwidth, they really need to examine where they are spending money on the entire video ecosystem, from content creation to delivery and everything in between. For many content owners, CDNs can help reduce overall video costs by doing more than just offering a lower price per gigabyte delivered or megabyte sustained. And they can do it without publishers having to sacrifice the volume of content they put online or the quality of the video they’re making available.

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