FTW Media

Thoughts about New/Social Media

Quality is the biz model for streaming video

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Over at theedgemalaysia.com we use YouTube for our videos. Why? Cos bandwidth costs too much.

I don’t know how much Malaysiakini.tv pays for its streaming video bandwidth but I’ve heard it’s a major drain on their resources.

YouTube looks like it’s set to lose close to US$500 million this year, mainly because of bandwidth costs.

Streaming video is a money losing proposition, largely because of bandwidth. The Economist wrote about this way back in Sept 19, 2002. And it’s still true today.

But YouTube (which is accessible here) and Hulu.com (which is not), are looking at a new business model where professional content is the key attractor of dollars.

YouTube has its partner program, which highlights professional content. Hulu, meanwhile, features only professional content. The former has signed a deal with Disney and the latter will do so soon.

There’s a lot of hype about user-generated content but at the end of the day, to make streaming video commercially viable, it looks like offering professional programs is the way to go.

Why? Because people might actually pay for professionally-produced stuff. But even if they aren’t willing, advertisers are more willing to pay for slots in quality productions. Hulu reports that it gets higher CPM rates than even broadcast TV does.

I’ve always been a skeptic of user-generated content. It works in some cases. Forums like LowYat.net are runaway success stories but it’s an exception to the rule. Generally, UGC sites like Facebook, Del.icio.us, Twitter have shown only that they are good at generating traffic but not income.

You do UGC for something as bandwidth intensive as streaming video and you will die standing. Luckily for YouTube, Google bought it.


Written by Oon Yeoh

April 10, 2009 at 7:17 pm

Posted in New Media

One Response

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  1. […] is the biz model for streaming video (Part II) Earlier, I had said that that quality was the biz model for streaming video. Here’s the latest development on that […]

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