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Video: What are the Economies of Scale for OTT vs. Broadcast Video?

What are the incremental costs of adding viewers for OTT, what CDN infrastructure strategies make sense for OTT services as they reach a certain scale, and which approaches fare best in the current economy? In this excerpt from their Streaming Media East 2016 panel, The Business of Streaming Television, trnrMedia's Jim Turner and Vimond CEO Helge Hoibraaten tackle these issues and more.

Watch the full video of the "Business of Streaming Television" panel from Streaming Media East 2016.

Read the transcript of the clip above:

Jim Turner: OTT and IP-delivered video are different in that there's an incremental cost for every viewer that's added. Whether it's NBC Broadcast or whether it's even a cable network, you have zero incremental cost for adding a viewer, but that's not true in OTT. Talk a little bit about that and how that might affect the fact that these are all subscription services instead of ad services, because at least you're guaranteed the subscription.

Helge Hoibraaten: There is a lot more feasibility, economically, with doing subscription services. The prices you get and the loyalty you get from people to an ad service really, it's a bit of a struggle to get it, to be profitable.

The incremental cost of each viewer is a challenge for anyone doing OTT. Basically, it makes a lot of sense to go to the existing CDNs when you start and over-the-top service. It's a fast way of getting good-quality streaming video out there to the audiences. Once you hit a certain scale, you have to start thinking how can you decrease that cost, because that cost is now one of the biggest costs.

So basically, what we have done together [with iFlix]--and we have done this before as well and we did it in Europe as well--was building up your own CDN infrastructure. There is a sound economy to set up here, because you can put out boxes into ISP networks that will allow them to have better control over the streaming of their network infrastructure and giving you less of a cost. This is the way most CDNs actually sell in their data structure into the ISPs of the world. When you get to a scale of iFlix or others, you really can do that yourself.

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