<story><title>Ask HN: Video streaming is expensive yet YouTube &quot;seems&quot; to do it for free. How?</title><text>Can anyone help me understand the economics of video streaming platforms?&lt;p&gt;Streaming, encoding, and storage demands enormous costs -- especially at scale (e.g., on average each 4k video with close to 1 million views).
Yet YouTube seems to charge no money for it.&lt;p&gt;I know advertisements are a thing for YT, but is it enough?&lt;p&gt;If tomorrow I want to start a platform that is supported with Advert revenues, I know I will likely fail. However, maybe at YT scale (or more specifically Google Advert scale) the economics works?&lt;p&gt;ps: I would like this discussion to focus on the absolute necessary elements (e.g., storing, encoding, streaming) and not on other factors contributing to latency&amp;#x2F;cost like running view count algorithms.</text></story><parent_chain><item><author>xivzgrev</author><text>Disclaimer: I used to work at a live video streaming company as a financial analyst so quite familiar with this&lt;p&gt;The biggest cost is as you imagine the streaming - getting the video to the viewer.  It was a large part of our variable cost and we had a (literal) mad genius dev ops person holed up in his own office cave that managed the whole operation.&lt;p&gt;Ive long forgotten the special optimizations he did but he would keep finding ways to improve margin &amp;#x2F; efficiency.&lt;p&gt;Encoding is a cost but I don’t recall it being significant&lt;p&gt;Storage isnt generally expensive. Think about how cheap you as a consumer can go get 2 TB of storage, and extrapolate.&lt;p&gt;The other big expense - people!  All those engineers to build back and front end systems. That’s what ruined us - too many people were needed and not enough money coming in so we were burning cash.</text></item></parent_chain><comment><author>foota</author><text>I&amp;#x27;m guessing live video looks a lot different from a more static video site. I think encoding and storage are both quite expensive. You want to encode videos that are likely to be watched in the most efficient ways possible to reduce network bandwidth usage, and every video needs at least some encoding.&lt;p&gt;Based on some power laws etc., I would guess most videos have only a handful of views, so storing them forever and the cost to encode them initially is probably significant.</text></comment>
<story><title>Ask HN: Video streaming is expensive yet YouTube &quot;seems&quot; to do it for free. How?</title><text>Can anyone help me understand the economics of video streaming platforms?&lt;p&gt;Streaming, encoding, and storage demands enormous costs -- especially at scale (e.g., on average each 4k video with close to 1 million views).
Yet YouTube seems to charge no money for it.&lt;p&gt;I know advertisements are a thing for YT, but is it enough?&lt;p&gt;If tomorrow I want to start a platform that is supported with Advert revenues, I know I will likely fail. However, maybe at YT scale (or more specifically Google Advert scale) the economics works?&lt;p&gt;ps: I would like this discussion to focus on the absolute necessary elements (e.g., storing, encoding, streaming) and not on other factors contributing to latency&amp;#x2F;cost like running view count algorithms.</text></story><parent_chain><item><author>xivzgrev</author><text>Disclaimer: I used to work at a live video streaming company as a financial analyst so quite familiar with this&lt;p&gt;The biggest cost is as you imagine the streaming - getting the video to the viewer.  It was a large part of our variable cost and we had a (literal) mad genius dev ops person holed up in his own office cave that managed the whole operation.&lt;p&gt;Ive long forgotten the special optimizations he did but he would keep finding ways to improve margin &amp;#x2F; efficiency.&lt;p&gt;Encoding is a cost but I don’t recall it being significant&lt;p&gt;Storage isnt generally expensive. Think about how cheap you as a consumer can go get 2 TB of storage, and extrapolate.&lt;p&gt;The other big expense - people!  All those engineers to build back and front end systems. That’s what ruined us - too many people were needed and not enough money coming in so we were burning cash.</text></item></parent_chain><comment><author>contingencies</author><text>Interesting background. I worked twice in digital video, once ~2000-2001 (ancient history - early IP, ISDN, the dead-end of H.323, bonded GSM channels, etc.) and once ~2009-2010. The second episode was fascinating, we specialised in mobile video at a time when it was just appearing on the consumer market. &lt;i&gt;Most&lt;/i&gt; of the global mobile device manufacturers were clients. It got to the point where they would build the hardware and we would get airdropped in to their R&amp;amp;D to make it work - they had no idea how performant the architecture was going to be, because they&amp;#x27;d never tried it. We also built the server side, the billing architecture with revenue share, carrier billing support (only possible with device preloaded apps due to &lt;i&gt;Google Play&lt;/i&gt; (then &amp;quot;Google Apps&amp;quot;?) store restrictions on third party payment mechanisms), etc.&lt;p&gt;Encoding, scaling and transcoding are relatively cheap for stored content, and relatively expensive if you want real or near-real time.&lt;p&gt;If you want DRM (digital rights management = ~ineffective copy protection) then you need to add a bit more overhead for that, both in terms of processing and latency. If you need multi-DRM (different DRM systems for different devices the consumer owns) and a good cross-device experience (like pause and resume across devices), it gets real hard real fast.&lt;p&gt;It helps to be targeting a standard platform, for example a modern widescreen TV with H.265 support and solid 4K decoding. Otherwise you need a different version for every resolution, a different version for every CODEC, a different version for every bitrate, etc. We had great experience adjusting bitrates and encoding parameters for different device categories, for example if you had a certain phone and you ran it at max spec it might look great but if you were looking to preserve battery and were running on battery save mode the decode would fail and you&amp;#x27;d get choppy performance and stuttering audio. This sort of thing was rife then.&lt;p&gt;As a series of specialist video providers emerged, ~all the cloud providers went and added these services, basically 95% of which are frontends to ffmpeg and some internal cloud storage scheme or similar.&lt;p&gt;Finally, billing is hard. Users have an expectation of free content now.&lt;p&gt;No experience with real time stream economics, but saw the inside of LA&amp;#x27;s stadium video control center one day. Didn&amp;#x27;t look inexpensive, I&amp;#x27;ll tell you that much. Probably for events with multiple cameras you&amp;#x27;re mostly paying site fees, ie. reliable bandwidth, humans, mixing desk if required. For studio broadcast these costs will be reduced. Both will have a slight real time encoding tax vs. stored content. If you want to figure out how to do it cheaply, look at the porn industry.</text></comment>