<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>foota</author><text>If they&amp;#x27;re not significant, then why does youtube build ASICs for doing video encoding? See e.g., &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;arstechnica.com&amp;#x2F;gadgets&amp;#x2F;2021&amp;#x2F;04&amp;#x2F;youtube-is-now-building-its-own-video-transcoding-chips&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;arstechnica.com&amp;#x2F;gadgets&amp;#x2F;2021&amp;#x2F;04&amp;#x2F;youtube-is-now-build...&lt;/a&gt;</text></item><item><author>timr</author><text>Encoding and storage aren&amp;#x27;t significant, relative to the bandwidth costs. Bandwidth is the high order bit.&lt;p&gt;The primary difference between live and static video is the bursts -- get to a certain scale as a static video provider, and you can roughly estimate your bandwidth 95th percentiles. But one big live event can blow you out of the water, and push you over into very expensive tiers that will kill your economics.</text></item><item><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></item><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>djtango</author><text>If you make a billion, a 1% saving is 10 million. You can hire and fund a lot of activity with 10 million.&lt;p&gt;If you make 1 million, 10k isn&amp;#x27;t going to go very far towards paying devs to save you 1%</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>foota</author><text>If they&amp;#x27;re not significant, then why does youtube build ASICs for doing video encoding? See e.g., &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;arstechnica.com&amp;#x2F;gadgets&amp;#x2F;2021&amp;#x2F;04&amp;#x2F;youtube-is-now-building-its-own-video-transcoding-chips&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;arstechnica.com&amp;#x2F;gadgets&amp;#x2F;2021&amp;#x2F;04&amp;#x2F;youtube-is-now-build...&lt;/a&gt;</text></item><item><author>timr</author><text>Encoding and storage aren&amp;#x27;t significant, relative to the bandwidth costs. Bandwidth is the high order bit.&lt;p&gt;The primary difference between live and static video is the bursts -- get to a certain scale as a static video provider, and you can roughly estimate your bandwidth 95th percentiles. But one big live event can blow you out of the water, and push you over into very expensive tiers that will kill your economics.</text></item><item><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></item><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>jupp0r</author><text>Because when you are Youtube, even relatively marginal cost improvements can be huge in absolute. There is also the UX of having to wait X minutes for an uploaded video to be ready that is improved by this.</text></comment>