The Dirty Little Secret About 4K Streaming: Content Owners Can’t Afford The Bandwidth Costs

When vendors and industry executives go to a show like CES, none of them seems to be satisfied to talk about what they are doing now. Almost always, they want to talk about the future and something more exciting and for this year, it’s all about 4K. All week we’ve seen companies talking about the role HEVC plays with 4K, improved compression, higher-quality video and hardware devices that will be able to decode and playback 4K content. While it all sounds exciting, the reality is, no one is discussing the business models around 4K streaming and the fact that for most, the economics of delivering 4K content don’t work.

This week we’ve heard a lot of technical talk about encoding, chips and devices, but no one is addressing the cost or QoS issues associated with 4K streaming. Lots of vendors are saying how HEVC “solves the 4K challenge”, but that’s just a technical challenge. What about the business challenge? I have yet to see a single vendor even mention it. No service like 4K streaming will ever come to the masses and survive if both the technical and business challenges aren’t worked out. I don’t doubt that the technical side of 4K streaming will be solid as there are a lot of vendors in the industry who excel in the encoding and compression segment of the market. But so far, vendors are not talking about how they are going to convince content owners to actually adopt 4K streaming and what the benefit is to them for doing so. How does streaming something in 4K instead of HD help the content owners business?

At CES, Netflix, Amazon and Comcast talked about their 4K content offerings and all of them disclosed that the bitrates they plan to use to deliver 4K content, using HEVC, will be between 12Mbps-20Mbps. That’s great for Netflix and Amazon, who have subscription based services and don’t rely on video advertising for revenue, but what about the vast majority of content owners who only make money from their content via advertising? The average broadcaster, news site and publisher, even the large ones, won’t be able to do 4K streaming as the cost for all the extra bits means they will have a content business they can’t monetize. Just think about how much content you view every day, from major content portals, where the max bitrate is 1Mbps. Why aren’t those websites delivering the video in 3Mbps? The answer you get when you ask them is that they can’t afford the extra bandwidth costs associated with it. read more...