Network end users to pull down 2 gigabytes a day, continuously?

Mikael Abrahamsson swmike at swm.pp.se
Sat Jan 13 11:45:24 UTC 2007


On Sat, 13 Jan 2007, Marshall Eubanks wrote:

> For the US, an analysis by Kenneth Wilbur
> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=885465   , table 1, from 
> this recent meeting in DC
> http://www.web.virginia.edu/media/agenda.html

Couldn't read the PDFs so I'll just go from your below figures:

> shows that the cost per thousand per ad (the CPM) averaged over 5 networks 
> and all nights of the week, was $ 24 +- 9; these
> are 1/2 minute ads. The mean ad level per half-hour is 5.15 minutes, so 
> that's 10.3 x $ 24 or $ 247 / hour / 1000. This is for the evening; rates and 
> audiences at other times or less. So, for a 1/2 hour evening show, on average 
> the VOD would need to cost at least $ 0.12 US to re-coup the ad revenues. 
> Popular shows get a higher CPM, so they would cost more. The Wilbur paper and 
> some of the other papers at this conference present a lot of breakdown of 
> these sorts of statistics, if you are interested.

Thanks for the figures. So basically if we can encode a 23 minute show (30 
minutes minus ads) into a gig of traffic the network (precomputed HD 1080i 
with high VBR) cost would be around $0.2 (figure from my previous email, 
on margin) and pay $0.2 to the content owner, they would make the same 
amount of money as they do now? So basically the marginal cost of this 
service would be around $0.4-0.5 per show, and double that for a 45 minute 
episode (current 1 hour show format)?

So question becomes whether people might be inclined to pay $1 to watch an 
adfree TV show? If they're paying $1.99 to iTunes for the actual download 
right now, they might be willing to pay $0.99 to watch it over VoD?

As you said, of course this would take enormous amount of time and effort 
to convince the content owners of this model. Wonder if ISPs would be 
interested at these levels, that's also a good question.

-- 
Mikael Abrahamsson    email: swmike at swm.pp.se



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