Update: Varun Singh, Founder of Scalarc Technologies, and previously the CTO at Web18, contends that the price of streaming is different from that suggested by Felix (earlier). Singh puts the costs down as follows:
Bandwidth streaming cost: 35 cents per GB, around Rs. 15.2, at maximum
DRM cost: is around Rs. 1.5 per item, and not Rs. 20 per item.
Storage cost: Rs. 1.5 per view at maximum
Singh suggests that the cost of streaming a movie is not more than Rs. 18.2, and the best case scenario is Rs. 12 at 1mbps. Add to that the content cost (Rs. 20-50), and the worst case scenario is Rs. 38.2 to Rs. 68.2 per view, and at best, Rs. 32 to Rs. 62 at worst. That, as Felix suggested earlier, would still be an unviable proposition.
Earlier today: So, how much does it cost to stream a movie online in India, and what will it take for a company to become profitable? Commenting on a post* in MediaNama, Joe Felix, former VP(New Media), Nimbus Communications, shared his approximations of costs of streaming, and we spoke with him for more information. The details:
– Bandwidth cost: Rs. 20-30 per GB, if you’re a smart negotiator and can commit large volumes, if you can commit 20 TB consumption per month.
– Storage cost (servers): taking total cost per annum divided by number of views per annum, this approximates to Rs. 1 per view, if there are at least 2000+ views per month. You have to use BitGravity, Akamai, Limewire etc.
– DRM cost: Rs. 10-20, but only if you commit large volumes. When you’re doing it free, you don’t generally take DRM.
– Cost of Media Rights: works out to Rs. 20-50 per view, but depends on the deal, and varies with scale. Media owners who have the rights, tend to benefit, because they don’t have to pay for film rights. As an alternative, one inks revenue sharing deals with content owners. In DTH, for example, the producer makes Rs. 25 for every Rs. 75 a user pays for a movie.
Felix says that the cost per user (rather, cost per view) will be between Rs. 51-101, if the negotiation is done well, though it will vary, depending on scale. However, he warns, one does not have significant control over scale: “achieving scale is purely a market driven reality, on which you do not have more than 20-30% control.” In this context, a company like YouTube, which operates on scale both in terms of viewers and cost of operations, the probability of being profitable is higher.
For most, the numbers are not huge and it becomes impossible to make money from advertising only. Say, if a movie is viewed by 5000 or 10000 people in total. Typically, for a three hour movie, you will have a minute long ad break every 20 minutes, which means around six ads. For non-premium content, the current market rate is Rs. 100-150 Cost Per Milli (CPM), and it can go up to Rs. 900 in some cases (like a Cricket match).
The proposition is unviable given the current landscape, because of the cost, even for a movie if you don’t have to buy the rights.