Saturday, November 23, 2013

Delivery v Reception

When you transmit a channel on traditional platforms you have reasonably predictable costs. These involve MUX costing, satellite transmission costs and carriage costs. For example, if you want to get your channel onto Sky you will need to pay that company around £100k to appear on their EPG and then pay a satellite company around £400k to beam your signal. Then come the costs of scheduling, playout, ad insertion, etc.. But once you've done this there are no inceremental costs per viewer.

On broadband you can buy a package that will get you into every properly broadband enabled home in the UK for next to nothing. My own company will do this from £300 a month. But the flip side is that you have a cost per viewer, based on the bandwidth they use, ie how much of your programming they are watching and at what data rate.

These are now the two models for TV delivery.

If you're generating, or are likely to attract under 100,000 regular viewers the former model is madness. You'll quickly go bust.

But if you can generate 2,000 viewers for your online channel at any one time, you may well have a viable business model.

This is the difference between delivery charging and reception charging.

For example, every movie a viewer watches in rasonably lo res will cost around 1p to an online broadcaster such as Netflix. but a HD version may cost 7p. If you pay Netflix £10 a month and watch 90 hours a month the cost is around a pound in HD.