The truth about 4k streaming
This is the thing with technology.
In the eternal quest for “new”, every year, product development teams push the boundaries of innovation to come up with newer forms of technology which promise the heralding of untold possibilities.
The media goes into a tizzy.
Marketing teams go on overdrive to churn the spin.
Customers start talking about it even if they have no clue about the possibility of it based on business relevance.
And a trend is born.
We can see it everywhere we look. Like we talk about 4g, even though there is no practicality of it being available at scale or is even a necessity. For that matter even getting proper 3g is more of a misnomer.
Or we talk about the internet of things, even though that is far away from being accepted across mass culture. Really- do we need our washing machines connected to our toasters and controlled by our cell phones?
Or we gloss over multiple megapixel’s on camera’s even though without large scale printing requirements anything over 6 megapixels is an unnecessary luxury which adds no value- thereby making those extra thousands in payment an absolute ludicrous proposition, especially for the millions of cell phone toting photo enthusiasts who earn not a single dime from photography through all the trigger happy moments of their life.
But that doesn’t stop organisations from using these trends and PR machinery to ride the public sentiment and media hysteria.
This year in CES that hysteria was around 4K.
4k streaming. Streaming quality that make HD seem like life before technicolour. Television companies talked about 4k screens, content providers talked about their capabilities of encoding in 4k technology and suddenly 4k was the requirement that customers just “needed” to have for their video consumption needs.
Curiously, no one deliberated on the business viability of it all, or the current state- where we are actually far away from 4k in terms of a demand supply equilibrium.
So let’s look at some numbers.
Major content providers like Amazon/ Netflix have already stated that for 4k streaming they would have to encode their content at a bitrate of 12-20Mbps.
Now let’s take a guess at the current encoding bitrate of video content from all major video content providers?
1Mbps to maximum 3Mbps
Yes you read that right.
So for video content providers to move to 4k quality they would have to buy additional bandwidth which allows them to move from 1/3Mbps to 12/20 Mbps.
Now lets look at the economics.
For delivering video content at 4k, the cost increase for an hour of video, would be at least 6 times only for the delivery part, based on bandwidth required. Add to it the cost of encoding, the cost of CDNs who deliver the content and it’s a 7-8 time increase over existing cost. And all this at no additional advertisement revenue or guarantee of millions of new subscribers.
Then add to it that there are only a handful of 4k enabled devices out there and it would take years for technology to lower production prices for mass adoption and thereby scale, whereby it would make sense of content developers to create 4k content.
So let’s now do the math.
For this to be profitable and viable
8 times bandwidth cost + CDN Cost + encoding technology cost + lesser number of customers (to actually view it on devices) has to be < increase in advertising revenue + increase in number of subscribers
It just doesn’t make business sense. Yes the technology divide has been conquered, but it will take years for large scale consumption to be viable.
So for now 4k is a pipe dream. Good to read about. Good to rave about. Good to debate. Good to experiment with.
And that’s about it