When Evaluating Video Platforms and Formats, Look At The Total Cost Of Ownership

We get a lot of questions at StreamingMedia.com about online video platforms as well as inquiries about the different video formats. Typically, most of the questions are around the costs associated with delivering video in one format over another or the price differences between multiple video platforms. While video delivery costs are always an important factor, I think a lot of content owners are missing the bigger picture when it comes to the total cost of any platform or service.

When evaluating any system or platform, the total cost of ownership needs to be taken into account and content owners need to look at more than just the cost of delivery, or a monthly platform fee for a video management system. Before you pick any solution you have to evaluate the impact it will have on your entire video ecosystem. Sometimes one format can be more expensive than another for delivery, but that does not mean that picking the cheapest video solution will save you money.

What you might save in delivery costs you might have to spend in other pieces of the video ecosystem like encoding, ingestion or management. You have to consider all of the costs associated with the entire video ecosystem of content creation, capture, ingestion, transcoding, storage, management, distribution and tracking. Does picking the cheapest solution cause you to have to spend more money to encode your content? What kind of hardware is required? Do you need more processing power? And what about turn around time? In many cases the money you might be saving in video delivery you could actually be spending in other pieces of the ecosystem. It's not just about the cost of delivery.

I see a lot of folks saying one format or platform is cheaper than another, but typically only the cost of delivery or the monthly platform license fee is being discussed. While some of those numbers can look enticing, make sure you look at the total cost of ownership and have a good handle on how your decision affects your entire video ecosystem.

Comments

[Curious]

What about calculating TCO on per-use based costing of SaaS or VaaS applications, such as http://www.ultralearn.com? (I mean as compared to going through the costs you mentioned, each time for each cycle)

[Dan Rayburn]

SaaS does not change how you calculate costs. Even SaaS models require the content owner to still have to deal with a lot of the ecosystem pieces.

[Peter Contardo]

Another factor to consider is the “opportunity cost” related to the monetization options included in the platforms being evaluated. Even after calculating the hard costs, if one platform offers more options to make money, like subscriptions, sponsorships, pay-per-view, and IPTV, than the other platforms, the cost of not choosing that platform is higher because of the lost revenue potential to your online video business.

[Justin Foster]

Just "dealing" with the video ecosystem is a big part of the problem in the first place - it's too complex. In the e-commerce world, I'm seeing the center of gravity in decisions about content delivery and video management infrastructure moving away from technology/IT and increasingly into the realm of business decision-makers - folks without the slightest knowledge of or interest in the mechanics of encoding or content delivery.

A comprehensive video platform should merge encoding, distribution, and management - then differentiate on its ability to generate revenue for the business. It really isn't about TCO. It's about ROI.