Bandwidth Pricing Trends: Cost To Stream A Movie Today, Five Cents: In 1998, $270

While working on a inquiry for WIRED magazine, I was looking through a lot of my data on bandwidth pricing over the past ten years. It's incredible to see just how much the cost of bandwidth has declined and how that rate has accelerated over the past decade. And that rate of decline is just for what content owners were paying and does not even include the rapid pricing decline we've all witnessed with transit costs.

In 1998 the average price paid by content owners to deliver video on the web was around $0.15 per MB delivered. That's per bit delivered, not sustained. Back then, nothing was even quoted in GB or TB of delivery as no one was doing that kind of volume when the average video being streamed was 37Kbps. Fast forward to today where guys like Netflix are encoding their content at a bitrate that is 90x what it was in 1998.

To put the rate of pricing decline in terms everyone can understand, today Netflix pays about five cents to stream a movie over the Internet. If Netflix tried to do this in 1998, at the same quality they are doing it today, it would of cost them $270 per movie. Of course, in 1998 no one was capable of getting a 3Mbps stream, but even if Netflix only encoded their videos for 37Kbps in 1998, it still would have cost them $2.40, $4.80 to stream one movie. (I forgot to double the number for 2 hours) Gives you an idea of just how far video quality, consumption and pricing has come over the past ten years. Yet even with the rapid rate at which pricing has declined, ten years later, companies are still struggling to figure out how to make money from online video.

Comments

[brian]

do we have a moore's law for bandwidth pricing yet?

[Steve Lerner]

We have the Dichotomy Paradox with pricing on its way to zero.

There is always someone who will sell the bandwidth for $.01 cheaper, yet pricing never reaches zero...

[Chuck]

WOW - if we aren't at the tipping point for content moving on line we will be soon.

[Richard Bruce]

We may not have a Moore's law for bandwidth, but the price has on average been more than cut in half each year for the 12 year period discussed. I used the figures given and an cheep engineering calculator to get this figure.

[John]

does we have a moore's law for bandwidth pricing yet?

[Richard Bruce]

To calculate how fast the price is declining I divided the 1998 price, $270, by the January 2010 price, 5 cents, and then use the exponent key and raise it to 1 over 12. There are twelve years between the two prices. This gives me a figure a little over 2, which means the amount of bandwidth you could buy for a dollar was a little more than doubling in the average year, increasing by roughly a thousand over the course of a decade. This is a faster rate than Moore's law and it seems likely that one can not sustain a faster rate. Still very interesting.

[Hancock]

Im still not understanding why it would cost $270 for one movie back then.

[R. Kontantkort]

Interesting reading:-) I have been following the computer science for about 20 years now, and I do remember the old days when I used to connect through my K-56 Flex modem. Downloading one mp3 could take as much as half an hour if the file was big. Times have definately changed since then:-) - Ray K.

[batteri htc legend]

I used to download mp3 and movies with double ISDN line. That was going to cost me... A lot! First bill was around a thousand bucks. OMG! I was ruined. :-)

[Mobilabonnement]

Prices are too high still. Here in Norway the prices are insaine..

[iphone uten binding]

I am so sick and tired of broadband companies. Promising the moon but don't deliver.

[Mobilabonnement]

Maybe fiber is the new thing that will be all over the world. It seems so..