The State of High-Definition Streaming
But has the introduction of HD content fueled higher revenue? Not quite yet. "We haven’t changed our rates for HD," says Berryman. "We’re definitely going to be looking at a different experience for HD viewers versus non-HD viewers. The idea is to attract the advertisers that are producing commercials in HD. And we are getting interest from the more progressive agencies that are doing this today."
Even though HD inventory would seem to be more attractive to advertisers and therefore compel them to pay more, that is still more theory than reality. "We just don’t know yet," says Nick Rockwell, MTV Networks’ SVP of online technology. "People are making that claim that advertisers will pay more, and CDNs are pushing that perspective. But it’s not proven to us.
"What’s an easier step to take," Rockwell continues, "is that higher quality translates into longer view times translates into more impressions. We don’t yet have a formula for how much more we can charge for HD, so instead we’re saying, let’s first try to get that data and see how this really works."
In the meantime, perhaps one of the best approaches to monetizing HD is through sponsorships. "Our entire HD rollout was sponsored by Canon," says Lodwick. "It was not a typical deal, but we put the Canon logo on HD videos and made a special Canon HD channel. The association that Canon made with our HD was extremely valuable to them, as up until now there hasn’t been a real reason for a consumer to buy an HD camera. If you’re going to put video on the web and it’s going to be heavily compressed, it doesn’t matter if the source is HD. But now through Vimeo, you can share in HD if you shoot in HD."
Bearing the Cost Burden
One of the biggest potential challenges with delivering HD video is the basic reality that the more bits you want to serve, the more its going to cost you.
"We’re very conscious of that as it really is a linear relationship. If you’re going to use a 1.5Mbps versus a 750Kbps file, it’s going to cost you twice as much," says Rockwell.
Though that doesn’t necessarily mean that delivering an HD file will be 10 times more expensive than a standard-def video. "It does require a lot more bandwidth and a lot more storage. But it’s not as simple; since a video’s 12 times bigger it takes up 12 times as much space," says Ouellette. "In reality it’s more like 3 to 4 times bigger because of compression."
Helping this situation is the constant push by CDNs to lower their costs for delivering bits. "They’re not trying to take it into a linear relationship as they’re discounting the extra bits we have to deliver, which is very nice of them," says Rockwell. "And the real good news is that there are real innovations in delivery that the CDNs are pursuing that are enabling them to do this."
"We definitely give discounts with volume," says Akamai’s Johnson. "What I can say about that is Akamai’s ultimate goal is to be able to lower our cost as much as we can so that our customers’ business models can be profitable."
"We’ve had a deliberate intent to not count some of our customers’ gigabytes," says Limelight’s Gordon. "And in terms of moving you up the volume discount scale we’re trying to be generous with our measurement. Obviously we know how many gigabytes you push, but our approach is to say, ‘Look, we recognize this has to work for your business.’ So we’re trying to put in place an economic model that is designed to allow our customers to continue monetizing their content successfully."