Million Dollar Web TV News

Last year, high-profile online video platform announcements were everywhere. Think Netflix’s streaming partnerships, Best Buy’s partnership with CinemaNow, and Disney’s Keychest. All of the initiatives were designed to securely bring content to an assortment of different devices, be they stationary like home TVs, desktop PCs, or mobile like smart phones, netbooks, and laptop PCs.

With these big video announcements, we keep hearing the newly popular buzz term “cloud computing” again and again. In short, cloud computing refers to public access data centers, web services, and online apps, such as Google, YouTube, iTunes etc., etc.

Image via CrunchBase

A major application of cloud computing, a.k.a. Software as a Service (SaaS), is applications that reside on the Internet instead of on your computer. Today the “going with the cloud” decision really turns on scalability, more specifically on the business model that governs companies in the SaaS remote storage area.

Since video storage and delivery is complicated and expensive, media companies in particular are keen to utilize the “cloud” as a way to expand their businesses and save money. Let’s examine whether or not this is a feasible solution for them.

Cloud service providers like Amazon, Google, and Microsoft have been, traditionally, charging a “Byte in/Byte out” fee — so for large, tier-one media companies like movie studios, a storage cloud service does not scale.

Here is a concrete example of this: If Studio A has a copy of “Harry Potter” that it wants syndicated onto the Internet and the mobile platform space, then it will have to transmit a huge file (50 gigabytes or more) to the transcode cloud provider. The finished product is a file that is 200 megabytes. Because Studio A is being charged a byte IN charge, this would not scale due to the size/cost ratio of the incoming file.

On the flip side, Studio A could pay the cloud vendor that is doing the transcoding to avoid the byte IN fee, and then be exposed only to the byte OUT fee. That arrangement scales much better, but storage fees have hovered around 50 cents per gigabyte per month.

So, let’s do the math and see if this makes sense for Studio A. The company has a digitized master library, 50 terabytes in size — which comes to somewhere around $20,000-30,000 per month for storage costs alone. Those fees would eliminate the savings generated by dropping the “Byte IN” model.

In other words, companies in the storage/transcoding business will need to rethink their models before they can sell services to the largest, tier-one media companies.

However, the ability to scale Web services across many processors in the cloud has huge potential even today, without changing the models. This is why we see great advancements in virtualization and intelligent load-balancing systems for dynamically driven services.

There is a huge future for this technology, and that’s why large web and storage hosting services are tooling up to offer “cloud-based computing.” Having hundreds, if not thousands, of processing cores on standby that anyone can access on an as-needed basis is like having a supercomputer accessible from your home. Is that cool or what?

So expect cloud-based computing to continue to grow and become more prominent as more devices allow users to connect from anywhere and everywhere. It’s not quite there yet, but as with video and other media delivery pointing the way, these business models will mature to serve your needs in very cost effective ways.

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