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Netflix: $.05 to Deliver Movie Stream?
Crunching the numbers behind Netflix broadband video...
by Karl Bode 08:42AM Monday Mar 23 2009 Tipped by Matt3 See Profile
A morning hat tip to Matt, who directs our attention to this interesting bit of analysis, where a blogger crunches the numbers on Netflix's successful broadband streaming video model. With the average encoding rate for video streamed to the XBOX 360 around 2000Kbps, one person watching a two hour movie would transfer around 1.8GB of data. Of course that's low-def -- the average encoding bitrate for an HD film is around 3200Kbps, and one user would transfer about 3GB of data per film. With Netflix paying about $0.03 per GB for bandwidth from Limelight and Level 3 -- the author estimates it costs them about $0.06 to deliver one SD movie and $0.09 to deliver one HD movie -- less for shorter fare. As the author notes, those costs don't include licensing fees.

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K Patterson
Columbus, OH

2 recommendations

reply to 88615298

Re: Here's why they can get away with it

It costs me $.06 for the gas to run my car one mile. Nobody has trouble understanding that the gas is a small part of the cost of running a car, but folks seem to think that $.03 for bandwidth is the only cost to NetFlix or the cable companies. It, like gas, is just a small part of the cost.

Electricity (Look before you leap - all the electricity used in a data center)
Circuit costs (rent for hanging a cable on one power pole is $30 per year. I've no idea what fiber ciruits cost other than a hell of a lot)
Equipment (Routers, switches, power conditioning, backup generators, and for cable the infamous fiber nodes, etc)
Buildings (The cost of the air conditioners alone is enormous)
Support (They nay be somewhat incompetent, but they do get paid)
Software (Ever price Cisco software? Makes Microsoft look like bargain basement, and there ae support contracts)

$.20 to $.30 a gigabyte is a likely number.