iPlayer’s economics

iPlayer‘s a huge success. Ashley Highfield says so. The first ‘iPlayer hits’ are emerging (Dr Who, Top Gear). iPlayer audiences are typically 10% of the broadcast numbers, sometimes 500,000 in one day. Within a year we’ll see the first streaming blockbuster – a show whose iPlayer audience exceeds its TV audience.

The corporation used to worry about the cost of streaming – the download iPlayer was, in part, aimed at controlling the Beeb’s bandwidth costs by offloading file distribution to downloaders (some have been surprised to see upload traffic from their PCs while viewing a show).

Greg Dyke was on record (can’t find a reference) as saying he didn’t think it was possible to resolve the economics of a system where each new viewer brings an additional cost, even where that cost tends towards zero. The problem, of course, is that the unit cost doesn’t (can’t) actually reach zero but can only bump along asymptotically – and is likely, in fact, to rise each time a service enhancement comes along (better resolution for instance).

The other problem, of course, lies out there at the network’s edge with the ISPs. Highfield is dismissive. iPlayer traffic is a ‘negligible’ proportion of overall traffic, he says. But, logically, it can’t stay negligible. ISPs are going to carry an increasing share of the burden of delivering the BBC’s streaming traffic to their customers. Tipping points will arrive, quality will suffer. A BBC insider told me the other day that the ISPs represent a huge potential problem for the corporation’s streaming plans. He used some graphic metaphors: cliffs, bullet trains approaching mountains without tunnels, that kind of thing. The $64K question is: can a national broadcaster switch a significant fraction of its content from a free transmission model to a costly per-stream network model without trashing its funding economics or the all-you-can-eat internet access model?

And, more to the point, is anyone at the Beeb thinking about this?

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