Hosting one of today's biggest infrastructure consumers – streaming

Hosting one of today's biggest infrastructure consumers – streaming

Netflix, Disney Plus, Amazon Prime – they are the companies that spring to mind for most of us when asked about streaming. And while the news may have been reporting some revenue losses lately, Netflix recently added 2.41 million subscribers to bring its total to 223.09 million.

But, to align the world of streaming with just these companies is to take a reductive view of the industry. When you order a takeaway on Deliveroo and follow the progress of the delivery rider on the map, that’s streaming. As are the live workout videos that so many fitness companies and consumers have invested in since the pandemic forced us to look for exercise alternatives at home.

Streaming has even found its way into the classroom with the rise in edtech and online classrooms. In the period from 2011 to 2021, the number of learners reached by massive open online courses (MOOCs) exploded from 300,000 to a whopping 220 million. And, of course, we cannot talk about the world of streaming without mentioning gaming.

Perhaps one of the biggest streaming adopters, the eSports and games streaming market is predicted to increase from $2.3 billion this year to $7.2 billion by 2032. Much of that growth is down to platforms such as Twitch, which has more than 31 million visits each day.

These are big numbers, and they require significant infrastructure to realize them. With streaming recently described as “probably the most profligate bandwidth consumer of the modern era” however, what infrastructure is needed to deliver increasing demands for live streaming now and in the future?

In this blog we consider the impact of the pandemic and the cost-of-living crisis on the streaming market and how changing priorities are impacting investment in live streaming infrastructure.

The growing appetite for streaming

While streaming services have been on the rise for some time, the sudden lockdowns caused by the pandemic accelerated that growth exponentially. A study by Ofcom found that during lockdown, adults spent on average 1 hour 11 minutes a day watching streaming services - double what it was before the pandemic. And viewing figures for video streaming services were up 71% compared to 2019.

The popularity of video streaming was so great that we saw the birth of new services from large multinational players, including HBO Max, Disney+ and Paramount+. It was an opportunity that video streaming providers couldn’t pass up and understandably their focus during this period was about increasing market share.

But, thankfully for the health of the world and its economies, lockdowns had to end and the heavy reliance on streaming services for entertainment naturally dipped. Forbes research showed that fifteen months into the pandemic, 28% of US adults were fatigued from watching so much TV and film. In better news for the industry however, Streamlabs also reported that streaming numbers took an initial slump across all platforms soon after restrictions were lifted, only to increase again this year. This is evident on Twitch, where the number of hours streamed has increased by 12%.

These increases are being helped by new areas of growth in streaming, such as live-stream e-commerce. Retail as we know it has been steadily transforming over recent years - from the death of the high street to affiliate links on influencer’s social posts. Modern consumerism is all about see-now-want-now and it’s driving an increasingly popular trend around shopping via live video.

It’s been popular in China for some time, with livestream shopping reaching around $425 billion in China in 2022. Now the rest of the world is starting to catch up. McKinsey suggests that even industries like healthcare, engineering and finance could start to see the value of live commerce to deliver important content, and even consultations and appointment scheduling.

But while demand for streaming services may be increasing, streaming providers and the myriad of companies that support them with services and products, are not immune to what is happening in the global market.

The pandemic was all about growth for the streaming market and increasing market share as much and as quickly as possible to keep up with demand. The cost-of-living crisis and a looming recession are putting that pure growth focus under pressure, forcing streaming companies into a new way of thinking; re-focusing from increasing market share to being more efficient.

The challenge for the industry today is how to realize efficiencies while also delivering streaming experiences that stand out.

Hosting one of today's biggest infrastructure consumers – streaming

The challenges of live streaming infrastructure

Infrastructure plays a key role here. An increase in streaming naturally leads to an increase in data usage and bigger live streaming infrastructure requirements. Which cost money. Thankfully - to bastardize the words of Thomas Jefferson - not all infrastructure is made equal.

Because of the unpredictability of viewing numbers for streaming, the infrastructure that supports it needs to be flexible and able to scale up or down to meet demand.

When live events take place successful social broadcasting platforms can suddenly see viewer numbers go from a handful to hundreds or even thousands in minutes.

Streaming platforms that have been in the business for a while will have a good handle on viewer numbers to be able to prepare for spikes in traffic. But what if you’re a new streaming provider just starting out and don’t know how many users are going to turn up to your live event? With no IT team, many new entrants to the market turn to the hyperscale cloud providers with their free credits and fast scalability to provide infrastructure that supports these peaks and troughs.

The hyperscale cloud providers were particularly popular during the pandemic when streaming companies were looking for ways to scale quickly with demand. The trouble is, now that growth in viewer numbers is a little more sedate and everything is getting increasingly expensive, many streaming providers are realising that having their infrastructure provided solely by hyperscale cloud providers is not a sustainable business plan. They need to adjust their live streaming infrastructure to the current economy.

Why streaming providers should be investing in hybrid

That adjustment - in our opinion - should be to invest in hybrid live streaming infrastructure. Using bare-metal dedicated servers for streaming for concurrent usage and the cloud for large spikes in users.

As our CRO Isaac Douglas discussed in an in-depth piece on finding a path out of hyperscale cloud, “while the purchase of hyperscale cloud may be simple, actually buying it in a way that works for your business isn’t. It’s very easy to end up spending far more than you should be…the cost for compute [in the cloud] can sometimes be 10x the cost of doing it in bare-metal”.

Using a baseline of dedicated servers for streaming helps companies keep costs far more predictable and manageable. While the hyperscale clouds may sell themselves on ease of set up - all you need is a credit card - that simplicity very quickly turns to complexity and streaming companies can suddenly find themselves with a bill for live streaming infrastructure that looks nothing like they’d signed up for.

Perhaps the biggest issue with the complexity of cloud is that the platforms provide very little help and support to unravel that complexity. In our experience, trying to get someone on the phone to better understand your monthly invoice is not easy.

Taking control of infrastructure costs

In today’s economy, we are all counting the pennies. The heyday of the pandemic for the streaming industry is over. But that doesn’t mean that society’s appetite has disappeared. Quite the opposite in fact.

Investing in hybrid live streaming infrastructure made up of dedicated servers for streaming and the cloud will deliver low latency, high bandwidth and scalability without losing control of costs.

To learn more about dedicated servers for streaming, visit our industry page.


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