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Video ̇Compression ̇OLE WL040/Bidgolio-Vol I WL040-Sample.cls September 14, 2003 18:10 Char Count= 0
550 VIDEOCOMPRESSIONon MPEG-2 and has proposed a licensing scheme for
MPEG-4 that includes an hourly usage fee that could
amount to as much as $0.25 per hour per user. ITU-
T maintains a patent database (http://www.itu.int/ITU-
T/dbase/patent/) and, in general, prospective developers
must negotiate with patent holders for license terms.DIGITAL VIDEO APPLICATION
SOLUTIONS
Table 4 extends Table 1 by indicating additional well-
known applications of video compression, together with
requirements and possible solutions.DIGITAL VIDEO BUSINESS MODELS
Video-on-Demand over Broadband Networks
In this application, customers request movies deliv-
ered via cable modem or digital subscriber line ser-
vice to their personal computer. Brief inspection of the
Intertainer Web site (http://www.intertainer.com) shows
that full screen (800×600 pixels), full motion movies en-
coded at about 500 kbps are currently delivered via the
Windows Media 8 platform at 580 kbps or higher includ-
ing overheads so that a 120-min movie causes almost 4
GB of data transfer. Table 5 shows a hypothetical busi-
ness model for a movie-on-demand service delivered in
the United States.Table 7Hypothetical FOMA Live Adult Service Business ModelDigital Video Business ModelFOMA Live Adult Service Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Avg Subs 55,000 235,000 415,000 595,000 775,000 955,000
% who use VOD service 75.0% 75.0% 75.0% 75.0% 75.0% 75.0%
Avg users per day 41,250 176,250 311,250 446,250 581,250 716,250
Conversion Rate (daily) 0.8% 0.8% 0.8% 0.8% 0.8% 1.0%
purchases/day 342 1,463 2,583 3,704 4,824 7,163
Average Purchase $25.00 $25.00 $25.00 $25.00 $25.00 $20.00
Monthly Subscription per Sub $10 $10 $10 $10 $10 $10
Gross purchase revenue per day $8,559.38 $36,571.88 $64,584.38 $92,596.88 $120,609.38 $143,250.00
Gross subscription revenue per day $13,750.00 $58,750.00 $103,750.00 $148,750.00 $193,750.00 $238,750.00
Gross revenue per day $22,309.38 $95,321.88 $168,334.38 $241,346.88 $314,359.38 $382,000.00
days in year 365 365 365 365 365 365
Annual Gross Revenue $8,142,922 $34,792,484 $61,442,047 $88,091,609 $114,741,172 $139,430,000
Content Partner Revenue Share 90% 90% 90% 90% 90% 90%
Content Partner Net Revenue $7,328,630 $31,313,236 $55,297,842 $79,282,448 $103,267,055 $125,487,000
Carrier Revenue Share 10% 10% 10% 10% 10% 10%
Carrier Net Revenue $732,863 $3,131,324 $5,529,784 $7,928,245 $10,326,705 $12,548,700
Capital Costs
Maximum Concurrent Usage 10% 10% 10% 10% 10% 10%
New Streams Required 4125 17625 31125 44625 58125 71625
Server Capacity (bps) 200,000,000 200,000,000 200,000,000 200,000,000 200,000,000 200,000,000
Bandwidth per stream (kbps) 384 384 384 384 384 384
Number of New Servers 8 35 61 88 114 141
Cost per Server $10,000.00 $4,996.17 $2,496.17 $1,247.13 $623.09 $311.31
Cost per Stream $50.00 $50.00 $50.00 $50.00 $50.00 $50.00
New Server Costs $10,000.00 $0.00 $0.00 $0.00 $0.00 $0.00
New Stream Costs $206,250.00 $881,250.00 $1,556,250.00 $2,231,250.00 $2,906,250.00 $3,581,250.00
Total Server Costs $216,250.00 $881,250.00 $1,556,250.00 $2,231,250.00 $2,906,250.00 $3,581,250.00
Amortized Server Costs $70,750.00 $364,500.00 $883,250.00 $1,558,250.00 $2,233,250.00 $2,906,250.00
Operating Costs
Bandwidth Costs
Sessions per year 124,967 533,949 942,932 1,351,914 1,760,897 2,614,313
Average 5-min call (128-byte 115200 115200 115200 115200 115200 4176
packets)
Total Usage (packets) 14,396,184,000 61,510,968,000 108,625,752,000 155,740,536,000 202,855,320,000 10,917,369,000
Bandwidth costs ($ per packet) 4.E-04 6.E-05 9.E-06 1.E-06 2.E-07 3.E-08
Total Bandwidth Costs $5,614,512 $3,659,922 $986,068 $215,690 $42,862 $352
Cost per Rack Unit $900 $900 $900 $900 $900 $900
Rack Units (2RU servers) 4 17 31 44 57 70
Racking Costs $3,650 $15,593 $27,537 $39,481 $51,425 $63,369
Total Network Costs $5,618,161 $3,675,516 $1,013,605 $255,172 $94,287 $63,721
Number of CSRs 1 12345
Total Staffing Costs $3,664,315 $15,656,618 $27,648,921 $39,641,224 $51,633,527 $62,743,500
Equipment Maintenance $1,000 $0 $0 $0 $0 $0
BadDebt (@ 2% of Revenue) $162,858.44 $695,849.69 $1,228,840.94 $1,761,832.19 $2,294,823.44 $2,788,600.00
Marketing/Promotion $81,429.22 $347,924.84 $614,420.47 $880,916.09 $1,147,411.72 $6,971,500.00
Total Operating Costs $9,598,513.80 $20,740,408.17 $31,389,037.70 $44,097,394.00 $57,403,299.52 $75,473,571.15
P&L
Balance Sheet −$2,269,884 $10,572,828 $23,908,804 $35,185,054 $45,863,755 $50,013,429