If You Webcast It, How Many Will Come?

A version of this article originally appeared in the May issue of Streaming Media magazine. Click here to subscribe.

Webcasting provides the ultimate means for disseminating video and/or audio communications from a live event to the masses. When planning for a webcast of any size, there are a host of decisions that need to be made prior to the event that can affect your bottom line.

Many of these decisions involve an apples-to-oranges comparison of the features of one technology or service versus another. And the biggest expense of most webcasts comes from the video production, which is a fixed cost relative to the overall budget of an event. But there is one major unknown that can unbalance a webcast’s ROI and potentially undermine the overall experience: the size of the audience that actually shows up to watch the live stream.

Too many viewers can result in unforeseen delivery costs and overwhelm the system that manages and monitors interactive elements. Too few viewers, on the other hand, can leave you paying for bandwidth that goes unused. As a result, properly estimating the size of a Webcast’s audience is often essential to its success.

In the following article you will find a discussion of how big an impact unexpected viewership numbers can have, how industry trends can help you estimate the size of your audience, and what you can do to minimize the negative impact of misjudging the size of your webcast audience.

A Shrinking Problem . . .
When looking at webcasting, it’s easy to distinguish between two separate flavors when it comes to the intent and general business model of an event: corporate communications and media/entertainment. And the reality is that for each flavor, the effects of unexpected traffic have gone down over the past few years, both because of the ever-falling price of bandwidth and for reasons unique to each segment.

Despite open and unfettered access to a live stream, corporate webcasts most often pull their viewers from much more limited demographics than a big entertainment event, which reduces the budget allocated to delivery relative to other, more fixed costs. In most corporate webcasts, streaming typically accounts for 5-10% of the overall product costs.

There’s also the fact that in many corporate environments, webcasting is used to replace more traditional and more expensive communications technologies like audio and video conferencing. "When you look at the millions of dollars that any organization would pay just to do regular, large-scale audio conference calls, transitioning that over to a streaming model can save an organization more than two-thirds of that cost," says Nicole McLane, manager for broadcast and streaming at JPMorganChase. So, in this light, there’s often a large buffer that can absorb any cost overruns involving webcasts.

Entertainment webcasts, on the other hand, are most often built around a business model with a clear equation for generating a profit in mind, meaning the bigger the audience the better. "There’s usually an ad-supported model in place," says Jim Byrne, director of OEM sales for VitalStream. "As a result, the more people that show up the more money they make. That little bit of overage I charge for going over their commit is pennies in the bucket to them."

Additionally, bigger-than-expected audiences for any type of webcast can actually benefit from reduced delivery charges. Increased volume typically means diminished per-unit costs. [For a look into other market forces that have lessened the negative financial impact of surges in traffic, see the sidebar on page 3 of this article, "A Maturing Market."]

. . . But One That Still Has Teeth
Even though a host of factors has contributed to lessening the impact of a webcast’s traffic on its bottom line, there are still a number of reasons why properly estimating the size of a webcast’s audience is important.

For corporate webcasts, the need for proper audience estimates becomes most apparent not in the delivery costs but in the management of the live event itself. "If you’re running a live, interactive webcast, the big issue is going to be handling the volume of question-and-answer, as people are more likely to interact with formulated thoughts on a webcast than on a conference call," says McLane. "If you’re not prepared with the proper personnel to handle this traffic, they can become quickly overwhelmed."

For larger, entertainment-oriented webcasts, finding the right balance between over- and underestimating an audience can be a double-edged sword. "It’s very bad business for me to go to someone and get them to commit to a large amount of money and then only use one tenth of their commit," says Bill Wheaton, Akamai VP of media entertainment and sales. "I’ve already deployed the resources to do it but now they’re not being used, and the customer didn’t get the expected return they’re looking for, so they’re unhappy."

At the same time, having a commit level that’s too low can limit a webcast’s ability to scale up to meet unexpected demand depending on what else is going on across a CDN’s network and the Internet in general the day of a Webcast event. With bandwidth at a premium, clients with long-term contracts typically get first dibs. "If you’re doing a one-time event and you’re going to guarantee yourself X amount of capacity, you’re going to pay a Y commit fee and then we’ll charge you a marginal rate for Gigs after that," says Wheaton. "If it’s the day of your event and say you contracted with me at 5Gbps but you actually go to 7Gbps, if I have it available I’m going to give it to you, but on some days when, say, there’s a big news event, the news sites on my network are going to get pretty hot. So if I have your event going on at the same time, I may not be able to give you those incremental gigs."