| | | | | | | | | | | | | | | | | | | | | . | Analysis By: | | | | | | | | | | | | | | | | | | | | . | Silicon Alley Insider | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Basic Model: Mid-level bandwidth, storage, transcoding, 50% royalties, 50% videos monetizable. | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | VIDEO UNIT P&L (CPM) | NOW | | | | | | | FUTURE?* | | | | | | | | | | | | . | Ad Sales Price (CPM) | | $5.00 | $10.00 | $15.00 | $20.00 | $25.00 | | | $5.00 | $10.00 | $15.00 | $20.00 | $25.00 | | | | | | | . | % of Videos Monetizable | | 50% | 50% | 50% | 50% | 50% | | | 50% | 50% | 50% | 50% | 50% | | | | | | | . | Revenue (Effective CPM) | | $2.50 | $5.00 | $7.50 | $10.00 | $12.50 | | | $2.50 | $5.00 | $7.50 | $10.00 | $12.50 | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Bandwidth (CPM) | | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | | *Down 75% | $0.38 | $0.38 | $0.38 | $0.38 | $0.38 | | | | | | | . | Storage (CPM) | | $0.20 | $0.20 | $0.20 | $0.20 | $0.20 | | *Down 75% | $0.05 | $0.05 | $0.05 | $0.05 | $0.05 | | | | | | | . | Transcoding (CPM) | | $0.01 | $0.01 | $0.01 | $0.01 | $0.01 | | *Down 75% | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | | | | | | | . | Royalties (% of Revenue) | 50% | $1.25 | $2.50 | $3.75 | $5.00 | $6.25 | | 50% | $1.25 | $2.50 | $3.75 | $5.00 | $6.25 | | | | | | | . | Other (% of Revenue) | 3% | $0.08 | $0.15 | $0.23 | $0.30 | $0.38 | | 3% | $0.08 | $0.15 | $0.23 | $0.30 | $0.38 | | | | | | | . | Gross Profit | | -$0.53 | $0.65 | $1.82 | $3.00 | $4.17 | | | $0.75 | $1.92 | $3.10 | $4.27 | $5.45 | | | | | | | . | Margin (% of Revenue) | | -21% | 13% | 24% | 30% | 33% | | | 30% | 38% | 41% | 43% | 44% | | | | | | | . | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | . | SG&A (% of Revenue) | | 40% | 35% | 30% | 25% | 20% | | | 40% | 35% | 30% | 25% | 20% | | | | | | | . | SG&A (CPM) | | $1.00 | $1.75 | $2.25 | $2.50 | $2.50 | | | $1.00 | $1.75 | $2.25 | $2.50 | $2.50 | | | | | | | . | Operating Profit | | -$1.53 | -$1.11 | -$0.43 | $0.50 | $1.67 | | | -$0.25 | $0.17 | $0.85 | $1.77 | $2.95 | | | | | | | . | Margin | | -61% | -22% | -6% | 5% | 13% | | | -10% | 3% | 11% | 18% | 24% | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | COST ASSUMPTIONS | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Bandwidth | | | | | | | | | | | | | | | | | | | | . | Bandwidth Cost Per GB | | $0.05 | $0.08 | $0.10 | $0.13 | $0.15 | | | | | | | | | | | | | | . | Average Video Size (MB) | | 20 | 20 | 20 | 20 | 20 | | | | | | | | | | | | | | . | Cost Per Video Stream | | $0.001 | $0.0015 | $0.002 | $0.0025 | $0.003 | | | | | | | | | | | | | | . | Cost Per 1000 Video Streams | | $1.00 | $1.50 | $2.00 | $2.50 | $3.00 | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Transcoding | | | | | | | | | | | | | | | | | | | | . | Transcoder | | $2,500 | $3,000 | $3,500 | $4,000 | $4,500 | | | | | | | | | | | | | | . | Videos/Day | | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | | | | | | | | | | | | | | . | Videos/Year | | 365,000 | 365,000 | 365,000 | 365,000 | 365,000 | | | | | | | | | | | | | | . | Life (Years) | | 2 | 2 | 2 | 2 | 2 | | | | | | | | | | | | | | . | Cost Per Video | | $0.00 | $0.00 | $0.00 | $0.01 | $0.01 | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | . | Cost Per 1000 Videos | | $3.42 | $4.11 | $4.79 | $5.48 | $6.16 | | | | | | | | | | | | | | . | Average Streams Per Video | | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | | | | | | | | | | | | | | . | Cost Per 1000 Streams | | $0.003424657534247 | $0.004109589041096 | $0.004794520547945 | $0.005479452054795 | $0.006164383561644 | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Storage | | | | | | | | | | | | | | | | | | | | . | Storage Server (7 terabytes) | | $5,000 | $6,000 | $7,000 | $8,000 | $9,000 | | | | | | | | | | | | | | . | Capacity (Videos) | | 40,000 | 40,000 | 40,000 | 40,000 | 40,000 | | | | | | | | | | | | | | . | Cost Per Video | | $0.125 | $0.15 | $0.175 | $0.2 | $0.225 | | | | | | | | | | | | | | . | Cost Per 1000 Videos | | $125 | $150 | $175 | $200 | $225 | | | | | | | | | | | | | | . | Average Streams Per Video | | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | | | | | | | | | | | | | | . | Cost Per 1000 Streams | | $0.13 | $0.15 | $0.18 | $0.20 | $0.23 | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | *Future assumes bandwidth, storage, transcoding costs drop 75%. | | | | | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | . | Published By: | | | | | | | | | | | | | | | | | | | | . | Silicon Alley Insider | | | | | | | | | | | | | | | | | | | | . | Sources: SAI estimates. | | | | | | | | | | | | | | | | | | | |
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