Compute power is required to support rendering, transcoding, motion capture, and a variety of other applications and services. In Web2, tech giants, like Amazon and Google, bundle these services in addition to providing content to users (e.g., Twitch and Youtube). Web3 companies seek to unbundle many of these services.
Video transcoding, the process of reformatting raw video files into viewable files based on a user’s device and bandwidth (2G-5G), is one vertical where this unbundling is currently taking place. According to Cisco, video will make up 82% of all internet bandwidth in 2022. Meanwhile, Grand View Research estimates the global video streaming market will reach $224 billion by 2028. This is not surprising given the growth in video streaming across services such as Netflix, Disney+, Fortnite Concerts, Twitch, and TikTok.
Video transcoding is a key process for streaming video. But, for companies who use Web2 infrastructure, the costs can be expensive and unreliable. For expenses, processing costs are around $3 per stream per hour to a cloud service such as Amazon, up to $4,500 per month for one media server, and up to $1,500 per month before bandwidth for a content delivery network. For reliability, a medium VM on AWS can only transcode 2-3 concurrent streams in a standard bitrate ladder (1080p, 720p, 480p, 360p, 240p). One potential solution is operating media server instances and load balance between them but this can lead to failure if not properly managed.
One company working to address these issues is Livepeer, a marketplace between infrastructure providers and application developers or streaming providers. The Livepeer network takes a distributed architectural design to create a more scalable and cost efficient solution for creators, broadcasters, and developers looking to add live or on-demand video to their projects. Via this decentralized approach, Livepeer’s process can potentially decrease costs 10x+ because it offers pricing based on usage rather than server space. Livepeer doesn’t compete for the same cloud computing supply as AWS or other cloud providers. In addition, the Livepeer network improves reliability by building in layers of server redundancy. If internet congestion happens in a certain region, other transcoding clusters can pick up the work from the ones impacted by the outage.