Now, more than ever, consumers are turning away from cable TV and using streaming services like Netflix, Amazon Prime, and Hulu. By 2027, the video streaming industry is expected to be worth more than $842.93 billion. Unsurprisingly, even more entrepreneurs are becoming increasingly interested in joining this growing market. After all, it’s ripe for new ideas, growth, and innovation. But just how much does building a streaming service cost?
Here, we’ll cover the considerations and costs of building and operating a video streaming platform.
Starting Your Streaming Platform –The Initial Costs
To tap into the billion-dollar video streaming market, you’ll first need to build your platform from scratch. While doing so will undoubtedly be a serious investment, the exact costs will fall into a wide range between hundreds of thousands and millions of dollars.
Storage costs, infrastructure, content licensing, and app design are all essential aspects that make a streaming service successful. Entrepreneurs should begin with a niche idea and detailed business plan before working out general price ranges for each step.
Consider consulting with experts or professionals who have experience in related industries. For example, a software engineer might be able to give you a price estimate for backend development.
Of course, the price will also depend on just how complex your service is. You might focus more on UX/UI design, while others might allocate more funds towards data hosting.
Let’s examine some of the main costs of creating and running a streaming platform.
Storage and Hosting Costs for Your Streaming Content
Storage and hosting costs are the main expenses for starting a streaming service.
If you stream a substantial amount of content, you’ll need enormous digital space for storage. Your storage and hosting space allows large numbers of users to access content through the platform.
To accommodate smooth hosting, you’ll also need a fully developed infrastructure, including cloud-based storage, servers, and content delivery networks.
For a modest streaming service with a smaller content library, storage and hosting alone could cost you a few hundred to a few thousand dollars every month. As your user base rises, you can expect to pay $10,000 or more for storing and hosting your content.
Buying the Content and Licensing for Your Streaming Service
This is probably the most complicated yet important step for your streaming service. You’ll need access to high-quality content to keep people subscribing and viewing your streams. Users will also need to get rights to distribute their content.
Typically, this is bought through content creators (broadcasting agencies), tech vendors, or even consulting agencies who can guide you through the process.
There are countless factors at play here. The process might also require legal professionals, business strategists, and a content acquisition team to cover every aspect of the project. Typically, this will add an additional cost of tens of thousands of dollars to even millions, depending on the content type, its creator, and the overall amount of content.
Creating the Platform’s Infrastructure With a Developer Team
Once you have storage and content ready, you’ll also need to build a solid infrastructure for your streaming. This is the platform; you’ll need a backend developer to complete the task.
The result should be a platform that can handle heavy user traffic, integrates well with devices, and provides excellent viewing experiences for subscribers. This step is crucial. You can host all the best content, but it won’t amount to much revenue if users don’t have a pleasurable experience.
For this step, you’ll need to invest either in one backend developer or a whole team. Backend developers are typically paid $51k to $133k a year, depending on the complexity of the project and their relevant experience.
Creating a Pleasurable User Experience
Once the platform is created, the service still needs more work before entering the market. Entrepreneurs will need the expertise of UI/UX designers to ensure the platform and web page have custom designs that make subscribing an easy experience for users. This won’t be a one-time price and will most likely take lots of feedback and testing before an adequate solution is reached.
These custom designs aren’t extras; they’re key for providing the audience with the right viewer experience. Since there are so many streaming platforms in today’s market, a good UI/UX design makes your service stand out.
As with other professionals, the exact price of hiring a UI/UX designer will depend on the complexity of your project and the designer’s qualifications. In the United States, the average annual salary of a UX designer is $95,000.
Adding Specialized Features to Your Streaming Service
Design shouldn’t be the only way your streaming service differs from other streaming platforms. This is a highly competitive market, so entrepreneurs will need specialized features from a developer team.
Some examples of these features may include downloading content for offline watching, maintaining customer profiles, sharing, and personalized content feeds. You’ll most likely need to test this and acquire customer feedback after the initial launch.
This expense can typically cost between tens of thousands and millions of dollars.
Maintaining and Running a Streaming Service
As we mentioned, the initial investment in creating a streaming service can be in the millions of dollars. More modest services with less content and simpler platforms might be able to get by for less. Once you get revenue, these expenses will be easier to cover overtime.
However, it’s not just starting a streaming service that requires substantial investment. Entrepreneurs must also make regular monthly payments for maintaining and running the service properly.
General Staffing
Once the platform is ready, you’ll need a well-trained team to ensure everything goes smoothly. Some of them will be tasked with developing the product, while others will hire whole departments just before the launch.
Some important teams include:
- Your technical team – This will most likely be the same team that worked on creating the app in the first place. It includes your developer team, UI and UX designers, database architects, and system administrators.
- Content acquisition team – You’ll have to negotiate to obtain audio and/or visual content through a content acquisition team consisting of legal professionals and business strategists.
- Marketing and PR team – To ensure your platform is portrayed to the public correctly, you’ll need a team of marketing and PR experts to introduce and promote your brand among media channels.
- Customer care team – If anything goes wrong with your platform, customers want to contact a customer care specialist to solve the problem.
- Security team – In today’s age, cyber security threats are becoming more advanced. Entrepreneurs will need a team focusing on protecting the platform.
While these are the main departments, other teams within your streaming service might include Q&A (quality and assurance) testers and data analysts. Entrepreneurs looking to cut costs will benefit from creating a list of team priorities and then allocating funds respectively.
Finance, Maintenance, and Subscription Service Management
Most successful platform services today are subscription-based. Customers pay a monthly fee and in turn get access to all the latest television shows, movies, and podcasts. Once you establish a payment process, you’ll also have to maintain the system so it’s available.
This will usually require the help of a third-party company, which might take a small percentage of monthly earnings. Typically, you’ll also have to pay content providers a certain regular fee to keep your licensing active. However, this will depend on your region.
Marketing and PR for User Acquisition
Even if you have the best product in the world, it won’t reach many people if it isn’t marketed properly. Streaming services like Netflix and Hulu heavily depend on campaigns and ensuring their brand is present across various media channels. In this way, they establish brand authority over time. For instance, Netflix has become almost synonymous with streaming blockbuster movies.
Marketers working for your platform will need significant funding to create ad campaigns, promotions, free trials, and discounts to attract new users. They’ll also need to constantly promote the service across multiple social media channels to build and maintain the brand’s authority.
Updating and Maintaining Infrastructure
Without a solid infrastructure, you won’t be able to host content for your viewers. So you’ll have to pay for content delivery networks based on your data transfer. To ensure everything runs smoothly, frequent backups might also add to the costs.
Servers are another part of your infrastructure that might need consistent updates, security patches, and maintenance, and which will also add to the overall cost.
Starting and Running a Streaming Service - What to Expect
By now, you’ve seen that there’s a broad range of skills, teams, and costs needed to start and run a video streaming platform. Entrepreneurs can expect to pay anywhere between hundreds of thousands to millions of dollars. This includes acquiring the content, storage, hosting, creating the platform, marketing it to your target audience, and maintaining it over time. The exact price range will depend on how complex you want the project to be.
While some might invest heavily in marketing and providing a specific niche service, others might spend more perfecting the product.
Many might think creating a service or product is done once it’s launched. However, that’s just the beginning. As time passes, entrepreneurs will likely need to manage and reallocate funds depending on the product’s strengths and weaknesses. By listening to the target audience, you can create strategies with your staff for more effective service and, in turn, better revenue.
