Bandwidth costs

One issue that a lot of people raise at some issue in regards to casual games is the cost of bandwidth. When 99% of your users don’t pay you anything, do the 1% that do pay adequately cover the bandwidth cost?

In the past, I asked around about what bandwidth costs per GB, but never got a solid answer. The problem is that the typical ‘plan’ for small businesses includes a large block of bandwidth, which the ISP grants as a splashy come-on, knowing that most customers will only use 5% or less of their bandwidth. If you actually build a successful business, additional bandwidth provided by your ISP can be much more expensive than the first lot. Moreover, really taxing your host by using a lot of bandwidth can overwhelm the smaller servers and connections these hosts typically rely on, resulting in poor service for your customers.

For New Crayon, I use Dreamhost, and although I haven’t tested their bandwidth out with huge traffic, overall, I’m pleased with them.

They charge $8/month, and provide 1000 GB of bandwidth for that. So, 0.8 cents/GB.

Amazon just launched a ‘pro’ service, S3, with quality standards the same as what they use for their own site (i.e. it uses their internal network). It’s a ‘pay as you go’ service, for 20 cents/GB.

That’s a big swing – 0.8 versus 20 cents / GB. I’m sure Dreamhost would be losing money on you as a customer if you regularly used exactly your allotted 1000GB. Incidentally, Dreamhost charges $1.00 for every GB over 1000 that you use. So if you use 1000 GB, you pay $8 / month. If you use 1100 GB, you pay $108 / month. Clearly there’s some weird price scaling here.

Let’s use the Amazon number, as I frankly trust it more as a gauge of what high volume, reliable bandwidth costs (with adequate coverage for peak periods). What does that mean to the casual games biz model?

A typical casual game is 10MB, sells for $20, and has a conversion rate of 1%.

So, users will download 1 GB (1000 MB, i.e. 10 * 100) for each sale you ring up.

Even at Amazon’s 20 cents / GB rate, the bandwidth cost would only be about 1% of your gross sales (i.e. $20). Even if you allow for traffic for the users that visit your website and don’t download anything, and make other unfavorable adjustments like assuming a larger game size or a smaller conversion rate, bandwidth costs are not likely to be very significant.

8 Responses to “Bandwidth costs”

  1. Donavon Keithley Says:

    I think I’d be a little worried if I knew my host was losing money on me. ;-) (In fact I’d probably start getting paranoid every little outage or slowdown…)

    I agree that for most indies the cost of bandwidth is not worth optimizing. What I like about this new Amazon thing is that — by all appearances anyway — it frees you to focus on other things. No estimating your usage up-front and no worrying about overages.

    But if you’ve already got a good deal like yours with Dreamhosting, meh, why bother?

  2. Mischiefblog » Blog Archive » Open Kimono MMO Says:

    [...] Bandwidth ain’t free For a company that sells client software and upgrades (bug fixes, textures, and models) one of the highest ongoing operating costs (ignoring rent, electricity, salaries, insurance…) will be hosting and bandwidth. Phil Steinmeyer recently performed a limited survey of these bandwidth and hosting costs for his company, New Crayon Games. At $0.20 per gigabyte, the size of a reasonably sized game client, $9.80 from a $10 sales is still left over for credit card processing fees, marketing, and business expenses. If instead, you choose to distribute content or clients over a P2P network like Bittorrent, bandwidth costs may be even lower. [...]

  3. kim pallister Says:

    I actually have no idea what the real BW cost is, but will point out that MANY casual titles are far over that 10Mb limit these days. 20Mb is quite common these days (your point still holds, I’m just pointing it out).

  4. Cline Says:

    Does anyone know what bandwidth costs are for video streaming in comparison with text? Or how to think about it and where it is going in the future?

    How much does it cost a Yahoo or Google in comparison with what providers charge a small company?

  5. Phil Steinmeyer Says:

    Well, there’s no real separation in costs for video versus text, as such, just that video uses VASTLY more bytes/second and bytes total than text.

    Text sites (such as blogs), will generally run fine on a typical vendor’s ~$10/month plan. A video site, in contrast, will likely require something more heavy duty, if it receives much traffic.

    I can’t really compare Yahoo/Google’s bandwidth costs to a small company’s – I know little about the former.

  6. Cline Says:

    Thank you for your response! Any idea how I could get a better idea as to how many more bytes/second & total bytes?

    Are there any other costs associated with streaming video that I should look into, that do not apply to text?

  7. Phil Steinmeyer Says:

    I’d suggest finding a forum where webmasters hang out and asking there.

  8. blumsday » Blog Archive » Need a year-end angle? How about the 20-cent movie download? Says:

    [...] If bandwidth costs continue along their downward spiral, it will not be long before it costs essentially nothing to distribute a movie or song. All we’ll be looking at is the fixed cost of a decent Web connection and the server and other computer assets needed to support the content online. [...]

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