What Is the Most Expensive Part of a Live Streaming App’s Infrastructure?

Bandwidth costs, a major expense in live video streaming, account for 50–70% of total infrastructure spending due to the linear scaling with audience size, unlike transcoding or storage. This high cost is a key reason why platforms like Twitch struggle to turn a profit, as live streams generate fresh segments every few seconds, providing little caching benefit. For example, AWS CloudFront's pay-as-you-go rates can make streaming for 100,000 concurrent viewers extremely costly, prompting platforms to develop their own content delivery networks (CDNs) to reduce expenses. Twitch, for instance, cut its bandwidth costs by 70% through a proprietary CDN and direct ISP peering, though costs remain substantial. Transcoding, while the second-largest expense, is significantly lower because it occurs once per stream. Platforms reduce costs by creating custom CDNs, using efficient codecs like AV1, and adopting strategies like client-side encoding and peer-to-peer offloading. While storage, chat, and other infrastructure costs are present, they are less financially impactful compared to bandwidth and transcoding. For developers building live streaming products, cloud-managed services are cost-effective at a small scale, but owning delivery infrastructure becomes crucial as the audience grows. Architectural decisions, such as codec choice and CDN portability, are critical for managing costs sustainably as platforms scale.