Cost of bare hardware is not what makes companies move to the cloud. Hardware / software licenses is an investment, cloud is opex (operational expense): it mea

Cost of bare hardware is not what makes companies move to the cloud. Hardware / software licenses is an investment, cloud is opex (operational expense): it means you don't invest much upfront (Zencode, Amazon, etc. made that investment for you), but you pay over time. If your treasury is low you may not even have a choice between investing or using the cloud to begin with. So you are going to say: in the long run, opex is more expensive than a wise investment that pan out well. That's called risk management, and is the main reason many companies choose cloud services over in-house. You might invest in the wrong hardware, the wrong licenses in the case of encoding audio/video, or the wrong Linux/*BSD/Windows administrators. Switching away from Zencoder is comparatively easy and cheap. It's a trade off, you are basically paying a premium to reduce your risks.