If you're talking about providing a high capacity and quality experience then there's no alternative to colo.
I think the /Mbps prices quoted are a bit on the high side (you can get cheap transit at 5GBP/Mbps if you deal in reasonable commits). Apart from dropping your own line in there's no cheaper way I know of to achieve the quality.
Use of a CDN would allow less capital outlay on the standard http hosting (could use dedis, vm, cloud) and somewhat instant scalability. Once you know your traffic patterns your implementation options sometimes get made for you.
Yes, the prices were a bit high. They're very regional (and depend on what carriers are at a given site, etc), so I was trying to give a decent average, erring towards worst case (my own prices in MA are a good bit lower, but I'm not trying to troll for customers on HN).
Good point on the CDN, "streaming" can sometimes be non-CDN compatible (although "CDN" is a wide ranging term).
Were it me, I'd start with an $800 1U box in a decent colo somewhere. Add another one on the opposite coast when the first started to get above 50% utilization and then scale from there.
Going colo can be worth it when you need serious hardware but for 800$ / month you can pick up:
Four of these: Xeon 3210 - SATA 250 GB IDE/SATA HDD 2 GB 2000 GB 5 IPs $199.00
Or one of these ~Dual Xeon 2.8, 8 x 300 GB 10K RPM SCSI/SAS HDD 2 x 73 GB 10K RPM SCSI/SAS HDD 8 GB RAM 3000 GB Bandwidth 5 IPs $799.00
Which can take a lot of traffic. IMO Colo is great when you want to use lots of heavy duty HW and little bandwidth but for front end web servers you need a lot of traffic before it's reasonable.
I think the /Mbps prices quoted are a bit on the high side (you can get cheap transit at 5GBP/Mbps if you deal in reasonable commits). Apart from dropping your own line in there's no cheaper way I know of to achieve the quality.
Use of a CDN would allow less capital outlay on the standard http hosting (could use dedis, vm, cloud) and somewhat instant scalability. Once you know your traffic patterns your implementation options sometimes get made for you.