State of the Video and Encoding/Transcoding Industry


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- Understand key technical trends in content delivery and monetization, and their impact on video encoding/transcoding offerings
- Gain insight into worldwide market growth opportunities
- Receive highlights related to the competitive landscape
- Identify customer perceptions and requirements when choosing vendors and solutions

Published in: Technology, Business

State of the Video and Encoding/Transcoding Industry

  1. 1. State of the Video Encoding and TranscodingState of the Video Encoding and Transcoding IndustryIndustry -- 20142014 OTT moves towards real monetization for enterprise and M&E alike;OTT moves towards real monetization for enterprise and M&E alike; UltraHDUltraHD and IP redefine contribution;and IP redefine contribution; Analysts run out of cloud punsAnalysts run out of cloud puns Avni Rambhia, Industry Principal Digital Media April 15, 2014 © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenter • Coverage areas: Avni Rambhia, Industry Principal Frost & Sullivan 2 • Coverage areas: •Video encoders & transcoders •Online video workflows •Video-enabled devices •M&E CAS and DRM •Software DRM and enterprise data security • Experience: 15 years of R&D, product management and marketing in media processing and application security
  3. 3. Focus Points • Market structure: revenue segmentation and forecast • Drivers and restraints impacting the market • Growth opportunities: by segment and geography • Technical trends: today and in the future • Competitive landscape: by segment • Strategic imperatives for continued growth 3 • Strategic imperatives for continued growth • Concluding thoughts
  4. 4. Comprehensive Coverage of the Encoder-Transcoder Market Global Video Encoders and Transcoders Industry Global M&&E Video Transcoders Market To be published May 2014 Global Broadcast and DTT Video Encoders Market Published April 2014 Global Pay TV Video Encoders Market To be published May 2014 Global Enterprise Video Encoders & Transcoders Market To be published July 2014 Customer Groups: Customer Groups: Customer Groups: Customer Groups: 4 Customer Groups: M&E: Online video providers, MSOs, Telcos, OVP vendors…. Customer Groups: Broadcasters and Digital Terrestrial Transmission (DTT) service providers Customer Groups: Telcos, MSOs and DTH service providers Customer Groups: Enterprises: Government, military, education, corporate… Market Segments: Post-Production, Multi-screen Market Segments: Contribution, Backhaul and Distribution, DTT Market Segments: IPTV, Cable, Satellite Market Segments: Encoders, Transcoders
  5. 5. Solution-Centric Markets with Video at Their Heart Additional Video-Based Studies From Frost & Sullivan Global Online Video Platforms Market To be published May 2014 Global Enterprise Video Webcasting Market Published March 2014 Global Lecture Capture Solutions Market To be published May 2014 Connected Video Devices Market To be published September 2014 Lead Analyst Lead Analyst Lead Analyst Lead Analyst: 5 Lead Analyst Anisha Vinny Lead Analyst Anisha Vinny Lead Analyst Avni Rambhia Lead Analyst: Prayerna Raina 5-Year revenue CAGR: 15-20% 5-Year revenue CAGR: 10-15% 5-Year revenue CAGR: 20-25% 5-Year units CAGR: >20 % Cumulative Revenue: ~USD 750 M
  6. 6. Market Overview Key Takeaway: AVC is the most efficient compression format today in terms of pricing, features and and 8K. Key Takeaway: AVC is the most efficient compression format today in terms of pricing, features and applications. That said, vendors are trying to push HEVC for adoption for next gen services in 2K, 4K and 8K. Video Encoding Market: Comparative Compression Efficiency of Video Coding Schemes, Global, 2013 • 1 SD analog channel consumes nearly three times the bandwidth of a digital HD channel • MPEG-2 video consumes nearly twice the bandwidth of MPEG-4 Relative bandwi dth for equival ent SD Ultra HD 6ND0C-70 Source: Frost & Sullivan analysis. twice the bandwidth of MPEG-4 video • One 3D channel equals 3 HD channels. AVC is the only economically feasible codec for 3D today. • HEVC, the new compression format can help achieve 25 percent bandwidth savings in comparison to H.264 and is touted as a more efficient format for smart phone applications, HD, 2K, 4K and 8K. ent quality (not to exact scale) Formats in order of rising efficiency Analog MPEG-2 MPEG-4/AVC SD HD HD SD HEVC Ultra HD SD HD HD
  7. 7. Segment-Wise Percent Revenue Breakdown of $1B Video Encoder and Transcoder Industry Enterprise Post-Production Cable Satellite Percent Revenue by Segment, Total Video Encoders and Transcoders Market: Global, 2013 7 Multi-Screen DTT Contribution Backhaul, Distribution & Other IPTV Source: Frost & Sullivan
  8. 8. Key Drivers for Revenue Growth Growing use of video by enterprises and in more sophisticated ways Digitization of 8 Digitization of workflows, cable and broadcast Competitive pressures force infrastructure upgrades Real money in multi-screen, multi-platform and OTT Bandwidth cannot keep up with voracious appetite for video Source: Frost & Sullivan.
  9. 9. Legacy infrastructure Commoditization and pricing pressure, esp. from cloud Diminishing value as standalone component Saturation Key Restraints For Revenue Growth 9 Customer confusion and uncertainty Source: Frost & Sullivan.
  10. 10. The Cloud Changes Everything • Three aspects of cloud: SaaS, IaaS, PaaS • Many vendors entering PaaS space in response to market demand; managed services also on the rise • Most vendors today offer virtualization-friendly products • Transcoding most likely of all workflow aspects to be put into cloud • Not all clouds are created equal 10 Not all clouds are created equal • Reliability, redundancy and scalability being built in from ground up • Increasingly mature ecosystem, with solid success stories • Broadening reach of technology, but also commoditizing it • CDNs provide transcoding as part of multi-platform OTT delivery • OVPs provide transcoding as part of end to end OTT solution • MAMs provide transcoding as part of content management offering Source: Frost & Sullivan.
  11. 11. Standalone Video Business Is Hard – M&A In Full Swing Market Trend Examples Industry Impact From fixed appliances to reconfigurable software platforms across the board Harris Broadcast reinvented to Imagine Communications; Belden acquired Grass Valley; Ericsson partnered with Envivio & Elemental; Nearly every company evolving to software/software-powered story High, Steady Monetizing not just content but also technology in the Verizon bought Edgecast, Uplynk; Imagine/Harris bought Digital Rapids; High, Rising 11 but also technology in the cloud Imagine/Harris bought Digital Rapids; Ericsson partnered with Elemental; Nearly every vendor virtualized with many directly offering SaaS Rising From post-production transcoding to workflow automation Dalet acquired Amberfin; Prime Focus acquired dax; Telestream evolving organically after buying Anystream Medium, Steady Video in the infrastructure Nevion bought T-VIPS, Allot acquired Ortiva Wireless Medium, Rising
  12. 12. Video Compression Format Relevance and Trends: Select Formats, Global, 2014 GeographicalReach AVC MPEG-2 12 Breadth of applications GeographicalReach Source: Frost & Sullivan. AVS J2K Flash (non-AVC) HEVC WebM
  13. 13. Technical Trends – The More Things Change…. • Transcoders • Commoditization of codecs; emphasis on automated workflows • Diminishing standalone value; renewed emphasis on throughput • Scalability & Elasticity – via hybrid or pure cloud architectures • Mezzanine-to-CDN turnkey solutions in the cloud • HEVC imminent disruptor, esp. for mobile and UltraHD scenarios • Broadcast and DTT 13 • Broadcast and DTT • Growing channel density, falling costs & transition to “software” • Transition to IP and rise of UltraHD redefining contribution segment • MPEG-2 -> AVC -> HEVC • Pay TV • Multi-screen transcoders and Pay TV encoders converging • Growing channel density, prices continue to fall • Appliances remain popular for live linear but cloud services rising
  14. 14. Growth Strategies: Current and Future • Enable agility and efficiency for major market customers • “New offerings in minutes” paradigm is crucial • Optimize bandwidth at every step of the workflow • Combat pricing pressure by minimizing total cost of ownership • Complexity of boxes is rising, but that simplifies customer workflow • Increase density; decrease power consumption; embrace software Maximize automation to minimize human resource requirements 14 • Maximize automation to minimize human resource requirements • Educate customers in intelligently evaluating products • Combat saturation in major markets by focus on growth markets • LatAm, CEE and Africa continue to offer greenfield opportunities • India and China continue to expand, v2 upgrades already underway • Convergence solutions are the need of the day • In all regions, one-stop vendors with a comprehensive multi-screen, multi-platform, ad-aware product line are seeing fastest growth
  15. 15. Conclusion: Key Take-Aways and Recommendations • $1.5B+ industry in 2020, with video-powered solutions growing much faster than core video technology revenues. Partnerships, channel strategies and M&A will play a key role in onward growth • Companies must continue to differentiate on quality and throughput, while positioning themselves as operations partners • Global footprint is key to sustained and steady revenue streams; 15 Global footprint is key to sustained and steady revenue streams; this requires diverse product portfolio and local relationships with dealerships and system integrators • HEVC is a valuable buzzword, but customers are looking for comfort in a future-proof investment • In the very long term, the entire encoders and transcoders industry will continue to converge into a single digital workflow automation market.
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  19. 19. For Additional Information Mireya Espinoza Global Director, Corporate Communications Digital Media 210-247-3870 Mukul Krishna Global Research Director Digital Media 210-247-3850 19