Table of Contents
•The the global media and entertainment video encoders and transcoders industry, as a whole, has see considerable upheaval in 2013 and 2014. While operators are demanding greater simplicity and higher throughput, vendors have struggled with falling prices and commoditization.
•A series of M&A transactions have reshaped the market: Imagine Communications (including Harris Broadcast and Digital Rapids) is a harbinger of how other large vendors may evolve; MAM company Dalet’s acquisition of post-production transcoding star Amberfin points to ongoing drive for consolidation. A number of companies entered the SaaS transcoding fray, including popular streaming server vendor Wowza.
•In terms of products, there is now limited value to differentiating on complexity of workflows and ability to handle niche formats. Key differentiators today are speed, cost, agility, and density. The cloud is adding a new dimension of promise for improved scalability and lowered cost but is a dramatically different new architectural paradigm for traditional hardware-centric vendors.
•Software is the new normal, with cloud buzzwords like “software-defined” gaining popularity. At the same time, customers remain confused about the best option from a long-term-cost-of-ownership or business perspective.
•Advanced Video Coding (AVC) remains the de facto compression standard. High Efficiency Video Coding (HEVC) is on the horizon, with growing availability of software decoders and hardware acceleration expected to be available by late 2015. VP9 and VP10 are interesting, but for now largely a side note for M&E applications outside of YouTube.
•The new format battleground is in streaming formats for over the top (OTT) video, where a troublesome mix of proprietary implementations and open standards persists. DASH and HTML5 have reasonable industry backing, particularly with Microsoft having announced their sunset date for SmoothStreaming. Adobe’s ADS and Apple’s HLS remain significant also.
•In contrast, ingest and storage formats on the post-production side are quickly reaching industry-wide consensus. This is simplifying transcoding workflows while creating new opportunities for differentiating in the ability to “beautifully” transform ingest video from the wide variety of formats, resolutions, and storage media that still persist to the uniform format now required for downstream processing.
•Overall the M&E video transcoder market is healthy, expected to rise at a CAGR of nearly xx% to approach the $xx billion mark by 2020. The market is analyzed by post-production and multiscreen; hardware, software and SaaS; and NALA, EMEA, and APAC breakouts.
Product differentiation hinges on speed, quality, density, operating cost, flexibility and future-proof architectures as industry focus shifts from delivery to monetization.
Beyond video, whole-media considerations of audio, closed captioning, advertising and metadata are increasing in importance.
As expected, a flurry of high-profile and decisive merger and acquisition transactions are driving the industry towards maturity.
Cloud and SaaS are gradually but definitively changing the way companies do business and customers deploy their workflows.
While monetization remains the key challenge today, delivery and bandwidth will once again take center stage as a key issue during 2016–2017. HEVC will be critical then.
Coverage of Video Technologies
•This research study is part of a quartet of in-depth analysis deliverables in the video compression space from Frost & Sullivan, which comprises the following:
oOur analysis of the global broadcast and DTT video encoders market covers encoder products for broadcast applications such as contribution, backhaul and distribution. It also covers encoder products used for digital terrestrial transmission (DTT).
oOur analysis of the Pay TV video encoders market covers encoder products for Pay TV applications such as cable, satellite direct to home (DTH) and Telco TV or IPTV.
oOur analysis of the enterprise video encoders and transcoders market covers compression products used in enterprise verticals such as government, military retail, healthcare, houses of worship and education.
•The scope of this study, the analysis of the media and entertainment (M&E) video transcoder market, is explained in depth in the next two slides.
•Until 2013, the M&E transcoders and enterprise encoders/transcoders markets were covered in a single report. In response to distinct differences between the two and growing maturity of the M&E transcoders market, we have divided this into two separate reports this year.
•Frost & Sullivan also provides dedicated studies for a number of adjacent markets, such as online video platforms, online video advertisement servers, digital rights management systems, consumer-electronic video devices, and others indicated in the digital media value chain diagram in the preceding slide.
Definitions of Market and Segments
•Transcoding is popularly defined as the process of converting compressed audio or video content from one compression format to another.
oFor the purposes of market definition, Frost & Sullivan differentiates re-encoding from transcoding. Re-encoding, combined with the encoders markets, is the process of converting content from one compressed format to another (typically MPEG-2 or MPEG-4) without any repurposing of content.
oFrost & Sullivan defines transcoding as the process of converting content from a single input to a broad array of output formats, definitions, resolutions, and file or stream formats. This enables the video to be delivered to a diverse array of networked and handheld devices. It also refers to the process of converting uncompressed or compressed content to a different compressed format to significantly repurpose the content, typically in the context of a digital media workflow.
•Transcoders are products, hardware, or software, whose primary purpose is video transcoding.
oFor clarity, transcoding functionality integrated into turnkey offerings for lecture capture, telepresence, online video platforms and other solutions is not considered as a stand-alone transcoder.
oStand-alone packagers are considered as part of the transcoders market for the purposes of this research since many transcoding solutions either include packaging or are frequently bundled with such products. Over time, packaging may become a stand-alone market in its own right.
•Encoders constitute commercially sold hardware or software that produce output in a single compressed video format though the video input be analog, digital compressed, or digital uncompressed.
oFor clarity, we consider an appliance that converts MPEG-4 HD video to MPEG-2 SD video an encoder, not a transcoder, from a market segmentation perspective.
•Media and Entertainment Video Transcoders: Video transcoders used for applications related to the M&E industry, such as post-production, video on demand and over the top (OTT) transmission of entertainment content. By application the market is divided into two segments. In a key difference from this study last year, form factor (hardware, software, or SaaS) is not considered in this primary segmentation.
•Production Segment: This segment covers products (software, appliance, or SaaS) which enable the applications of post production and archiving. The segment is largely composed of software-based products, incorporated into a workflow management platform, for primarily file-based transcoding. Related applications, such as mastering and archiving, are included in the production and VOD segment. For brevity, this segment is referred to as the production segment throughout the study. In another key difference from this study last year, video-on-demand applications, even for primary screen distribution, are no longer counted in this segment.
•Multiscreen and VOD Segment: This segment covers products (software, appliance, or SaaS) which enable the creation of a number of optimized video streams for unicast or multicast distribution of video to primary screens, connected computers, devices, and second/third screens. These may be included in purely unmanaged over the top (OTT) services, such as online video services or Internet-only video services. They may also be part of a Pay TV service provider’s offerings. Transcoding may be done live or in file-based fashion. Increasingly, many produces are used to transcode, for both primary screen and smaller screen VOD, which is why VOD, even though it is file based and has traditionally been considered under the production segment, is now part of this one.
•This is the fundamental segmentation based on which market shares, trends and forecasts will be discussed.
Additional vectors along which the market is analyzed are the following:
•By Form Factor: Hardware, Software or SaaS Transcoders
oThe SaaS segment covers the revenue generated by online transcoding services which process M&E content at high quality and are charged for on the basis of usage. For clarity, the SaaS segment does not include managed transcoding services. It also does not include transcoding functionality integrated into broader solutions, such as rate grooming solutions, online video platform (OVP) solutions or content delivery network (CDN) solutions.
oThe boundaries between hardware and software blur in the transcoder market. For the purpose of this research, hardware transcoders are products sold in appliance form factors and designed using specialized silicon or boards for their core. Software can be sold either bundled with an appliance, a general purpose server, or as a stand-alone installable package.
oSoftware appliances are products sold in appliance form factor (such as a 1-rack unit appliance) but using a general purpose CPU and software at their core. Software products are essentially a collection of digital bits and bytes that may be sold together with commercial off-the-shelf computing hardware, such as a blade server or may be delivered independently on, say, a CD or through online download. Software products are increasingly amenable to virtualization, meaning that a software image of the product may be run in a public or private cloud as one or more virtual instances. For clarity, cloud implementations run and maintained by the customer are considered software, not SaaS.
•File or Live Transcoding: Live transcoding is done in real time, as the source content is generated or received. File transcoding occurs in offline mode and is typically used for on-demand content.
By region, the market is divided as follows:
•North America and Latin America (NALA) covers the continents of North America (NA) and South America – also referred to here as Latin America (LATAM).
•Europe, Middle East and Africa (EMEA) covers Western Europe (WE), Central and Eastern Europe (CEE) including Russia, the Middle East, and all regions of the African continent. For clarity, India is not counted in our definition of EMEA, although several vendors consider India within their EMEA business division.
•Asia-Pacific (APAC) covers the Asian continent, the ASEAN nations and nations within the Pacific Rim.
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