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State of the Video Encoding and Transcoding State of the Video Encoding and Transcoding Industry Industry -- 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.
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
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
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 Broadcastand DTT Video
Encoders MarketPublished
April 2014
Global Pay TV Video Encoders Market
To be published May
2014
Global Enterprise Video Encoders &
Transcoders MarketTo 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
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
MarketPublished
March 2014
Global Lecture Capture Solutions
MarketTo be published May
2014
Connected Video Devices Market
To be published
September 2014
Lead Analyst Lead Analyst Lead Analyst Lead Analyst:
5
Lead AnalystAnisha Vinny
Lead AnalystAnisha Vinny
Lead AnalystAvni 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
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
Relativebandwidth for equivalent
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
UltraHD
SD
HD
HD
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
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.
Legacy infrastructure
Commoditization and pricing
pressure, esp. from cloud
Diminishing value as
standalone component
Saturation
Key Restraints For Revenue Growth
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Customer confusion and
uncertainty
Source: Frost & Sullivan.
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.
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 OrtivaWireless
Medium, Rising
Video Compression Format Relevance and Trends:Select Formats, Global, 2014
Geogra
phic
al R
each
AVCMPEG-2
12
Breadth of applications
Geogra
phic
al R
each
Source: Frost & Sullivan.
AVS
J2K
Flash (non-AVC)
HEVCWebM
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
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• 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
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
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• 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
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;
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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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