The market for professional encoders and transcoders is seeing a huge benefit from current soaring online video consumption, assisted greatly by content bingeing, says new research from IHS Electronics & Media (IHS E&M).
The analyst says that its survey fundamentally shows how channel launches are driving encoder sales and the impact of key trends such as content contribution, unique channel primary distribution, cable and DTT digitisation. It is also attributed with showing how live online distribution is driving multi-format transcoding.
In particular, the data shows that professional encoders and transcoders, used to package TV channels for delivery, are growing fast as more channels are launched and online distribution drives complex delivery needs. Specifically, it believes that the increase in multi-device and multiscreen viewing on tablets, smartphones and other devices will drive the need for transcoders that can build multiple profiles for adaptive bitrate streaming.
IHS E&M calculates that professional encoder and transcoder channel shipments will grow by 25% between 2013 and 2017, with over 140,000 channels being shipped in 2017. It adds that the market will be driven primarily by demand from live multi-format transcoders, digitisation of analogue cable infrastructure and growth in overall broadcast channel feeds. The leading companies in the area will be ARRIS (including Motorola Home), Cisco, Ericsson, Harmonic and Thomson Video Networks who are forecast to collectively account for almost 70% of the market.
Between 2013 and 2017 unique channels are set to grow by 15-30% in established markets, and 100-200% in emerging regions, driving the need for contribution and distribution encoders. Live multi-format transcoders used in linear multiscreen and OTT distribution are projected to account for 30% of the growth to 2017.
Yet despite this growth in shipments, IHS E&M cautions that commensurate revenues will grow at a slower rate of 9% as chassis density increases and per-channel costs are pushed down for MPEG-2 and MPEG-4 encoders. The bulk of the industry volumes will still go to traditional broadcast distribution, accounting for almost 60% of shipments and over 40% of revenue in 2017. The most attractive markets in terms of revenue will be contribution to broadcasters which will account for 25% of the market, followed by transcoders for live OTT distribution, accounting for almost 20% of the $800 million industry in 2017.