Software and Cloud Reshape the Video Transcoding Market

Software and Cloud Reshape the Video Transcoding Market

  • March 2015 •
  • 5 pages •
  • Report ID: 2837199
There has been a significant shift in the M&E space that was once very much hardware-centric, and where even software has only recently gained widespread market trust. While cloud-based transcoding has traditionally been the domain of smaller start-ups and focused on lower value media such as user generated content, the past two years have seen a surge of professional-grade, high-reliability applications. This has been driven by operator need to cope with exploding content volumes and growing QoE expectations on the one hand, and vendor ability to deliver falling costs coupled with improved automation and reliability on the other.

Frost & Sullivan has released its comprehensive analysis of the media and entertainment video transcoders market and not surprisingly, one of the key findings is that software and the cloud are quickly reshaping future design choices in this once hardware-centric industry. Cloud considerations are playing a strong role in influencing product roadmaps and investment decisions for vendors and customers alike.
This is a significant shift in an industry that was once very much hardware-centric, and where even software has only recently gained widespread market trust. While cloud-based transcoding has traditionally been the domain of smaller start-ups and focused on lower value media such as user generated content, the past two years have seen a surge of professional-grade, high-reliability applications. This has been driven by operator need to cope with exploding content volumes and growing QoE expectations on the one hand, and vendor ability to deliver falling costs coupled with improved automation and reliability on the other.

The overall M&E video transcoding market is forecast to grow at a healthy % CAGR, but revenues derived from SaaS and cloud-based offerings are expected to grow at more than thrice this rate. Accordingly, transcoder vendors who have not done so already urgently need to build, buy or partner to add credible and competitive cloud-based aspects to their product lines. Accordingly, we have seen a number of quiet deals made in recent months. Harmonic, a leading vendor in the space who won much of their early advantage on the strength of hardware appliances, was the lead investor in Encoding.com's recently announced $ M Series B round. Other recent significant
transactions include:
- Haivision acquired Kulabyte, lending a much needed cloud angle to their traditionally hardwarebased business
- Brightcove acquired Zencoder at an ambitious valuation, emphasizing the importance of the role cloud-based transcoding plays in OTT video
- Wowza acquired Camfoo and leveraged this to release a cloud-based transcoder plug-in to an enthusiastic client base
- Verizon acquired Uplynk who brought considerable experience and expertise in cloud-based workflows to the table
- Microsoft closely partnered with iStreamPlanet, which provides - among other components - high density cloud-based transcoding capability
- Ericsson partnered with Elemental to offer a broader choice across software and cloud form factors to its customers