MPEG Broadcast Contribution Encoders Set to Reach More Than US$ 320 Mil. in 2017

Scottsdale, Ariz., January 15, 2014--Contribution encoders are used to compress the video and audio stream coming from the camera, truck or venue before it is transmitted to the studio. Contribution encoders are also used for compressing the stream as it is moved between studios. A new report by MRG forecasts that that this segment of the market will reach about US$ 320 million based on more than 20,000 units in 2017. 

Encoding systems can range from PCs with capture cards costing under $1,000 to 4:2:0 8-bit encoders with dual audio channels costing several thousand dollars to high end 4:2:2 10-bit 1080p encoders with 16 audio channels costing tens of thousands of dollars.   While PC systems are not included in its numbers, MRG feels that this segment of the market will reach about US$ 320 million based on more than 20,000 units in 2017. 

Though there will be shifts in the market with some segments growing more slowly than others, the overall contribution encoder market will grow in 2014 after declining in 2013. We will see the normal seasonal patterns with greater shipments in even years for major events like the World Cup and the Olympics. Cellular newsgathering equipment is relatively new in the market, so there is a higher growth trajectory projected for that segment of the market.

There are many broadcasters who have not upgraded their newsgathering capabilities to HD, so replacing older SD MPEG-2 equipment with new HD H.264 equipment will continue with the overall market shift to HD. By 2017 SD encoders will account for 13% of the market compared to 35% in 2013. ASPs will decline each year so vendors will need to increase their shipments each year to keep their revenues stable — higher prices for HEVC encoders will help with revenue.

One large factor influencing the future of the contribution encoder market is the rollout of HEVC. MRG expects that the mobile and fixed segments of the market will deploy HEVC encoders in different time frames with those using cellular transmission equipment moving first. There will be a number of demos of HEVC contribution encoding equipment at NAB with the first shipments expected later in 2014.

Other trends shaping the market in the next few years include transmission via the unmanaged Internet, improvements in satellite transmission technology, 4K content production, and the need to reduce expenses at the same time as the demand for more and more video content is increasing. Not all of that content will use broadcast encoders though as it becomes easier and easier for reporters to capture video footage with nothing more than a cell phone.

MRG’s latest report, first in a series of reports on MPEG broadcast encoders, looks at contribution encoder market trends, the technologies, such as HEVC, that are impacting this segment, and the vendors supplying the market.  Fixed and mobile contribution encoder units (streams), ASPs and revenues are forecasted by region.