Worldwide Transcoder Vendor Revenues Set to Get a Boost from HEVC
Scottsdale, Ariz., November 21, 2013--MRG expects revenues for total transcoders to reach just over US$ 490 million by 2017 as the live portion of the total continues to account for higher revenues. Many live transcoders are bought by pay-TV providers who are offering multiscreen services out of fear of OTT providers undermining their business. They are spending money without generating additional revenue or improving margins.
The pay-TV providers do not impact the file segment as much. Many of the customers for file transcoders buy them for mezzanine transcoding and workflow automation which can save money and time, thereby boosting profits and possibly generating revenue if it allows them to distribute their content more widely.
Multiformat transcoders are used to process video and audio streams mainly for distribution over the Internet but also for other purposes like digital archiving. The multiformat transcoder market can be divided into segments in different ways. Some transcoders are hardware appliances and some are software. The main difference is the density of inputs and outputs with hardware typically offering greater density, while software offers more flexibility for adding features and third-party integration. Additionally, we are seeing more and more vendors offering transcoding in the cloud, once the province of small startups.
Transcoders can also be segmented by their main purpose. Delivery transcoders take in files or streams that need to be output in formats that can be distributed to viewers. They typically need to support many fewer formats than mezzanine transcoders which are used in content production as files are moved through the production workflow. Mezzanine transcoders are one part of an increasingly automated file workflow system that reduces the amount of human intervention required to process video. For the purpose of presenting its revenue forecast, MRG segments the global transcoder market by live and file.
The greatest change to transcoder technology will come from the adoption of the HEVC codecs. All vendors are preparing software upgrades to existing equipment or have plans for new HEVC transcoders. Some of their customers are already making the investment in HEVC equipment but most are sitting on the sidelines right now. That is expected to change in 2014. The use of HEVC compression will be the greatest driver of revenue growth for the next few years, reversing the slowing growth, according to MRG.
