Video Transcoding Market Growing 20%, SaaS & Cloud Based Offerings 3x That

Frost and Sullivan has just 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. (see our quantitative findings here)

The overall M&E video transcoding market is forecast to grow at a healthy 20% 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 $3.5M Series B round. Other recent significant transactions include:

  • Haivision acquired Kulabyte, lending a much-needed cloud angle to their traditionally hardware-based 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 is closely partnered with iStreamPlanet, who 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

Many other key vendors have diversified organically into the cloud. Envivio has been a long-time provider of cloud-based live transcoding functionality which complements its encoding and transcoding appliances. Digital Rapids (acquired by Imagine Communications earlier this year) built their cloud-based automated workflow platform Kayak in anticipation of a shift away from hardware and fixed components towards reconfigurable and software-defined architectures. Imagine Communications, the re-imagined (no pun intended) Harris Broadcast, has been a highly vocal proponent of software and cloud-based workflows in the past year, aggressively moving away from a siloed hardware approach towards a far more open, and far more future-proof, architecture. Elemental announced a cloud-based product this year, and Telestream is facilitating hybrid and cloud-based deployments of its enterprise-grade workflow platform.

While the M&E community has been more aggressively growing on the cloud front, the enterprise community is slowly but surely catching up as well. Longtime market leader VBrick has made several forays into the cloud this year, and Haivision is aggressively embracing cloud as part of its global growth strategy. Preliminary results from our upcoming analysis of the Enterprise Video Encoders and Transcoders Market are currently available to subscribers; the full study is scheduled for publication in December. The rate of adoption of the cloud (whether in private data centers, via Infrastructure as a Service or through Software as a Service) is lower on the enterprise side than on the media and entertainment side, but is is poised to grow steadily nonetheless.

For additional details on Frost & Sullivan’s multiple reports on the video transcoding market, you can contact Avni Rambhia, the lead analyst on the reports.

Content Owners, ISPs & Vendors Form New Streaming Video Alliance

SVA2While some companies compete with one another in the online video market, there is also a desire amongst many of them to work together to create best practices, architecture guidelines and standards across the entire online video ecosystem. With that goal in mind, a new alliance has been formed amongst content owners, distributors, vendors and ISPs called the Streaming Video Alliance. As one of the founding members, I join an amazing group of companies that share the same goal of wanting to see streaming flourish including: Alcatel-Lucent, Charter Communications, Cisco, Comcast, EPIX, Fox Networks Group, Korea Telecom, Level 3 Communications, Liberty Global, Limelight Networks, Major League Baseball Advanced Media, Qwilt, Telecom Italia, Telstra, Ustream, Wowza Media Systems and Yahoo.

Our mission statement is to develop, publish and promote open standards, policies and best practices that allow the video streaming ecosystem to grow. We’re not a standards or policy body and our goal isn’t to influence regulators but rather to foster collaboration and promote operational and technical best practices throughout the streaming video ecosystem. In the New Year the Streaming Video Alliance will publish specific topics we plan to address, but some of our goals include:

  • Establish and promote an open architecture standard for streaming content delivery to allow economic and architectural scaling
  • Foster collaboration and promote operational and technical best practices throughout the streaming video ecosystem
  • Define a standard practice for quality measurement, optimization and reporting for the consumer experience
  • Maintain an open stance with the industry – publish and promote deliverables quickly and broadly

The Streaming Video Alliance is still in the process of electing officers but many founding members of the alliance have already been meeting and discussing our goals over the last year. Membership in the SVA is open to companies, organizations and individuals who share our vision for stronger collaboration across the ecosystem. The SVA has some work to do before we’ll be ready to accept general membership applications, but we already have a long list of some really smart people who want to help contribute to the SVA’s work. If you’re interested in getting more details on joining, contact me or fill out the form on the website and one of the founding members will be in touch.

We have a lot of work ahead of us, but we look forward to working with others on collaborating, accelerating innovation and redefining the way online video is streamed across mobile and fixed networks to consumers worldwide.

Pay TV Sports Unbundling Goes Mainstream: Verizon Now Offering, Internet, HBO, Showtime, Netflix For $60 Month

Screen Shot 2014-11-13 at 7.50.42 PMVerizon has just announced a new Internet and Pay TV package that they are advertising as “The Package Built for Streaming” and for those who don’t need sports, it will be a great deal. New customers can get 50/50 Internet, FiOS TV Local package, HBO, Showtime, Netflix and pay $59.99 a month (tax and fees not included). The Netflix subscription is only for one year, but the rest of the Verizon package is locked in for two years at that price. Included with the local TV package is CBS, NBC, FOX, ABC, WGN, WWOR, WLNY, WPIX, Telemundo, PBS and some other local channels based on where you live. Verizon says 61 channels in total are included, 14 of them in HD. The Netflix portion of the offer expires 1/19/15 and it takes 45 days after you are a Verizon customer to get your Netflix code.

For some who complain they don’t need so many channels, and don’t care about live sports programming, it’s hard to beat this deal. Verizon isn’t the only one to offer non-sports packages, my Mom recently removed all sports channels from her Cablevision package and saved $15 a month, but it wasn’t advertised to her and I had to tell her to ask. With Verizon’s new offering now being mainstream, it’s a clear sign that cable TV providers are now willing to unbundle certain types of content from their packages to try to have an offering suited for anyone thinking about getting rid of pay TV. This is the most change we have seen from the cable TV providers in a long time and it’s clear they are realizing they need to adapt and be flexible in today’s market where consumers have lots of other content options besides just cable TV.

Skype To Keynote Streaming Show: Learn How To Integrate Skype Into Live Events

pic08660I’m excited to announce that Matt Jordan from Skype’s media division will be the keynote speaker on day two of the Streaming Media West Show, taking place next week at the Hyatt Regency Huntington Beach Resort & Spa in Huntington Beach CA. Matt will demo how Skype is being used in the media industry and showcase the integration of high-quality Skype calls into live broadcasting events for news, TV and film and social media events. Register online using the code 200DR for a “Discovery Pass” and get free access to the keynotes, exhibit hall, discovery track sessions, and receptions. #smwest

As Live Streaming Matures, Encoding & Delivery Workflows Getting Smarter

Live streaming is not for the faint of heart. There is no margin for error. When a glitch happens anywhere in the live chain from capture and backhaul, to the encoding and packaging, to the caching and delivery, there is no “do over”. And as events scale and live streaming becomes more predominant, the impact of any failure becomes immediately evident, potentially to millions of viewers. This was the case for Apple’s recent live webcast of the launch of the new iPad Mini, which was a massive failure.

Over the past five years, we’ve seen successive attempts to take live streaming to new levels for major events like the 2010 World Cup, 2012 Summer Olympics, and the recent World Cup in Brazil. Akamai recently noted that the 2014 World Cup was more than 7X the streaming volume of the 2010 event. These events are now commonplace and getting to the point where the user experience rivals traditional linear broadcast. But, it’s not there yet.

Earlier in the year, at IBC, Elemental unveiled its Elemental Delta video delivery platform and over the past month, I’ve had a chance to see the platform in action. Sitting between the core video compression and downstream content delivery network, Elemental Delta enables catch-up TV, start-over TV, nDVR functionality, as well as targeted advertising. For a sense of what Elemental Delta can enable, just check out CNN’s new app, CNNGo (previously branded CNNx) on your PC or smart device.

What wasn’t noted in the widespread coverage of the Elemental Delta launch is that this was a pretty smart extension for Elemental and one worth watching closely as it evolves. While extending its reach along the video delivery chain positions Elemental to have a potentially larger impact on the industry and therefore greater prospects for growth, it also allows the company to double down on its well-recognized expertise in live applications, while providing a bridge to the creation of on-demand assets.

When I talk to broadcasters and content owners in the media and entertainment space, it’s clear that Elemental has been a disruptive force in live streaming. The company’s focus five years ago was on leveraging graphics processors along with a powerful software stack to achieve dramatically better density, performance and quality in any live streaming experience. It was an approach that took other vendors by surprise and captured the attention and support of media leaders like BBC, Comcast, ESPN, and HBO.

The makeup of the video delivery infrastructure market, particularly at the point of origination, is remarkably similar to the transcoding market five years ago. The ecosystem is fragmented, with no clear dominant player and a lot of large players, including Cisco, Alcatel Lucent, and Arris with perhaps more questions than answers. Adding in all the new cloud based transcoding solutions and the new devices available to consumers, (Nexus Player, Amazon Fire TV Stick) and the market for encoding, both live and on-demand, only continues to get more complex.

Elemental’s approach to the market has been to maintain its focus on perfecting live streaming experiences with its software platform to implement video architectures that have a lot of elasticity and scalability. Many vendors now use the new term “software-defined” transcoding, which essentially means video is infrastructure-agnostic, freeing video operators from the constraints of dedicated or legacy equipment. In other words, customers can deploy Elemental’s solution on whatever combination of dedicated and virtual resources as well as architectures and processors that work best, maximizing the most flexibility possible across the content chain.

With the entrance of Elemental Delta into the market and delivery portion of the video chain, it’s signaling to the industry that this is an area ripe for disruption. What I find intriguing about their product is what it is not. It’s not a veiled attempt to be all things to all people like the OVPs that have been forced to do so because their capabilities, and market, are more or less limited to end-to-end management of clip content. Elemental Delta seems remarkably focused on functionality customers need right now as they think about the impact of YouTube, Netflix, and Amazon on their media franchises. Not that the OVPs aren’t also thinking about this impact, but they simply aren’t as focused in their product offering.

By positioning itself as the singular source of clips, highlights, start over assets, etc. directly sourced from live streaming and even 24/7 linear channels, Elemental Delta plays to the company’s expertise in real-time video processing and gives the potential for a fused viewer experience across live and on-demand. If Elemental Delta can bridge the divide between live and VOD processing, it will in an enviable position, with a holistic offering that extends well beyond the basic ability to move bits. This may jolt companies like Cisco, Ericsson and perhaps even Akamai into recognizing the need to evolve services in the video delivery space to align with customers seeking to offer more than the ability to move bits.

This segment of the market is really heating up and just this morning, thePlatform announced a new product called mpx Replay, which also looks to address this need in the live event market. I suspect we’ll see even more solutions like these coming out in the New Year and I know of at least on major OEM provider who is looking to partner with a vendor on such a solution.