Video encoder shipments to rise 19% in 2010

There will be an estimated 19% annual increase in worldwide shipments of video encoders of all kinds in 2010, representing an 11% annual increase in revenues over 2009, according to a new report from IMS Research.

At the end of 2008, cable comprised the majority of distribution shipments, followed by IPTV, according to the report. This trend is expected to continue through 2014, although the Compound Annual Growth Rate (CAGR) for satellite is expected to be stronger than any other platform. On the contribution side, revenues are forecast to grow by 17% through 2014 on shipment growth of 18%.

“Due to a general slowing in the pace of technological advancement within the industry, we expect the replacement rate for both MPEG-2 and MPEG-4 AVC (SD & HD) encoders for contribution and distribution to drop throughout the forecast," said Shane Walker, Research Manager at IMS Research and author of the study. "While MPEG-2 channels will continue to be upgraded to MPEG-4 AVC and JPEG 2000, they will still account for 25% of the distribution and contribution market at the end of 2014. A likely area of opportunity will be encoding for Web video, with data from some interviewees putting annual growth in this relatively small segment between 60% and 70%”

Two other areas which IMS Research is watching are software-based encoders and camera-based encoders, both of which are expected to begin affecting the market between 2010 and 2011. However, the combined influence of these encoders could lower overall revenues for the industry by as much as 9% over the next four to five years, as while software-based encoders require a maintenance agreement, they do not require equipment switch-out for upgrades. The impact of all this on consumers will be a "significant jump" in new channels, including video-on-demand, over the next two years on a worldwide basis.