Broadcast encoder market set to return to growth on HEVC rollouts

Michelle Clancy | 16-01-2014

Though there will be shifts in the market, with some segments growing more slowly than others, the overall broadcast contribution encoder market will grow in 2014 after declining in 2013, eventually reaching about $320 million based on more than 20,000 units shipped in 2017. And HEVC will be a major growth trend, according to new research.

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.

Encoding systems can range from PCs with capture cards costing under $1,000 to 4:2:0 eight-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.

"We will see the normal seasonal patterns with greater shipments in even years for major events like the World Cup and the Olympics," explained SNL Kagan MRG research in a report. "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, MRG predicts. ASPs meanwhile will decline each year, so vendors will need to increase their shipments each year to keep their revenues stable — and MRG predicts that higher prices for HEVC encoders will help with revenue when they start to ship in 2014.

"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," the firm said.

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 said.