HEVC to give kick to MPEG Encoder market

Joseph O'Halloran | 01-02-2014

Contribution encoders which see use compressing video streams coming from cameras, trucks or venues—and also compressing streams as they are moved between studios—are set to enjoy a renaissance according to new data from SNL Kagan MRG.

According to its MPEG Broadcast Contribution Encoders report, the market will reach about $320 million based on more than 20,000 units shipping in 2017 driven by a large extent by the rollout of HEVC technology which itself will be a key enabler in the dwelivery of 4KTV and UltraHD services. With the first demos of HEVC contribution encoding equipment imminent and the first shipments expected later in 2014, SNL Kagan 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 analyst see further traction driven by the fact there are many broadcasters yet to replace SD MPEG-2 equipment with new HD H.264 equipment and so predicts that by 2017 SD encoders will account for 13% of the market compared with 35% in 2013. ASPs are set to decline markedly year on year and so SNL Kagan MRG forecasts that vendors will need to increase their shipments each year to keep their revenues stable with higher prices for HEVC encoders will help with revenue.

Other trends that SNL Kagan MRG believes will shape the market are video transmission via the unmanaged Internet, in other words over the top (OTT) services, 4K content production and the need to reduce expenses at the same time as the demand for more and more video content is increasing.

“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,” explains senior analyst Michelle Abraham. “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.”