The video entertainment industry status-quo has been disrupted by emerging service providers -- such as Netflix and Amazon -- that don't play by the old rules.
The new market realities are forcing a much needed transformation in the distribution chain dynamics. The self-inflicted constraints of a bygone era are being swept aside.
Content owners -- including HBO, Disney, and Fox -- are rapidly growing in importance as customers for video encoder and transcoders, which are used in online service delivery.
Previously, content owners have always purchased some video encoders for primary distribution -- which feed into existing pay-TV systems.
However, now their investment is increasingly in multi-format transcoders -- that support direct-to-consumer distribution. HBO Go is just one example of this phenomenon in action.
"Content owners will grow from 11 percent of the total encoder and transcoder market in 2012 to 17 percent in 2017, having already passed the importance of Telco operators for use in traditional IPTV platforms," said Sam Rosen, practice director at ABI Research.
Their role in distribution stems from both authenticated access offered as part of a retransmission agreement with a classical pay-TV operator, but will also increasingly include advertising supported free-to-wire services and some standalone content-owner bundles.
The total encoder and transcoder markets grow to become over a $1.5 billion dollar market in 2017, a market led by the combined Arris/Motorola, with Cisco, Ericsson, Harmonic, and Thomson Video Networks all playing a strong role.
Envivio leads the file-based multi-screen market while Elemental Technologies leads the live multi-screen market.
This segment is a rapidly evolving part of the video entertainment market that is a key indicator of ongoing transformation. These findings are part of the ABI Research cloud video and video hardware research service.