Video Delivery Shifting from Gear to Cloud

Aug. 18, 2016
According to ABI Research, as major media companies actively attempt to own their own video delivery technology, there continues to be a ...

According to ABI Research, as major media companies actively attempt to own their own video delivery technology, there continues to be a push toward agile services, often cloud-based, to keep pace with the fast-moving video market. The research house says video equipment will see a 4% CAGR through 2021, while managed video platforms (MVPs) focused on providing turnkey service offerings and delivering media and entertainment content will see a 17% CAGR in the same period.

"A value chain shift within the video market led to hardware stagnation, with traditional broadcast and network-adjacent video components taking a back seat," said Sam Rosen, managing director and vice president at ABI. "Video delivery demands are not lessening, but instead leaving strong growth opportunities for content delivery networks and service-based platforms to fill the gap."

Some merger and acquisition activity supports the push towards video distribution ownership. Google's (NASDAQ:GOOG) acquisition of Anvato helps to position the Google Cloud platform more favorably against Microsoft's (NASDAQ:MSFT) Azure and Amazon (NASDAQ:AMZN) Web Services (AWS). AT&T's (NYSE:T) Quickplay acquisition also highlights the company's trend toward pure over-the-top (OTT) video services. Amazon's Video Direct self-service video platform and NBC Sports Digital's Playmaker Media both serve to expand existing video distribution platforms to include wider swaths of content.

Encoders and transcoders continue to experience a product to service shift similar to the overall market, but remain a strong sector of the equipment space, showing approximately 14% CAGR through 2021. In encoding, Ericsson's (NASDAQ:ERIC) Envivio acquisition and Harmonic's (NASDAQ:HLIT) Thomson Video Networks acquisition further reduced the number of standalone video delivery players.

"As the video service provider market continues to consolidate, those involved will begin looking for next steps to stay competitive," said Rosen. "New video formats such as 360-degree video and interactive content will escalate delivery complexity, bringing along increased network requirements, including reducing latency. Properly mixing technology and service, together with signing partnerships mixing wholesale distribution with retail presence, will be important for competitiveness."

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