A new study by research firm Frost & Sullivan indicated that the drive toward digital multimedia -- including the active IPTV market -- is creating good business for the makers of digital encoders and expanding their role from processing just video to a wider range of multimedia.
The analyst firm projected that revenues for the encoder market will rise from just shy of $500 million in 2005 to nearly $2 billion in 2012. That growth is driven by the federal mandate to shift from analog- to digital-TV broadcasting and a growth in digital video for enterprise customers including universities, corporations and government agencies, according to analyst Vidya Nath.
That has further been boosted by entry of IPTV players seeking bandwidth-management systems and digital broadcast-quality video. And video-to-mobile services are also emerging to drive more encoder sales, according to Nath.
But it isn’t all rosy: The encoder market is also showing signs of commoditizing, with more than 20 vendors now competing worldwide. Frost & Sullivan predicted that competition will increasingly be based on price rather than encoder technology.
"Choosing appropriate equipment has become a challenge for telco service operators, as the video services they aim to deploy over IP networks require the right equipment to deliver broadcast-quality video at low bit rates," Nath noted. "In contrast, cable and satellite operators are burdened by incumbent systems that prevent them from adopting advanced-format encoders, thus dropping the unit shipment rate."
