IPads, (s AAPL) connected TVs and TV Everywhere services will be the biggest drivers of the global transcoding business, which is expected to grow to nearly half a billion dollars over the next few years. That kind of growth has a number of startups (and investors) excited about taking advantage of a wide-open market opportunity.
Until recently, most video files put online required just a single version, which was typically watched in a web browser through Adobe’s Flash player. (s ADBE) Things got a little more complex with the introduction of adaptive bit-rate streaming, which split up videos into multiple different bit rate renditions and automatically switched between them based on the bandwidth available through a user’s network connection.
Then came the iPhone and iPad, which don’t support Flash-based video at all, causing many publishers to create new versions of their videos just to reach the growing number of viewers on Apple mobile devices. And now there’s a wide — and growing! — array of new connected TVs, Blu-ray players and other devices, many of which require different versions or video formats.
At the same time that the number of video files necessary to support new consumer electronics devices continues to grow, there’s increased publisher interest in delivering video to all those devices. With the introduction of TV Everywhere authentication, cable networks and distributors are, for the first time, comfortable with making their content available to streaming audiences.
All of which leads to a bit of a perfect storm for encoding vendors. Take Elemental Technologies, for instance. The company recently announced a partnership with Comcast subsidiary thePlatform. (s CMCSA) Elemental will be providing transcoding for Comcast’s TV Everywhere offerings. In addition to Comcast’s Xfinity Online streaming video portal, Elemental also delivers video to an iPad app and also could be making Comcast’s on-demand streams available to connected TVs soon. In total, Comcast encodes 18 different renditions of each video file in its streaming library.
It’s not just the usual hardware encoding vendors that will benefit, either. More publishers are moving their encoding offerings into the cloud, with startups like Encoding.com and Zencoder looking to cash in on that trend. Both startups have recently raised funding and are cashing in on the infrastructure-as-a-service model, which gets rid of the upfront costs associated with deploying traditional encoding hardware.