The arrival of a new generation of video codecs designed for streaming-first media will disrupt the transcoding market substantially over the course of the next ten years says a report from analyst ReThink TV.
The current battle over patent pools for the next generation H.266 (VVC) codec is damaging the rollout as well, says the report.
The next generation of codecs are set to be more costly, and this means that the Total Addressable Market (TAM) for video device royalties will grow 146 percent to $8.42bn in the next decade. Meanwhile the Servicable Obtainable Market (SOM) will grow to $7.62 billion in 2030. This means that patent pools will be collecting ever more royalties from the available market, with the total SOM reaching over 90 ercent of the TAM by the end of the period.
The ballooning size of device royalty payments is also exemplified by the flat rate of annual video device sales, which are going to slowly taper down to 2.61bn in 2030. Growing demand for smartphones and smart TVs will be offset by a flat market for games consoles, and shrinking demand for CTV devices, computers, tablets, set tops and non-smart televisions.
Despite the hype surrounding the capabilities of new technologies, the rise of codecs is directly linked to adoption by OEMS, which in turn is led by consumer demand for device capabilities. This means the rise of the next generation is going to be much slower than predicted, with large changes unlikely until the latter half of the decade says the report.
There will also be increasingly fragmented use of codecs across consumer video devices. Not only are there now two distinct camps of codec ‘families’ – those descended from the MPEG lineage, and those spearheaded by AOMedia – but within each family there are multiple codecs competing for implementation by OEMs. Throughout the period, the MPEG family will cede ground to the codecs found in the AOMedia ecosystem.
"Media & Entertainment Transcoding Workload and Device Royalty Forecast 2020-2030" is available at www.rethinkresearch.biz
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