2022-Opportunities and Challenges for the Streaming Video Industry

As 2022 comes to a close, for those in the streaming video industry, it will be remembered as a turbulent year marked by new opportunities, including the emergence of new video platforms and services.

2022 started off with Meta’s futuristic vision of the internet known as the Metaverse. The Metaverse can be described as a combination of virtual reality, augmented reality, and video where users interact within a digital universe. The Metaverse continues to evolve with the trend of unique individual, one-to-one video streaming experiences in contrast to one-to-many video streaming services which are commonplace today. 

Recent surveys have shown that two-thirds of consumers are planning to cut back on streaming subscriptions due to rising costs and diminishing discretionary income. With consumers becoming more value-conscious and price-sensitive, Netflix and other platforms have introduced new innovative subscriber models. Netflix’s subscription offering, in addition to SVOD (Subscription Video on Demand), now includes an Ad-based tier, AVOD (Advertising Video on Demand).  

Netflix shows the way

This new ad-based tier targets the most price sensitive customers and it is projected that AVOD growth will lead SVOD by 3x in 2023. Netflix can potentially earn over $4B in advertising revenue, making them the second largest ad support platform only after YouTube. This year also saw Netflix making big moves into mobile cloud gaming with the purchase of its 6th gaming studio. Adding gaming to their product portfolio serves at least two purposes: it expands the number of platforms that can access their game titles and serves as another service to maintain their existing users.

These new services and platforms are a small sample of the continued growth in new streaming video services where business opportunities abound for video platforms willing to innovate and take risks.

Opportunities and challenges 2022 - Video Industry

Stop data center expansion

The new streaming video industry landscape requires platforms to provide innovative new services to highly cost sensitive customers in a regulatory environment that discourages data center expansion. To prosper in 2023 and beyond, video platforms must address key issues to prosper and add services and subscribers.

  • Controlling data center sprawl – new services and extra capacity can no longer be contingent on the creation of new and larger data centers.
  • Controlling OPEX and CAPEX – in the current global economic climate, costs need to be controlled to keep prices under control and drive subscriber growth. In addition, in today’s economic uncertainty, access to financing and capital to fund data expansion cannot be assumed.
  • Energy consumption and environmental impact are intrinsically linked, and both must be reduced. Governments are now enacting environmental regulations and platforms that do not adopt green policies do so at their own peril.

Application Specific Integrated Circuit

For a vision of what needs to be done to address these issues, one only needs to glimpse into the recent past at YouTube’s Argos VCU (Video Coding Unit). Argos is YouTube’s in-house designed ASIC (Application Specific Integrated Circuit) encoder that, among other objectives, enabled YouTube to reduce their encoding costs, server footprint, and power consumption. YouTube is encoding over 500 hours (about 3 weeks) of content per minute.

To stay ahead of this workload, Google designed their own ASIC, which enabled them to eliminate millions of Intel CPUs. Obviously, not everyone has their own in-house ASIC development team, but whether you are a hyperscale platform, commercial, institutional, or government video platform, the NETINT Codensity ASIC-powered video processing units are available.

To enable faster adoption, NETINT partnered with Supermicro, the global leader in green server solutions. The NETINT Video Transcoding Server is based on a 1RU Supermicro server powered with 10 NETINT T408 ASIC-based video transcoder modules. The NETINT Video Transcoding Server, with its ASIC encoding engine, enables a 20x reduction in operational costs compared to CPU/software-based encoding. The massive savings in operational costs offset the CAPEX associated with upgrading to the NETINT video transcoding server.

Supermicro and T408 Server Bundle

In addition to the extraordinary cost savings, the advantages of ASIC encoding include enabling a reduction in the server footprint by a factor of 25x or more, which has a corresponding reduction in power consumption and, as a bonus, is also accompanied by a 25x reduction in carbon emissions. This enables video platforms to expand encoding capacity without increasing their server or carbon footprints, avoiding potential regulatory setbacks.

In need of environmentally friendly technologies

2022 has seen the emergence of many new opportunities with the launch of new innovative video services and platforms. To ensure the business success of these services, in the light of global economic uncertainty and geopolitical unrest, video platforms must rethink how these services are deployed and embrace new cost-efficient, environmentally friendly technologies.

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Argos - an ASIC chip dedicated to YouTube video encoding was given a codename after a monster from Greek mythology called 'Argos'.
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Argos dispels common myths about encoding ASICs

  Even in 2023, many high-volume streaming producers continue to rely on software-based transcoding, despite the clear CAPEX, OPEX, and environmental benefits of ASIC-based transcoding.