Streaming Media Magazine

Jan Ozer

The Changing Face of On-Prem Encoding

Demand for on-prem encoding is waning, and vendors are responding with innovative hybrid approaches that offer the best of on-prem and the cloud.

Ten years ago, a live or video-on-demand (VOD) encoder ran on a standalone computer located in a server room or in a corner of your studio, connected to other encoders or controllers via a local area network. Today, as computing resources are consolidated into clusters of virtual machines, or private or public clouds, encoding customers are seeking new deployment options to match their changing computing architectures, and encoding companies are responding.

To understand the specifics of this trend, I reached out to about 20 encoding companies worldwide and spoke to twelve vendors (some off the record) that serve a broad swath of live and VOD encoding markets. On one level, I learned that in many markets, both large and small, the traditional “encoder as a standalone appliance” model still dominated. On the other, I learned that all vendors are offering new deployment and licensing models, some in response to customer demands, some on the “build it and they will come” plan.

These discussions led to the following conclusions.

Markets Are Changing, But at Different Speeds

Not all companies are virtualizing their computing infrastructures, of course, and not all that are virtualizing are transitioning away irom traditional encoding schemas at the same pace. For example, Elecard sells multiple encoding products, including live encoder CodecWorks (which was used to stream the FIFA Confederations Cup in 2017) and VOD encoder Converter Studio Pro.

According to product manager Vadim Blinov, most CodecWorks users install the software in a single on-prem computer because they care more about performance, while scalability is achieved with more blades for high-density hardware configurations. In contrast, with Converter Studio Pro, Elecard is seeing demand for a cloud version, which is now under development. Explaining the difference, Blinov comments, “Many customers want access to the cloud to manage spikes to their VOD demand. We’re not seeing the same level of demand volatility in live encoding.”

Similarly, Comprimato’s Live transcoder runs on any standard x64 server device with GPUs, or it can be virtualized in a data center via Docker. Although the company is experimenting with a cloud version, it hasn’t deployed that. According to CEO Jirí Matela, “Customers we talk to aren’t ready to abandon the old-fashioned model of controlling equipment on-prem. Though they’re asking about the ability to run in a cloud or use as a service, they don’t appear ready to make that transition.”

Anevia’s Jérôme Blanc described how the market was changing for his company’s Genova Live encoder. “Our traditional markets are broadcasters and telcos. Broadcasters typically have a limited number of live TV services, are comfortable with appliances and a CapEx model, and haven’t seen the benefit of virtualization. Telcos offer more channels, were OK with appliances, but 2 to 3 years ago wanted software-only pricing. Some have tried virtualization, but discovered a negative performance impact, probably because it was based on virtual machines at that time. This group is now starting to ask about OpEx rather than CapEx models.

“Since early 2018, we see a new type of customer: OTT platforms, who want to aggregate and offer live encoding and packaging services to broadcasters, and telcos,” Blanc says. “They build their infrastructure from the ground up on virtualization, using containers for maximum performance instead of VMs, and either host it themselves (on-prem or rented space in an external data center that they manage) or trust a public cloud to host it (AWS, Azure). They need elasticity, because they can’t predict how many live TV services they will have to handle.” According to Blanc, this class of customer is also pushing for an OpEx model because that’s what it’s offering to its clients.

In the VOD space, I spoke with Ikuyo Yamada, CEO at Capella Systems, which sells a VOD program called Cambria FTC that runs on Windows. As described by Yamada, although most of Capella’s clients run Cambria in a traditional on-prem workstation, about 30% are now installing in virtual machines or in the cloud, which Capella supports with a floating licensing model that lets customers activate and deactivate Cambria installations to meet their worldwide needs. The next update will also add load balancing to the cloud.

According to Yamada, Capella hasn’t seen a lot of pressure to change from a CapEx to a usage-based model. “Our customers buy their encoders for a relatively fixed demand of VOD processing,” she says. “In these cases, a traditional licensing model is less expensive than most usage-based models.”

At the other end of the spectrum are companies like Harmonic, which has expanded its product line to support most possible deployment options. Although products like the Electra 9200 are still sold as appliances, or as software with custom off-the-shelf (COTS) hardware (as Electra X2 or X2S), it’s also available for deployment in virtual machines (Electra XVM) or containers (Electra Docker), and even via SaaS with usage-based pricing (VOS 360) or a full software stack installable in a customer’s private or public cloud (VOS SW Cluster). The hardware and software products are sold under traditional licensing models, while the SaaS enables companies to access the same technology with per-use pricing. The same encoding technology is used in all products.

The Cloud Is Coming On-Prem…

As corporate encoding environments become more cloud-like, traditional cloud-encoding vendors like and Bitmovin are offering their solutions for deployments inside the firewall. Gregg Heil, CEO of, explains why several of his largest clients opted for this method. “As you can imagine, some of our largest media customers have massive compute and storage investments that they want to utilize,” he says. “However, they also want the ability to elastically scale as needed, access critical video workflows, and to avoid the headaches and costs of managing traditional in-house software and hardware encoders.

“We can run the service in any data center. When running our Hybrid solution in customer data centers, we update all the engines to ensure the solution is always current,” he says. “Unlike old-school software encoders, when the processing is finished, customers can seamlessly repurpose the CPU resources for other functions.” As described by Heil, the individual applications exist in containers, driven by an orchestration system that can keep all content inside the firewall for security-conscious customers. Other clients, who don’t see encoding in the cloud as a security concern, can burst to the public cloud when on-prem compute resources are 100% utilized to complete all encoding jobs as quickly as possible.

Similarly, Bitmovin provides its encoding software on-prem behind its customers’ firewalls, with overflow capabilities to public cloud environments, delivering many of the same benefits as According to Bitmovin vice president of solutions Igor Oreper, since the Bitmovin encoding service can run on customers’ own infrastructure, software pricing is a fraction of that charged for the SaaS-based service. Oreper also advised that the public/private cloud native nature of the Bitmovin content processing service allows its customers to encode where it is most efficient for final delivery and most cost effective when considering total cost of ownership, including network egress.

… and On-Prem Is Moving to the Cloud

Most original cloud encoding services were just that: encoding services that handled the last stage of media creation and deployment, plus encoding and packaging, but none of the antecedent workflows and none of the subsequent distribution roles. As cloud services push their encoding capabilities into the enterprise, traditional encoding vendors are porting the full functionality of their in-house workflow systems into the cloud. This allows customers to push more of their in-house workflows into the cloud.

A great example is Telestream Vantage. I spoke with Shawn Carnahan, CTO, who described how customers were accessing Telestream Vantage, the company’s flagship media processing program. Carnahan says that most customers still accessed Vantage bundled with traditional Lightspeed servers. However, an increasing number are also deploying software-only versions in their internal computing centers, usually into full virtual machines. He also notes that Telestream is supporting the need for scalability with usage-based pricing, though it’s closer to daily pricing than output minutes.

The most fascinating changes are occurring in the SaaS-based Telestream Cloud, however, where under the hood, a number of the traditional Vantage-based applications like IMF content creation and captioning are being ported into containers for web operation. Not only does porting simplify development, Carnahan related, it also ensures that the cloud outputs are identical to on-prem outputs.

In this fashion, not only can Vantage users push encoding up to the cloud, they can push other workflow items like quality control or standards conversion to the cloud, all charged on a per-minute SaaS basis. Reflecting back, Carnahan says that the cloud impacted the encoding market later than it did many enterprise computing functions, most likely because of the sheer size of media files, though the momentum has definitely accelerated. “Three years ago, you had to offer cloud encoding so you could check it off on an RFP,” he says. “About a year ago, that shifted to real demand for comprehensive cloud services, which is a real challenge, both from a technological perspective and for converting revenue from traditional licensing to SaaS.”

Elemental Technologies started out selling high-performance, stand-alone encoding appliances, and was one of the first traditional encoding vendors with a credible cloud offering, though its Platform as a Service model was designed to appear to users like on-prem equipment, so it required significant management and oversight from the end user. Now owned by Amazon, AWS Elemental has totally “cloudified” its product offerings via a suite of AWS Media Services applications supported by other Amazon services and multiple third-party partners providing functions like quality control and DRM that are accessible within the AWS infrastructure. SaaS operation and pay-as-you go pricing completes the transformation.

Where Telestream Vantage adds value in pre-encoding workflows, AWS Elemental Media Services focuses on encoding and distribution, with services for live (MediaLive) and VOD encoding (MediaConvert), packaging (MediaPackage), storage (MediaStore), and monetization (MediaTailor). These are supported by other services like the Amazon Kinesis Video Streams service for ingestion, the Amazon CloudFront content delivery network, and the Amazon Rekognition video and image analysis service. This pricing model allows new services to spring up for a fraction of the cost of traditional pricing models, which leads us to our final conclusion.

For Agility and Scale, It’s All About the Cloud

As we saw earlier, companies with a fixed set of live channels seem to favor on-prem encoding, since operational efficiency rather than scalability is paramount. In contrast, at both ends of the size spectrum, from start-up to massive scale, cloud-based SaaS services are beginning to dominate.

Until recently, starting an OTT service required a significant investment in hardware, software, and video-related technical expertise, plus months to get the gear installed and running. Today, multiple vendors (including two we’ve already mentioned, Harmonic’s VIOS 360 and Elemental’s AWS Media Services) offer cloud-based, turnkey systems with pay-as-you-go pricing, enabling OTT entrepreneurs to hit the ground running fast and to focus on what they know best- finding content and building subscribers.

Companies in this mode of operation would benefit from viewing two case studies, the SuperSoccer case study on the Harmonic site ( and the fuboTV case study on the AWS site ( Services like these are also appropriate for companies that need to quickly add channels, or to support event-based productions that occur infrequently, so don’t warrant a massive CapEx investment.

Another company with a similar product offering is Ericsson Media Solutions. Tony Jones, principal technologist at Ericsson, points out that while cloud operation has benefits for startups and periodic events, it also is becoming the preferred platform for operations running at scale. “If you have 10,000 channels, you simply can’t manage it manually, you have to do it using cloud technology,” he says. “It’s worth the investment to set up the cloud environment, configure one channel, and step-and-repeat for the others.” Jones also points out that cloud operation offers much greater operational efficiency than traditional appliances, vastly simplified maintenance, and more affordable redundancy.

Although Ericsson’s offerings can run on both private and public clouds, Jones sees more and more companies turning to the public cloud, mostly because the technical expertise necessary to run a private cloud is extensive and dynamic. Not surprisingly,’s Heil, who was among the first to bet big on the cloud, feels the same way.

I asked Heil, “Isn’t it always cheaper to install your own hardware to encode consistent demand?” He agreed, but with a caveat: “Cost is only one factor, and the cost of compute in customer-owned data centers as well as in the cloud continues to decline,” he says. “For many, compute is already a utility that gets paid every month. Netflix has enormous compute requirements and runs most of its encoding operation on AWS infrastructure. With the requirements in the OTT space changing so rapidly, investments in hardware or software encoders become outdated long before the cost can be fully amortized. Finally, the location of content is also key in deciding whether or not to build internal encoding farms. As more companies move their content stores to AWS S3, encoding in the cloud becomes an easy decision.”

Beyond that, Telestream’s Carnahan adds, “you’ll always need some on-site computing for heavy editing and production, and an onsite encoder to get the video into the cloud, at least for live. Beyond that, the business case for on-prem encoding is clearly waning.” The bottom line is that if we revisit this topic in 5 years or so, the concept of an on-prem encoder will likely be in the rearview mirror for many, if not most, companies.

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Jan Ozer is a streaming media producer and consultant, a frequent contributor to industry magazines and websites on streaming-related topics, and the author of Video Encoding by the Numbers. He blogs frequently at

This article was written by Jan Ozer from Streaming Media Magazine and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to