Global Media Format Report 2017 2016 by the Numbers Global

Global Media Format Report 2017

2016 was another year of explosive growth in the world of cloud media processing. This year’s data set reﬂects the usage of over 3000 leading broadcasters and content publishers. Our aim is to provide the critical data, trends, and insights that will help shape your media processing strategy.

Cloud Storage Transit S3, Akamai, Azure, SWIFT, Cloud Files, Google Cloud SFTP, FTP, HTTP, UDP

Video Codecs & Containers Adaptive Bitrate Standards H.264, VP9, FLV, HEVC, WEBM HLS, DASH, MSS

Digital Rights Management Screen Resolutions Widevine, Flash Access, Apple Fairplay, PlayReady 4K, 1080p, 720p, 480p

Closed Caption Formats Audio Formats SCC, CEA-608, WebVTT, SRT, DXFP AAC, AC3, EAC3, MP3

2016 by the Numbers Encoding.com’s total encoding volume grew 63% from 2015, providing an even broader snapshot of the state of online video.

Global Processing Centers Peak Processing Cores We now operate 14 Global Processing Centers in five Our customers depend on our platform to make massive compute 14 continents. We are significantly expanding our global resources available both quickly and cost effectively. Large content libraries footprint with the launch of our entire media processing suite to include can be processed in days rather than weeks and can be submitted to our London, Ohio, Singapore, Seoul, and Mumbai. Availability of VOD and Live platform without any operator configuration or advance coordination. We media processing platforms enables high-speed, low-latency content continue to track maximum simultaneous compute capacity as an arbitrary ingestion in 14 critical markets and includes our advanced private cloud in but an anecdotal way to monitor our platform’s growth and ability to meet Oakland, CA. massive processing requirements simultaneously. This year we hit our highest capacity on 10/20/2016 at 11:21 AM PST running 21,700 simultaneous processing cores or 684 32-core instances, representing Average Formats per Source a 27 percent increase over 2015’s peak. For the first time since our launch in 2008 the average 10 number of target output has decreased from 12 to 10, as content publishers have worked to map the HLS output to a broader set of devices. Petabytes of Source Content 5.9 Ingested 5.70 One of the biggest trends driving growth is the adoption of 6 cloud resources by the world’s largest media and entertainment companies. A few critical elements have made these companies more comfortable in the cloud. First, transit speeds in and out of the cloud are faster than ever because of UDP technologies, making the processing of massive files a reality. Second, the stringent 3 security requirements placed on cloud providers by industry and government agencies often exceed the requirements for in-house 1.45 .915 data centers. Third, cloud storage has been an entry point for large companies adopting the cloud. Once content is stored in the cloud, PB INGESTED processing the content is a much more attractive option. 0 2015 2016 2017

Cloud Storage Amazon Maintains Dominance

Amazon Web Service’s S3 service continues to be the most popular cloud storage location in 2016 representing 68% of the total source location volume we ingested in 2016 up from 63% in 2015. We continue to see large media and entertainment companies moving mezzanine storage to S3 which fuels the adoption of cloud media processing in the corresponding AWS availability zone. Akamai remained a favorite destination for large media and entertainment companies to deliver transcoded and packaged output. OpenStack’s object based storage, known as SWIFT, seemed to stumble in 2016 dropping from 6% to 3%. The Google Cloud storage oﬀering continues to struggle in the media processing market segment and has yet to break the 1% mark.

Amazon S3’s Dominance Amazon’s dominance continues as over 2/3 of all Encoding.com source locations processed from commercial cloud storage providers comes from 68% 19% an Amazon S3 location.

OpenStack SWIFT S3 Akamai After SWIFT made a strong appearance in 2015's job statistics, it dropped oﬀ signiﬁcantly in 2016 from 6% to 3%.

Big Media Loves Akamai 7% 3% Akamai's dominance of the media and entertainment sector is no secret and their penetration of this market was demonstrated by a large percentage of our M&E customers using Akamai NetStorage as a destination for cloud media processing. Azure SWIFT

Google Cloud Struggles According to our statistics, Google Cloud storage does not represent a signiﬁcant source or destination location for media companies who have 2% 1% migrated to cloud media processing. From a technical capabilities perspective we believe the Google cloud compute and storage oﬀerings are quite competitive, but they continue to struggle with penetrating the media processing segment. Cloud Files Google Cloud

Transit How content is delivered to the cloud

We evaluated how people are getting content to and from the cloud. Despite being less eﬃcient, FTP/SFTP accounted for over half the transit in 2016 because of its legacy ubiquity. However, UDP, particularly Aspera’s fasp protocol, makes up a signiﬁcant portion of the transit and continues to grow because its speed and security make it perfect for delivering high volume broadcast content.

FTP | 20% SFTP/FTP Remains Steady Despite the TCP/IP protocol never being designed for moving large ﬁles SFTP | 32% HTTP | 4% around internet, FTP remains a popular transit protocol for getting ﬁles to the cloud, primarily due to its ease and prevalence on on-premise media servers.

UDP Continues Growth Customers utilizing UDP technologies like Aspera showed steady growth for the last two years. The inherent speed and security advantages make UDP a perfect protocol for ingest and egress of high-value mezzanine assets to and from cloud processing.

UDP (Aspera) | 44%

Video Codecs & Containers While we support virtually unlimited codec and container combinations processed by over 30 commercial and open source encoding engines, we highlight the top 6 most popular combinations and any signiﬁcant codec movement in the statistics up or down.

WEBM | 2% H.264 Holds Steady H.264 grew slightly this year reﬂecting its device and browser support HEVC | 3% ubiquity. H.264 is the underlying codec within the most dominate adaptive H.264 | 79% bitrate standard HLS. FLV | 5%

VP9 Makes a Strong Debut Adding support for the VP9 codec in 2016 was followed by very strong adoption and market interest in VP9 as an alternative to H.264, especially for high volume customers who beneﬁt from the nearly half the data rate at the same quality when compared with H.264. VP9/DASH VP9 | 11% implementations sparked the most interest due to strong VP9 browser compatibility (~90%), however some market hesitation still exists when considering the signiﬁcantly longer encoding times seen with Google’s libvpx encoding engine.

HEVC Stumbles Flash Video Winding Down After some strong growth in 2015 which we attribute more to testing While Flash is still being used for specific uses and edge cases such as than production workflows, HEVC as a target output codec seemed to online advertising and legacy browsers, its days are numbered. Flash stumble in 2016 dropping over 50% from 6% to 3%. The 4K smart TV outputs continue to decrease year over year, and we expect to see the market remains the largest consumer of the HEVC codec, but we believe Flash video codec disappear completely from our report within 12 HEVC codec license uncertainty and a lack of mobile device compatibility months. Flash deprecation continues with the Chrome M56 is significantly inhibiting the market from further exploration of this release where Flash was automatically disabled by default. codec and has actually made it retreat.

MVPD Workflows Migrate to the Cloud Historically, M&E companies have managed their Multichannel Video Programming Distributor (MVPD) workflows in-house using on-premise encoding infrastructure. This made sense. There were only a few “recipes” they needed to produce for Comcast, Charter, Time Warner, etc. and these video output profiles didn’t change very often. However, much has shifted in the past few years. M&E companies now distribute their content to an increasing number of MVPDs and virtual MVPDs (Netflix, Hulu, Amazon, iTunes, etc.) each having its own requirements on how content needs to be delivered. In addition, the pace of change for each distributor has also accelerated as end users adopt an increasing number of platforms from which they view M&E content (Cable set-top-box, OTT set-top-box, Apple devices, Game boxes).

Throughout 2016 we are reporting a significant increase in M&E companies migrating these traditional workflows to the cloud. By storing individual video components (video, audio, captions, meta-data) separately in the cloud, content providers can now assemble all the various output flavors on the fly for their increasing number of distribution points without having to revert back to a single high-bitrate Mezzanine file each time a new recipe is required. This is one of many use cases where leveraging cloud-based transcoding and packaging services can power more efficient workflows.

Adaptive Bitrate Standards Adaptive packaging protocols serve as the industry standard for premium video publishers to improve the end user video experience across varying network conditions and support for a diverse set of playback devices. Although DASH has shown strong growth year over year, HLS remains the most popular adaptive bitrate protocol.

HLS the Industry Standard HLS remains the most prominent standard, primarily due to its broad device compatibility (iOS, Android), Browsers, and OTT players (Apple TV, Roku, Fire TV, Chromecast) and is especially popular with video publishers who require sophisticated DRM or Dynamic Ad Insertions integrations. Also supporting the standard is Apple’s continued improvement of the protocol. HLS v5 was announced in September 2016 and most notably included support for Fragmented MP4.

MSS 7% DASH Grows DASH 21% Strong growth from OTT providers has moved DASH ahead of MSS as the second most popular adaptive bitrate protocol according to our statistics. HLS 72% A relative lack of DRM and DAI integrations has held the protocol back.

Digital Rights Management As the biggest studios and broadcasters start to deliver their content to every device, secure encryption has become a vital component of the online video ecosystem.

PlayReady | 13% CENC: The A Single DRM Format? Apple made a major announcement at WWDC16 which included support for encrypting fMP4 segments using MPEG-CENC (Common Encryption) within HLS. CENC is currently used by MPEG-DASH and is supported by all major HTML5 browsers. A public consensus is expected from Apple, Apple Fairplay | 24% Microsoft, and Google regarding the two cipher modes within CENC, CBC Widevine Classic/Modular | 35% versus CTR. So, a truly single DRM format might just become a reality in 2017.

Apple FairPlay Surges 2016 was the ﬁrst full year that Encoding.com supported the FairPlay Flash Access | 28% DRM framework from Apple, and we’re reporting a signiﬁcant move from top video publishers to adopt this format to target iOS, tvOS, and macOS.

Screen Resolutions Despite the industry excitement about 4K, the resolution makes up only 10% of our total output resolutions while 1080p makes up about half the resolutions. 720p remains a leading format for most mobile devices.

Mobile Devices 4K | 10% While most current smartphones support 1080p, 720p remains the leading resolution for top-end streams as video publishers balance 1080p | 55% quality, playability, and delivery costs. 480p | 12%

4K 1080p 720p 480p 720p | 23%

Closed Caption Formats DXFP 6% We are reporting some consolidation of the sidecar SRT 11% closed caption ﬁle format to SCC (Scenarist Closed Caption ) as many video publishers have chose SCC for WebVTT 21% its bundled, multi-language support, representation CEA-608 23% of CEA -608 and compatibility with many client facing SCC 39% video players.

Audio Formats The audio experience remains a critical component of the overall mobile and OTT video experience. Low bitrate audio “fallback” streams all the way up to high bitrate surround sound living room audio experiences are now commonplace within the same adaptive bitrate package, which ensures that the highest available experience is delivered to every device at every network speed.

Multi Channel Audio Surges for OTT The Dolby Digital (AC3) and Dolby Digital Plus (EAC3) grew signiﬁcantly MP3 | 2% AAC | 48% over 2015 aggregate data. The 5.1 and 7.1 codecs are gaining mobile device compatibility in the market, and the codecs are often used within the premium audio channel of the HLS spec which allows 192kbps 5.1 streams to be paired with 1080p high-tbitrate video streams. This audio video combination oﬀers a premium experience for connected televisions, such as the Apple TV and Roku that are connected to home | 19% theatre receivers. EAC3

ACC Delivers The AAC and Dolby HE-AAC codecs remain popular audio codecs with broad compatibility across desktop and mobile devices. The HE-AAC codec is especially popular within the HLS adaptive bitrate standard as it performs exceptionally well at the low 64k audio only bitrate required in Apple's HLS spec. AC3 | 31%

Improve quality and eﬃciency while saving money by optimizing your media workﬂow in the cloud.

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