Telestream just won’t let up spending its parent’s cash. The latest strike on the video quality test and measurement specialist’s aggressive acquisition streak is Encoding.com – but doesn’t Telestream already have encoding software strings to its bow, you ask?
That it does, but this deal is smarter than one file-based video encoding business acquiring a smaller rival.
Encoding.com has a roster of technologies with microservices including packaging, automated quality control (right up Telestream’s street), DRM, dynamic ad insertion and streaming conditioning, forensic watermarking, Nielsen support, and programmatic editing features, as well as its flagship video compression capabilities.
Telestream’s Episode product suite, meanwhile, includes a 10-bit encoding engine and fine-tuning compression for simple transcoding jobs as well as more complex encoding jobs such as standards conversion. It has the capabilities for codec control and filtration parameters, with real-time frame-by-frame video preview, to quickly adjust encoding and preprocessing settings.
What Encoding.com brings to Telestream’s table is a more cloud-native approach to video compression – providing flexibility for customers to meet their most demanding workflow needs.
Describing Telestream as a legacy vendor would be unfair, but we wouldn’t hesitate to label many of its broadcast customers as legacy. To this end, Telestream must ensure that its media processing capabilities are available across cloud, on-prem, and hybrid environments – as most suppliers do – while Encoding.com markets itself as a pure play cloud-based transcoding-as-a-service platform.
Encoding.com’s acquisition by Telestream, a portfolio company of private equity firm Genstar Capital, is also significant in that many typical Telestream customers are approaching the cloud with caution.
It’s true that on-prem deployments won’t just disappear overnight, with many customers leaning towards hybrid approaches. Telestream has been working on shifting its on-prem video monitoring systems to the cloud. Functions like fast-paced transcoding capabilities also need to transition seamlessly to the cloud to avoid upsetting the loyal customer base.
Just as with traditional networks, you need to monitor the entire network architecture to get low-latency across cloud infrastructure. In the case of video monitoring, customers do the usual on-demand checks with QC tools when putting video assets into storage, before these assets are run through just-in-time packagers, to be sent out as VoD streaming assets. There has also been strong demand for testing these VoD assets, including on the CDN side for delivery testing tools.
The video monitoring game doesn’t stop at analyzing picture quality, however. It applies to all steps in a chain, from transcoding to post-CDN. Telestream also looks for SCTE-35 markers for when ads should be placed into streams and also provides a real-time analytics feedback loop, for instance.
By a similar token, Encoding.com also has a long list of broadcast clients, albeit ones with OTT video businesses. NBCUniversal (including Peacock and NBC News), TNT, TBS, Turner, Fox, BBC, MSNBC, CNN, and WarnerMedia all line the pockets of Encoding.com.
But supplying the US broadcast market with cloud-based media processing services isn’t where Encoding.com’s skills end. Notably, it has a significant deal at CDN behemoth Akamai.
This came about in early 2019, when Akamai announced it had begun retiring its Media Service On Demand (MSoD) transcoding services, its complementary VoD transcoding product. Instead, Akamai chose to bring in Encoding.com, a long-term media processing partner of Akamai turned preferred partner for a major transition project. It meant Akamai started recommending that customers transition to Encoding.com’s cloud transcoding platform before April 2019.
Suffice it to say, Akamai has a rather extensive customer list, although we can’t speak for how many of its client based transitioned to Encoding.com.
For this project, Encoding.com came out on top following a six-month technical and commercial evaluation of the market’s cloud VoD vendors. At the time, Encoding.com President Jeff Malkin told Faultline that the vendor was on the cusp of closing “the largest cloud VoD processing deal ever” (based on volume and revenue). We haven’t heard anything since.
Akamai chose to sunlight its MSoD service as a result of falling CDN prices, and recruiting Encoding.com allows it to take a cut of cloud transcoding revenues. The fact Akamai chose not to develop these capabilities in-house speaks volumes.
The acquisition of Encoding.com, for an undisclosed amount, is also good news for Harmonic, in more ways than one.
The deal dissolves a direct competitor into the belly of a larger organization, while rewarding Harmonic financially, as the US company has a significant shareholding in Encoding.com.
Harmonic says that having financial stakes strengthens its ability to offer flexible cloud-based services. Telestream has taken that approach as gospel and now the vendor can be considered a serious cloud-based media processing contender to Harmonic.