1) The video they want to transcode is of a significantly higher bitrate (read, exceeds the bitrate of blu-ray by several orders of magnitude) and size than is practical for the cloud.
2) The files that support these high bitrates are, by definition, extremely large (in the 10′s to 100′s of GB or more).
3) The codecs that many studios are using to store their high-bitrate, large video files are not supported by open source or low-end transcoders.
4) The quality requirements (as noted by another poster) far exceed anything that is currently supportable in this model.

A previous poster mentioned that this requires lots of bandwidth. They weren’t kidding, think along the lines of a 1Gb dedicated pipe being insufficient if you’re a studio. Going to a higher bitrate pipe becomes cost prohibitive.

All that leads you to the idea that this isn’t suitable for studios, which leads you to the question, is there enough of a market for this from people that aren’t studios to sustain these startups in the long run? I agree that the concept of easily spinning up CPU cycles for transcodes is attractive, however. Unfortunately the cost of bandwidth, storage and capabilities leads me to believe that this isn’t sustainable.

There is certainly a need and a market for this sort of encoding service. From home users looking to convert their Sony/Flip/Panasonic native content to SMB sized post production facilities. Here in Cardiff local government and academia have clubbed together to provide a clustered farm service for use by the local creative community for processor & cash hungry tasks such as rendering. In that case the data can be physically shipped, the problem for a cloud service, and it had been mentioned a few times in the comments, is that video needs big fat pipes (http://www.matrixstore.net/2009/09/21/big-fat-pipes-to-the-cloud/).

Most individuals, SMBs and even some larger enterprises do not have access to the comms resource either through lack of local infrastructure or more commonly the cost of paying for the pipe.

Solve the comms and cloud based video offerings will prosper.

Tinkthank and Rocky: hardware-based encoding does a better job than software encoding at guaranteeing transcoding speed (e.g. guaranteed real-time encoding), so it is great for live stream encoding. But today, hardware transcoder quality is significantly worse than the best software encoders. That’s a big deal for anyone who is concerned about their storage or bandwidth costs. And software-based encoding on new commodity hardware is extremely fast – as fast as many hardware-based transcoders (e.g. real-time 1080p).

If this changes – if hardware encoders improve dramatically – then that doesn’t necessarily change the need for SaaS transcoding. A cloud provider could run hardware-based encoding in the cloud easily enough.

Visiotech: you’re absolutely right. Bandwidth is definitely a limitation for some businesses, and it’s definitely not a limiting factor for others. As bandwidth gets cheaper and faster, cloud processing will make sense for more and more of the market.

USB transcoders have quality issues that bother some. There is a wide review spread from 1 star to 5. The Elgato appears to max out at 10Mbps, which may be part of the problem.

Maybe higher data rate USB3 versions will fix that – or maybe “good enough” will be good enough for most people. But they don’t appear to be there yet.

Robin

I’m not sure there’s a SOHO/SMB market for cloud transcoding.

For $100 you can get a USB transcoder like the El Gato Turbo.264 HD. Depending on your target format, you can transcode much faster than real time.

Much cheaper than paying for a faster Internet connection, and then paying for the cloud transcoding.

We’re looking at USB transcoders, despite having a 45 Mbps Internet connection. That connection is saturated much of the working day.

Nice description of one (of many) killer apps for the cloud. Combined with CDN, you upload your source video once and the cloud takes it form there and serves it in the various distribution formats. No need to be bound to Youtube and fits many more business models.

Yes it sounds great but most studios like tight quality control on all aspects. These guys see things that most of us can see. This might fit but not sure until they have excellent quality compare to what they can produce. This guys have huge file size. In hundred of GB. Hard to upload on common DSL or broadband. They need faster line. Beside http is not very efficient for that type of transfer. SFTP is much better but not to much cloud friendly compare to http.

For everybody else I see a market. Specially with laptops and tablets growing in popularity much faster than desktop I can see that happening. They also have much smaller file size (typically less than two minutes clip).

Home Cable are coming with new setup boxes that will allow consumers to upload their smartphone videos to their home setup box. Once inside the setup box, they will offer transcoding for various devices. Storage will be provided within the setup box itself or on the cloud to be able to stream or transcode the video.

Next target will be video asset management. How home users will be able to maintain several hundreds of transcoded video files. We go the problem today with photos. Next will be videos with at least 20x more capacity.

Do we anticipate storage growth…you bet!

Soon or later we will have to do something to place these files at much cheaper cost and be environment friendly. We will face serious rare metal provisioning that are part of today’s storage devices. Earth as not infinite mine resources of these rare metals.