Video encoders will be the fastest growing segment in the market, with a growth rate of 10% per year.
The worldwide video hardware infrastructure market is expected to rise from 2.8bn in 2012 to $3.8bn in 2017, according to a new report from ABI research.
According to the report, "Video Hardware: Encoders, VOD Servers, and CDN", the market is expected to rise at 6% per year while video encoders will be the fastest growing segment in the market, growing over 10% per year.
Analysts believe that classic video servers, which are witnessing higher rate of integration as well as replacement with more modern IP-based architectures, is expected to grow about 3% per year.
ABI Research senior analyst, Adarsh Krishnan,said significant consolidation is taking place within the video infrastructure hardware space.
"In addition to the well-publicized acquisition by smaller Arris of larger Motorola - creating a more healthy and diverse company - Harmonic recently spun off a small and low-margin business to Aurora Networks," Krishnan said.
"Mature hardware companies, including Cisco, Ericsson, and even Huawei are all turning their focus to higher margin services business as new entrants compete in well understood sections of the equipment space."