Next Generation Video Codec in China Trends and Forecast
The future of the next generation video codec market in China looks promising with opportunities in the mobile phone, computer, and TV markets. The global next generation video codec market is expected to reach an estimated $7.9 billion by 2031 with a CAGR of 22.1% from 2025 to 2031. The next generation video codec market in China is also forecasted to witness strong growth over the forecast period. The major drivers for this market are the growing demand for better video experience, increasing mobile video consumption, and the proliferation of video content across platforms.
• Lucintel forecasts that, within the video codecs type category, the HEVC segment will remain the largest segment over the forecast period due to cutting the necessary bitrate in half while maintaining similar image quality, but at the cost of more processing complexity.
• Within the application category, mobile phone is expected to witness the highest growth.
Emerging Trends in the Next Generation Video Codec Market in China
The next generation video codec market in China is evolving due to the increased demand for high-definition and high-quality mobile video usage, along with the growth of video-on-demand services. As China remains a world leader in adopting new technologies and producing quality digital assets, the need for advanced video codecs increases. These codecs are necessary for efficient content delivery with restricted bandwidth while maintaining maximum quality. The following five emerging trends are transforming the market: efficient automation, efficient communication, system geolocations, dynamic docking, and efficient display suppression.
• Improved AV Compression With The Use of AV1: As China continues to grow in reputation in the technology industry, its adoption of the AV1 video codec becomes increasingly significant. The country is implementing AV1 due to its cost-efficiency compared to technologies like HEVC. Many AV service providers in China require efficient delivery of high-quality 4K and even 8K videos to audiences. AV1 offers the highest return on investment when compared to alternatives that poorly cater to media infrastructures. This quality has boosted AV1’s popularity and will continue to yield excellent business results in the future.
• Impact of 5G Networks on Mobile Video Streaming: The rollout of 5G networks in China greatly impacted the popularity of mobile video streaming. The advanced technologies being deployed have lower latency, and superior HEVC codecs and AV1 will assist in video streaming across China, including regions with restrictive network provisions. These developments will support the mobile video content industry tremendously and elevate China’s economy. The rapid rise in mobile video content consumption is set to revolutionize the industry in China.
• The Growing Need for 4K and 8K Video Content: As the demand for ultra-high-definition content continues to rise, there is an increasing need for efficient codecs for 4K and 8K video encoding and decoding. UHD content is being aggressively promoted by Chinese broadcasters and OTT platforms. The HEVC and AV1 video codecs make it possible to deliver super high-definition videos without quality loss while utilizing less bandwidth. The surge in demand for 4K and 8K videos is a key factor driving innovation in the Chinese video codec market, where businesses aim to offer affordable, high-quality viewing experiences.
• Boost the Development of the Video Codecs Market Through Domestic Investment: The Chinese government has been backing the development of digital infrastructure, including high-speed internet and next generation video technologies. Programs like "Made in China 2025" are advancing the deployment of 5G networks and enhancing digital addressable content delivery systems, fostering aggressive adoption of these advanced technologies throughout China. Government support is enabling the development and deployment of next generation video codecs, helping the industry move to newer codecs to enhance video streaming and content delivery.
• Implementation of Video Codecs in IoT and Smart Cities Projects: China is a global leader in smart city development, integrating video monitoring and IoT (Internet of Things) capabilities into a singular system. The focus of smart city projects is optimizing next generation video codecs for seamless transmission and storage of high-quality video data. Surveillance systems powered by HEVC and AV1 codecs are proliferating, helping reduce the bandwidth required for transmitting high-definition footage. The integration of video codecs into smart city infrastructure in China is driving the demand for more robust and user-friendly video solutions in urban environments.
Shifts are taking place in the Chinese market for next generation video codec due to several major trends. The market’s adoption of AV1 for efficient dynamic video streaming, the rollout of 5G networks for mobile video broadcasting, the increase in demand for UHD content, government support for digital infrastructure, and the integration of video codecs in smart cities and IoT projects are the primary factors driving growth. These changes highlight China’s efforts to improve the efficiency of video delivery while addressing the ever-growing demand for high-quality video content, ultimately fostering growth in the video codec industry.
Recent Developments in the Next Generation Video Codec Market in China
China’s video codec market has been changing rapidly due to increasing technology adoption and consumer demand for high-definition video content. The introduction of 5G networks, the rise of UHD content, and the ever-expanding video streaming market have driven the need for better video codecs. These factors are rapidly transforming China’s next generation video codec market, encouraging innovation and adoption across multiple industries.
• Widespread Deployment of 5G Networks: 5G technology is boosting mobile video streaming across China by enhancing speed and reducing latency. 5G provides the bandwidth needed for smooth high-quality video streaming, which increases the demand for competent video codecs. AV1 and HEVC are examples of new codecs that efficiently transmit large files while offering compact storage capabilities and superior network resource management. This trend is allowing China to deliver unparalleled high-quality mobile video experiences, which in turn increases the adoption of mobile streaming codecs.
• Growth of OTT Platforms and Content Providers: Chinese OTT platforms like iQIYI, Youku, and Tencent Video have scaled up to meet the rising demand for video content. These platforms are now responsible for distributing high-definition and 4K videos to users. HEVC, AV1, and other innovative codecs are crucial in improving compression ratios and reducing buffering times. China’s OTT providers have started harnessing AI-based Bandwidth Compression Technology to offer better local and international content to users.
• Greater Emphasis on 4K and 8K Broadcasting: In China, traditional broadcasters and streaming services are investing in and shifting towards 4K and 8K broadcasting. Unlike many other countries, Chinese broadcasters need to leverage strong marketing strategies to make their platforms appealing to consumers. Next-generation video codecs have more tasks and challenges to fulfill, ensuring the efficient delivery of UHD content without excessive data consumption. Emerging codecs such as HEVC and AV1 are addressing these concerns and proving valuable for services requiring large data volumes. The strong push towards UHD content is ensuring the adoption of new codecs within China’s streaming and broadcasting industry.
• Expansion of AI-Powered Video Compression Technologies in China: Chinese companies are actively investing in AI-powered video compression technologies to advance video quality and reduce data consumption. By understanding the context of a video, AI algorithms modify how the video is encoded and decoded. These new developments are being incorporated into upcoming video codecs, making them even more powerful and efficient. China will likely lead the world in AI-driven innovation, playing a key role in enhancing video codec technology shortly.
• Chinese Policies Encouraging Video Infrastructure Development: The Chinese government continues to invest in new video infrastructure following other policies promoting massive digital adoption in the economy. Support for 5G and smart city development, along with innovation policies for video technologies, are enabling the emergence of next generation video codecs. The rapid adoption of video streaming services, smart city initiatives, and digital content production heavily relies on advanced video codecs, benefiting from these policies. These initiatives have led to government support, accelerating the use of such technologies across multiple industries.
Recent changes in China’s next generation video codec market show a renewed focus on improving video streaming experiences and optimizing systems for video delivery. The introduction of 5G networks, the expansion of OTT platforms, the shift to UHD content, and AI-assisted video compression are all transforming the industry. Government investment in digital infrastructure is also supporting further development in this sector, making China one of the leading countries in video codec technology. These trends offer significant opportunities for rapid growth and establish a strong framework for video delivery systems in the region.
Strategic Growth Opportunities for Next Generation Video Codec Market in China
The rapid growth of digital infrastructure in China and the increasing demand for high-quality video in various sectors have created significant opportunities for next generation codecs to thrive in the country. As 5G networks expand and more streaming services emerge, the demand for high-performance and efficient video codecs continues to rise. The following are some of the primary strategic opportunities for growth in China’s video codec industry, offering substantial potential for advancement.
• 5G Supported Mobile Video Streaming: One of the major driving forces behind mobile video streaming is the availability of mobile 5G. China’s deployment of 5G and the introduction of new AV1 and HEVC mobile video codecs are pushing the demand for video codecs to undergo structural changes to increase efficiency. 5G users require fast, low-latency, and high-bandwidth mobile networks, enabling multiscreen interactions. Mobile users watching videos demand fast streaming and immediate playback with minimal or no loading time. New, powerful AV1 and HEVC codecs serve as the backbone for this seamless mobile experience, offering high quality with minimal data consumption. The opportunity to capture more users who stream mobile HD video content makes this area a significant business opportunity.
• Emergence of OTT Platforms and Online Video As A Product: The demand for video streaming in China is growing, driven by increased user interaction with platforms like iQIYI, Youku, and Tencent Video. These platforms require advanced video codecs to stream high-bandwidth-consuming content such as 4K and 8K videos. As OTT services rapidly increase to meet diverse content needs, AV1 and other efficient codecs will be essential for providing quality user experiences and supporting the continued development of the Chinese streaming economy.
• Investment Opportunities in Smart Cities and IoT Applications: China’s investment in IoT and smart city technologies has created an important area for next generation video codecs. Intelligent video surveillance systems, self-driving vehicles, and smart traffic systems require high-performance video encoding solutions for effective data communication. Advanced codecs can significantly reduce bandwidth requirements for real-time video streams. As China’s smart city initiatives progress, the need for efficient video codecs—especially for IoT monitoring, data analysis, and surveillance—will grow substantially.
• UHD Content Delivery Alongside Broadcasting: China’s demand for UHD content, particularly for its 4K and 8K broadcasts, is on the rise. There is an increasing need for efficient delivery over existing networks. Next-generation video codecs like HEVC and AV1 are crucial for meeting this need. These codecs enable broadcasters and streaming services to transmit high-quality video while using less data, ensuring seamless playback in areas with restricted bandwidth. As China’s broadcasting market adopts UHD content, there is potential for growth in the next-gen video codec space for both traditional broadcasting and streaming platforms. China’s burgeoning UHD content industry presents opportunities for growth in next generation video codecs across both legacy and streaming services.
• Video Encoding and Artificial Intelligence: The merging of artificial intelligence with video encoding processes offers significant growth potential for China’s economy. AI codecs learn from content and optimize encoding parameters to reduce file sizes without compromising quality. This increased efficiency reduces the data needed for streaming, making it ideal for mobile video streaming or live broadcasts. AI-powered video technologies will drive innovation in China’s video codec market, especially in light of advancements in AI technology.
The advanced video codec market in China is poised for substantial growth, driven by developments in 5G networks, OTT platforms, smart cities, UHD content demand, and AI integration in video encoding. These trends indicate that next generation codecs will play a crucial role in meeting the needs of China’s rapidly expanding video codec market. These technologies will support a variety of industries and applications by delivering high-quality video content.
Next Generation Video Codec Market in China Driver and Challenges
China’s next generation video codec market faces both key drivers and significant challenges. Global socioeconomic changes, improvements in technology, and regulatory policies are expanding the adoption of AI-powered video codecs, which improve compression rates, and video quality, and reduce data usage. However, challenges such as standardization across the industry, regulatory obstacles, and differentiation from primary codecs must be addressed. These factors are essential for understanding the long-term impact on the market.
The factors responsible for driving the next generation video codec market in China include:
• Implementation of 5G Networks and Mobile Video Streaming: China’s massive deployment of 5G networks is one of the key catalysts for the next generation video codec market. With technological advancements, 5G is expected to offer faster data transfer, lower latency, and support a greater number of simultaneous users. As a result, the demand for efficient video codecs has risen. Video streaming on mobile devices, especially for high-definition content, requires codecs that manage bandwidth while maintaining quality. This has led to a high demand for AV1, HEVC, and other advanced codecs, fueling market development.
• Renewed Interest and Demand For Advanced Video Content Types: The market for 4K and 8K videos has gained significant attention, further benefiting the next generation video codec market in China. Advanced encoding systems are crucial as video consumption soars across OTT platforms, social media, and broadcasting channels. New codecs offer the ability to process high-bandwidth content with minimal network usage. In response to consumers’ growing demand for higher-quality video, developers are increasingly focusing on the aggressive market for advanced video codecs.
• Smart Investment in Cities and IoT: Demand for video codecs has surged due to China’s investment in smart cities and IoT technologies. Surveillance cameras, self-driving vehicles, and traffic monitoring systems all require sophisticated video transmission methods. Next-generation video codecs are critical for maximizing bandwidth and storage space in these applications. The expansion of smart city projects in China will lead to greater demand for newer video codecs, which are increasingly used in CCTV and other IoT-driven ecosystems.
• Shifting Consumer Behaviors and Content Engagement Trends: The rise of video watching on mobile devices, streaming services, and even smart televisions is transforming how people consume content. This shift is driving the demand for next generation video codecs. Today’s consumers expect videos to stream instantly without buffering. Moreover, as more consumers access videos on multiple devices, the need for codecs that can seamlessly function across various resolutions and device types will continue to grow. This is why the market for video codecs will keep expanding.
• Competition and Standardization Challenges: Fragmentation in next generation video codec standards is one of the challenges facing the market in China. AV1, HEVC, and VP9 are among the most popular codecs, but competition among these standards often leads to inefficiency in the industry. Multiple competing standards create inefficiencies, as some codecs perform better than others in specific applications. Failure to adopt a single standard results in market fragmentation and inadequate market penetration.
Challenges in the next generation video codec market in China are:
• High Implementation Costs: Service providers and content creators face challenges in adopting next generation video codecs. This is particularly difficult for the streaming and broadcasting industries. Implementing these advanced codecs requires purchasing new hardware and software, which can be expensive. While these investments improve video quality, compression efficiency, and profitability for larger companies, they create financial challenges for smaller companies and content providers. Addressing these constraints is essential for the widespread adoption of next generation codecs.
• Intellectual Property and Licensing Issues: The complex and fragmented environment of proprietary video codecs, such as HEVC and others, presents challenges for China. Licensing fees, patent pools, and layer streams make adoption difficult for smaller video streaming services and broadcasters. While open-source codecs like AV1 present a growing concern in terms of scope and deployment, they remain a more agile option compared to proprietary codecs. A significant challenge for the next generation video codec system will be addressing intellectual property and licensing issues.
Factors driving the next generation video codec market in China include the fast rollout of 5G networks, growing digital video expectations, investments in smart cities and IoT, and government regulations supporting digital infrastructure. However, issues such as codec competition, resource overspending, and intellectual property challenges present hurdles to sustainable growth. Despite these challenges, the future of the video codec industry in China looks positive, particularly considering the innovation and expansion opportunities available in various sectors.
List of Next Generation Video Codec Market in China Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies, next generation video codec companies cater to increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the next generation video codec companies profiled in this report include:
• Company 1
• Company 2
• Company 3
• Company 4
• Company 5
• Company 6
• Company 7
• Company 8
• Company 9
• Company 10
Next Generation Video Codec Market in China by Segment
The study includes a forecast for the next generation video codec market in China by video codecs type and application.
Next Generation Video Codec Market in China by Video Codecs Type [Analysis by Value from 2019 to 2031]:
• AVC
• AV1
• HEVC
• VP9
• VVC
Next Generation Video Codec Market in China by Application [Analysis by Value from 2019 to 2031]:
• Mobile Phone
• Computer
• TV
• Others
Features of the Next Generation Video Codec Market in China
Market Size Estimates: Next generation video codec in China market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends and forecasts by various segments.
Segmentation Analysis: Next generation video codec in China market size by video codecs type and application in terms of value ($B).
Growth Opportunities: Analysis of growth opportunities in different video codecs type and application for the next generation video codec in China.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the next generation video codec in China.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.
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FAQ
Q1. What are the major drivers influencing the growth of the next generation video codec market in China?
Answer: The major drivers for this market are growing demand for better video experience, increasing mobile video consumption, and proliferation of video content across platforms.
Q2. What are the major segments for next generation video codec market in China?
Answer: The future of the next generation video codec market in China looks promising with opportunities in the mobile phone, computer, and TV markets.
Q3. Which next generation video codec market segment in China will be the largest in future?
Answer: Lucintel forecasts that HEVC segment will remain the largest segment over the forecast period due to cuts the necessary bitrate in half while maintaining similar image quality, but at the cost of more processing complexity.
Q4. Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.
This report answers following 10 key questions:
Q.1. What are some of the most promising, high-growth opportunities for the next generation video codec market in China by video codecs type (AVC, AV1, HEVC, VP9, and VVC), and application (mobile phone, computer, TV, and others)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.4. What are the business risks and competitive threats in this market?
Q.5. What are the emerging trends in this market and the reasons behind them?
Q.6. What are some of the changing demands of customers in the market?
Q.7. What are the new developments in the market? Which companies are leading these developments?
Q.8. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.9. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.10. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?
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