How Hardware AV1 Encoding Cuts OTT Streaming Costs

OTT streaming providers face a simple but difficult cost problem: more viewers mean more video data must be processed, stored, and delivered. As video quality moves from HD to 4K and beyond, bandwidth consumption can become a major operating expense.

AV1 offers a way to reduce the amount of data needed to deliver comparable video quality. However, AV1 encoding is computationally demanding. This creates a new question for streaming providers: Can hardware AV1 encoding reduce the cost of encoding enough to make the overall savings worthwhile?

For large OTT platforms, the answer can be yes. Hardware acceleration can increase encoding throughput, reduce CPU workload, and make AV1 more practical for large-scale streaming workflows. When combined with lower delivery bitrates, these improvements can reduce the total cost of streaming.

Key Takeaways

• AV1 can deliver comparable video quality at a lower bitrate than older codecs such as H.264.
• Lower bitrates reduce data transfer and can lower CDN and bandwidth costs.
• AV1 encoding requires more computing power than many older codecs.
• Hardware AV1 encoding can improve encoding speed and stream density while reducing CPU dependency.
• The financial benefit becomes stronger as viewer numbers and streaming hours increase.
• Hardware AV1 decoding is also important because viewers need compatible devices to receive the benefits of AV1.

Why OTT Streaming Costs Continue to Increase

An OTT platform has several major technical costs. These include content acquisition, encoding, packaging, storage, origin infrastructure, and delivery.

Among these expenses, delivery can become particularly significant when a service has a large audience. AWS provides one example in which a 1080p live event with 10,000 viewers generated about $1,531 in distribution costs compared with about $3.18 for live encoding and packaging under its stated assumptions.

This illustrates an important point: a small reduction in bitrate can have a much larger financial effect when the same video is delivered to thousands or millions of viewers.

For an OTT provider, reducing the amount of data delivered per viewer can therefore improve the economics of the entire streaming operation.

How AV1 Reduces Streaming Bandwidth

AV1 was designed to provide high compression efficiency. Its greater encoding complexity allows video providers to produce streams at lower bitrates while maintaining similar perceived quality.

NVIDIA testing, for example, found that AV1 could achieve approximately 40% bitrate savings compared with H.264 at similar quality in a 1080p60 scenario. In one example, AV1 achieved a 42 dB PSNR at 7 Mbps compared with 11 Mbps for H.264.

A lower bitrate means fewer gigabytes need to travel through the delivery network.

The exact savings depend on content type, resolution, encoder settings, quality targets, and device support. Therefore, a fixed percentage should not be treated as a universal AV1 saving.

The important principle is that bitrate reduction becomes increasingly valuable as the number of viewers increases.

Why AV1 Encoding Can Be Expensive

AV1’s compression efficiency comes with a trade-off.

More advanced compression techniques require more processing. AWS has noted that AV1’s higher encoding complexity can increase encoding costs, even though the resulting lower bitrate can reduce delivery and storage expenses.

This creates two different cost categories:

Encoding cost:
The computing resources required to convert source video into AV1.

Delivery cost:
The cost of moving the encoded video to viewers through CDNs and networks.

A streaming provider should therefore avoid asking whether AV1 encoding itself is cheaper than H.264 encoding. That is usually the wrong comparison.

The better question is:

Does the additional AV1 encoding cost produce enough bandwidth savings to reduce total streaming cost?

For a platform with a small audience, the answer may not always be yes. For a large OTT service, however, bandwidth savings can become much larger than the additional encoding expense.

How Hardware AV1 Encoding Changes the Cost Equation

Hardware AV1 encoding addresses one of AV1’s main disadvantages: computational complexity.

Instead of relying mainly on general-purpose CPUs, hardware encoding uses dedicated video processing engines. These engines are designed specifically for video encoding and can process multiple streams efficiently.

NVIDIA’s Video Codec SDK, for example, supports hardware-accelerated AV1 encoding through NVENC. NVIDIA states that hardware encoding can provide high stream density and reduce both cost per stream and power per stream.

This creates several potential advantages for OTT providers:

Higher Encoding Throughput

A hardware encoder can process more video streams within a given hardware configuration. This is particularly important for live streaming, where encoding must keep up with the incoming video in real time.

Lower CPU Utilization

Dedicated encoding hardware takes much of the video processing workload away from the CPU. The available CPU resources can then support packaging, application services, monitoring, or other workloads.

Better Scalability

When an OTT provider adds more channels or video profiles, encoding capacity becomes an important infrastructure requirement. Hardware acceleration can make it easier to scale the number of simultaneous encoding sessions.

Lower Power Consumption per Stream

Hardware acceleration can also improve energy efficiency. This matters for large data centers where thousands of encoding operations may run continuously.

Hardware AV1 Encoding vs. Software AV1 Encoding

The choice between software and hardware encoding depends on the streaming workflow.

Software encoding remains useful when an operator needs maximum control over encoding parameters or wants to avoid specialized hardware.

Hardware encoding becomes more attractive when encoding volume, real-time performance, and operating cost are major concerns.

For example, NVIDIA reports that its Blackwell NVENC implementation can provide AV1 encoding with software-comparable quality at roughly three times the throughput in its ultra-high-quality mode.

This does not mean every hardware encoder will achieve the same result. Performance depends on the chipset, encoder generation, settings, resolution, frame rate, and workload.

The Role of Hardware AV1 Decoding

Encoding is only one part of the OTT ecosystem.

The viewer’s device must also decode the AV1 stream. If AV1 decoding is handled entirely by software, the device CPU may experience a significantly higher workload.

AWS notes that AV1’s complexity also affects decoding. Dedicated hardware decoding can reduce CPU workload and energy consumption, particularly on mobile and other power-sensitive devices.

This is why the device ecosystem matters when an OTT provider introduces AV1.

A streaming platform may save bandwidth on the server side, but those savings cannot be fully realized if a large portion of its audience uses devices without efficient AV1 decoding.

For OTT operators, the deployment strategy should therefore consider both sides:

Server side: Hardware AV1 encoding
Network side: Lower bitrate and reduced data transfer
Client side: Hardware AV1 decoding

The three components work together.

How OTT Providers Can Calculate AV1 ROI

A practical AV1 business case should compare the additional encoding expense with the savings generated across the delivery chain.

The basic calculation can include:

AV1 ROI = Bandwidth Savings + Storage Savings − Additional Encoding Costs

Consider a simplified example.

Suppose an OTT provider serves 100,000 viewers. If AV1 reduces the average streaming bitrate by 30%, the amount of data delivered can also fall significantly, assuming the same viewing time and comparable quality.

This is an illustrative model rather than a guaranteed cost reduction. Actual results depend on the provider’s CDN pricing, content library, encoding settings, audience distribution, and AV1 adoption rate.

AWS provides a useful real-world cost model. In one example, adding AV1 to an AVC live workflow increased encoding costs but reduced delivery costs enough to lower the total cost of a two-hour event. With 5,000 viewers, the modeled saving was $10.11. At 100,000 viewers, the modeled saving increased to nearly $500 under the same assumptions.

This demonstrates why AV1 economics tend to become more attractive at scale.

When Should OTT Providers Adopt Hardware AV1 Encoding?

Hardware AV1 encoding is particularly relevant to several types of streaming businesses.

Large VOD Platforms

Large video libraries can contain thousands of hours of content. Reducing bitrate across a large catalog can decrease both storage and delivery requirements.

Live Streaming Platforms

Live services need real-time encoding. Hardware acceleration can help maintain high throughput while controlling computing resources.

FAST and AVOD Services

Free ad-supported streaming platforms are especially sensitive to operating costs because revenue per viewer may be lower than premium subscription services.

4K Streaming

Higher-resolution video requires more data. Efficient compression becomes increasingly valuable as resolution increases.

International OTT Services

Services operating across markets with different network costs can benefit from lower bitrate delivery, especially in regions where bandwidth is expensive or network capacity is limited.

What to Consider When Choosing AV1 Hardware

An OTT provider should not evaluate an AV1 encoder only by its maximum encoding speed.

Important factors include:

• AV1 encoding throughput
• Supported resolutions and frame rates
• Encoding quality at target bitrates
• Number of simultaneous streams
• Power consumption
• Hardware and software compatibility
• Support for existing OTT workflows
• Hardware decoding support in target devices
• Long-term chipset availability

For hardware suppliers, chipset selection also affects the downstream playback experience.

BOXPUT, for example, offers Android TV box platforms using chipsets with AV1 decoding support. Its X98H PRO based on the Allwinner H618 lists AV1 support alongside 4K video capabilities.

For OTT operators deploying branded or customized playback hardware, this type of hardware capability can help ensure that lower-bitrate AV1 content can be decoded efficiently at the user end.

Conclusion

Hardware AV1 encoding can reduce OTT streaming costs by solving one of AV1’s biggest challenges: its higher computational requirements.

AV1 can reduce bitrate and therefore lower the amount of data that OTT providers need to deliver. However, the codec’s greater encoding complexity can increase computing costs. Hardware acceleration changes this balance by increasing encoding throughput, reducing CPU dependence, and improving stream density.

The strongest business case appears when an OTT provider has a large audience, high viewing hours, or significant bandwidth expenses.

The economics should therefore be evaluated at the total streaming cost level rather than by comparing codec encoding prices alone.

For OTT providers considering AV1, the most important calculation is not simply how much AV1 encoding costs. It is how the additional encoding investment compares with the savings from lower bandwidth, CDN traffic, storage, and potentially lower infrastructure requirements.

As AV1 hardware encoding and decoding become more widely supported, this balance is becoming increasingly practical for large-scale OTT deployments.

For additional technical context on AV1’s cost model in live streaming, AWS’s AV1 streaming cost analysis provides a useful example of how encoding costs and bandwidth savings can be evaluated together.

FAQ

Does AV1 reduce OTT streaming costs?

AV1 can reduce streaming costs by lowering the bitrate required to deliver comparable video quality. The actual savings depend on the provider’s audience size, CDN pricing, content, and encoding settings.

Is hardware AV1 encoding better than software encoding?

Neither is universally better. Software encoding provides flexibility, while hardware encoding can provide higher throughput and lower CPU usage. Hardware encoding is generally more attractive for high-volume or real-time workflows.

How much bandwidth can AV1 save?

There is no universal percentage. Different content and encoding settings produce different results. NVIDIA has reported examples of approximately 40% bitrate savings compared with H.264 at similar quality.

Does AV1 increase encoding costs?

It can. AV1 is computationally more complex than older codecs such as AVC. Hardware acceleration can help reduce the infrastructure impact of that additional complexity.

Do streaming devices need AV1 hardware decoding?

Hardware decoding is not always mandatory, but it can significantly improve playback efficiency. Dedicated decoding reduces CPU workload and can improve power efficiency on supported devices.

Is AV1 suitable for live streaming?

Yes. AV1 can be used for live streaming, and major cloud media platforms now support live AV1 workflows. AWS Media Services, for example, support AV1 for live and on-demand streaming.

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