Your foray into live streaming will be marked by the critical questions you’ll need to answer. Which audience are you addressing with your content? What are the websites and platforms where you should stream? Finally, what kind of a streaming setup do you need to use? And what are the pros and cons of the gear choices you’re presented with, such as the popular “software or hardware encoder” choice?

Every cog in the machine that is your streaming setup is vital, so much so that it would almost be unfair to single out one component as the most important. But if you’d have to do it, the obvious choice for the MVP of your streaming setup would be the encoder. So let’s get better acquainted with the heart and brain of the streaming setup, in the hope it’ll help you when the time comes to pick one.

What are the essentials of a streaming setup?

The best place to start getting to know encoders and their importance is where they do most of their work. We’ll use a simple input-encode-output model to get a sense of the position encoders occupy in a live streaming setup. That should suffice for illustrating their importance.

So it all starts with the input — the place where the information that goes into the system is made. For live streaming, the input can come from:

  • Cameras: Webcams are good, but camcorders and DSLRs are better. Professional cameras, you guessed it, are best.
  • Microphones: Built-in microphones rarely provide audio quality that’s sufficient for live streaming. External mics are a much better option.
  • Computer screen: Video games, presentations, and anything else you can show on a computer screen often finds its way into live streams.

So that’s that source of information. But before that information is transmitted in a live stream, it needs to be captured and encoded — transferred to a format streaming platforms, websites, and services can understand.

Capture cards are in charge of capturing the video and audio. For encoding, you have two choices:

  • Software encoders: Encoding computer programs you run on a personal computer. They get data from the capture cards, and they send it via the internet.
  • Hardware encoders: Dedicated pieces of hardware that run encoding algorithms. Sometimes they connect straight to the camera and always to the internet.

When the encoder does its job — puts the data in a communicable format — it sends it to wherever you want to stream.

There needs to be a fairly strong and stable internet connection — with a nice upload speed — for this part of the process. More importantly, there needs to be something waiting to take in that data. These destinations can be any of the following:

  • Streaming and video-sharing platforms: Twitch is the most popular streaming platform, and YouTube is the biggest video-sharing website that offers streaming services.
  • Social networks: Most offer live streaming services these days. Facebook does it with Facebook Live, YouTube with YouTube Live, and LinkedIn with LinkedIn Live.
  • Multistreaming services: Services for streaming to more than one website at any given time. Restream is one of the leading providers of cloud multistreaming services.

The encoders’ dead-center position in a streaming setup is necessary because the encoder is the translator and the communicator. Take it out of the equation and video streaming platforms would have a hard time understanding and reproducing the data you’re sending them. That’s the special role that grants encoders their importance.

Hardware Encoding vs. Software Encoding

The two types of encoders: What are the pros and cons of each?

The abiding question with encoders is, “Which ones are better: hardware encoders or software encoders?” An encoder is basically an algorithm and the hardware needed to run it. In some sense, hardware encoders are very similar to their software counterparts because, by the time you’ve put them into a setup, that’s what they’ll both be — algorithms and hardware.

But that’s all there is to their similarities. The two differ in fundamental ways, which also means that each comes with its own set of pros and cons. You should familiarize yourself with those if you want to make a good purchase decision, so let’s dig into them a bit deeper.

Hardware Encoders

What are the pros and cons of hardware encoders?

Hardware encoders pack all you need in a neat little box. There will be an encoding algorithm in there, as well as a powerful processing unit whose sole job is to run the encoding algorithm. Usually, there will be some sort of an interface so you can choose between options and, for example, pick the encoding codec or the destination of the stream.

The pros of using a hardware encoder are as follows:

  • Great performance, especially when you need extremely high-quality streaming.
  • Awesome reliability, given that they’re built with one purpose — to encode.
  • Higher encoding speed, leading to lower latency.

Hardware encoders do have their downsides, though, including:

  • The price, because their costs start at a couple hundred dollars and go up from there.
  • Lack of functionalities, so you’ll have to get additional gear for actions such as switching.
  • Difficult to upgrade, especially when compared with software encoders.

So that’s hardware encoders for you: the real deal. They encode, and that’s it. The good ones do it incredibly quickly, but they’ll also cost you an arm and a leg. If you can justify the investment, though, you probably won’t look back. Just be ready to make additional investments, because hardware encoders are a one-trick pony.

Software Encoders

What are the pros and cons of software encoders?

Software encoders don’t come with their own hardware. They are completely reliant on the CPU of their host computer for processing power. You probably sense there’s going to be an issue with that somewhere along the line, and you’re right. For now, let’s just say that specific encoders let you use hardware encoding to share the load between the CPU and the GPU.

  • Affordability, because even the good ones come with no costs attached.
  • Flexibility, as they can ingest multiple feeds, but also act as switchers, effects, and more.
  • Customizability, seeing how they let you change the bitrate and even the encoding type.

It’s not all gravy with software encoders, though, because of their:

  • High dependence on the host, and they’re only as good as the computer running them.
  • Higher latency, thanks to the slower encoding.
  • Overall lower performance, especially in lower-end rigs or when multitasking.

Software encoders have their flaws. But the good ones are capable of delivering a surprising bang for the buck you invest into them, and they can help you be creative thanks to a myriad of customization options. Still, it’s hard to see a high-end software encoder beat a high-end hardware encoder when it comes to quality and latency.

Read later: Video streaming protocols explained: RTMP, WebRTC, FTL, SRT 📍

Do you need software or hardware encoding for your live stream?

What you want and what you need are two completely different things. You should keep this in mind when choosing gear, because the goal is usually to get the best possible option for the money you have — and that often means making compromises.

But whatever you do, you should always ensure that your choices help you meet your needs. Regular streams usually don’t need to match the quality of a professional broadcast.

Affordability is the major factor that will influence your decision. Hardware encoders are expensive, and they’ll also force you to buy additional gear to fill in the gaps left by their lack of functionalities. High-end software encoders can be expensive, too. Often enough, you’ll need a dedicated computer just to run them.

Still, a good software encoder and a decent computer can get you a long way in the streaming world. With so many other parts of the setup to spend money on — good microphones, for example — getting a computer and installing OBS will save you money to invest in the camera, mics, or a better internet connection.

So unless you’re a professional broadcaster, a software encoder should keep you happy and streaming successfully for a while. It’s cheaper, more accessible, and easier to use — a clear winner in most situations.

Creating a Live Stream with a Software Encoder

How to successfully live stream with a software encoder

Phew, you’ve got that over with, right? With making the choice behind you, we can turn to the next big step: adding the encoder to the setup, and connecting it all together in a hopefully successful stream. No pressure.

Here’s how you would do it with OBS Studio, a mega-popular open-source software encoder:

  • Set up the audio and video sources. Place the cameras and the microphones where you want them for the stream and connect them to their capture cards.
  • Add the audio and video in OBS Studio. Set up audio in “options,” and add visual sources from the “sources” menu.
  • Configure the live stream. You should configure settings such as the bitrate, but also remember to create different scenes for smoother switching later.
  • Connect the platforms. OBS Studio connects to one platform at a time, and you’ll need to find the stream key to do it.
  • Test your live stream. Check if everything looks good in the preview or set your stream to private if your platform allows it and watch it on another computer.

If you want to reach an even wider audience with your live streams using a software encoder like OBS, you might want to use a multistream tool such as Restream. Right off the bat, it helps you with:

  • Getting a wider reach, thanks to native support for over 30 platforms and a solution for platforms that aren’t supported natively.
  • Simplifying the setting up, because it can hold the URLs and stream keys for every platform you use.
  • An easy learning curve, so you’ll be able to set everything up and deploy it within minutes of the initial registration.
  • Being easy on the budget, because it lets you start for free and then pay as you need advanced features. Plus, it works on Macs, too.
Multiply your views and engagement
Reach a wider audience by streaming to multiple platforms simultaneously.
Get Started

The success of a live stream comes down to the quality of your content, both in terms of what it is (its contents) and how you present it (the technical side). So work hard to develop good content ideas, but always remember to do a technical check before going live. If you want to reach a wider audience, consider multistreaming with Restream.


For most people who are just getting into live streaming, software encoders are a better choice than hardware encoders. They provide an accessible entry point into the world of streaming, and you can’t overstate how important that can be.

As time goes by and production budgets get bigger, you can decide to go full hardware. You can also add some hardware encoders to a setup containing a software encoder and make a hybrid setup. Either way, make sure you’re able to use Restream if you want to get to your audiences wherever they are.