Cloud transcoding allows for the conversion of video files between different encoding formats. This is useful when the target device or workflow does not support the original format or file size. Cloud computing is well-suited for the CPU-intensive task of video encoding. There are two main types of cloud transcoding - video on demand (VOD) transcoding of pre-recorded content, and live transcoding of streaming video. VOD transcoding reduces on-site encoding costs while live transcoding addresses bandwidth issues and allows for adaptive streaming. Amazon Elastic Transcoder and EC2 Spot Instances are two options for VOD transcoding in AWS.