HEVC encoding

HEVC Advance announces no more royalty fees for non-physical content distribution

Last week, HEVC Advance, one of the four HEVC patent pools, announced that it is eliminating subscription and title-by-title royalty fees for non-physical content distribution. This announcement makes all HEVC-encoded content distributed by streaming, cable, over-the-air broadcasts, and satellite royalty-free. HEVC encoded content sold on physical mediums – blu-ray discs and other storage devices – will continue to be subject to a fee. In addition, HEVC Advance reduced hardware royalty fees on certain lower cost products.

This follows the latest big news in the codec world from last January, when Apple joined the Alliance for Open Media (AOM) in a move many predicted would have a significant impact on the future of the codec landscape, and prompted a rather cynical response from MPEG Founder Leonardo Chiariglione. Well, it looks like HEVC Advance got the message, loud and clear. What does this news mean for broadcasters’ workflows, and what is the next move for HEVC and AOM?

HEVC: a complex patent environment

For years, H.264 has been nearly ubiquitous, and the industry expected a smooth transition to its successor, HEVC. However, growing support for AV1 has weakened its place at the top, as industry players began to seek out a less costly codec solution, favoring open standards and solutions. Today, the HEVC world includes essentially three patent pools that could claim royalties for the use of HEVC. Most of the licenses required are on the decoding side, for device producers; however there are some royalties in place for content providers and production studios:

  • The MPEG LA patent pool assesses royalties for device producers and does not charge for HEVC-encoded content;
  • HEVC Advance, up until now, provided licenses for both devices and content;
  • Velos Media is a third patent pool that was created in April 2017. The group has been studying the possibility of licenses for content providers. It is said to have established a pricing model for their royalty fees, but have yet to publish it.

In addition to these three, Technicolor, which left HEVC Advance in 2016, has indicated that it will assess royalties independently.

You can learn more about HEVC patent pools in this talk by Hector Ribera at Demuxed in October 2017.

The recent news from HEVC Advance show that licensors are not giving up their claim to the throne that easily, and this announcement clearly raises hopes for a royalty-free codec world. But is this step really as significant as it seems?  

What’s in it for you?

This latest HEVC Advance announcement is definitely good news for OTT broadcasters and for the online streaming world in general; HEVC is a sound choice for many broadcasters as it can reduce bandwidth costs by up to 30% (our customers see up to 4 times less delivery costs when using HEVC together with our solution).

Remember that the royalty fee on the device side still remains the same. Though HEVC is expensive to implement, device manufacturers have been working on HEVC chips since 2013; the marketing value of having a next-gen codec supported is enough for them to invest the necessary funds.

While the HEVC Advance move makes H.265 more accessible, a lot of uncertainty remains; the other patent pools have yet to announce public pricing, and the licensing terms can change at any moment. It seems that they may be waiting for wider adoption: once content owners adapt their workflows and replace their encoders, it would be much harder for them to revert in case of a fee increase.

What will the future look like? It’s difficult to say today. HEVC is increasingly used on TVs and STBs, although not as much as the HEVC pools would have it, apparently. At the same time, AV1’s impact can be felt on everyone’s encoding pipelines. However, it will still take at least two years to have AV1 hardware chips set in the latest Android phones, Smart TVs, and maybe even iphones(!), whereas we are already there for HEVC.

2018 will certainly continue to see its share of  twists and turns in the codec world, and we are far from being able to announce a “winner,” if such a winner exists… But it seems that AOM’s intention of shaking the status quo is finally paying off, and it’s good for the video industry as a whole.

And you, who do you think will win this codec war?