Guest post by Avni Rambhia, Industry Principal for ICT/Digital Transformation at Frost & Sullivan.
By many measures, HEVC has had a pretty good year. Natively integrated shipment numbers are up – notably in Smart TVs, tablets and mobile phones. The most egregious of royalty terms imposed by HEVC Advance have been rolled back. The HEVC community has made solid strides forward in standardizing HDR specifications for 4K and HD content. The UltraHD Blu-ray specification was locked down, and the first generation of devices and content titles are already shipping. Higher-efficiency implementations of HEVC encoding are available in a growing number of processing cores, including Intel’s new Skylake and from vendors such as Advantech. The end to end ecosystem for 4K is in place, and infrastructure for 4K is slowly but surely being rolled out (think 12G and AIMS). So why isn’t the community more optimistic about the codec?
At the Streaming Media East show last week, there was a lot of talk of HEVC and I presented revised forecasts for HEVC uptake, along with recommendations on choice of codecs and architectures for popular applications, in the context of ongoing trends such as 4K, virtual reality and virtualization. [See: Codec Battle Revisited: HEVC vs. AVC In 2016]
Multiple people at the show commented that they was surprised to see an eager movement to announce the death of the codec. At the surface, it’s easy to see how this may be tempting. The Alliance for Open Media, formed as a counterpoint to the irrational muscle-flexing of HEVC Advance last year, has certainly gained momentum. 4K and HDR are growing rapidly from a percentage growth rate point of view, but content volumes are still small as compared to the entire universe of M&E and enterprise video. VP9 has indeed made strong strides forward in enterprise applications as IT companies eager for speedy progress sought an effective alternative to the stymied and potentially risky HEVC standard at that time. None of this, however, materially impacts forecasts for HEVC adoption.
For most of the history of online video, compression standards for enterprise and M&E applications have been different. Where codecs such as Microsoft’s Windows Media Video, On2’s VP6, and later H.263 powered most of enterprise video needs, MPEG-2 was the powerhouse codec for most broadcast media applications. (In fact, MPEG-2 continues to be the go-to codec for many M&E applications today). The convergence of the two ecosystems around AVC/H.264 brought a welcome surge of growth, uniformity and scalability to the entire ecosystem. This trajectory to convergence was by no means a smooth one, some of us remember the patent fracas of MPEG-4 Part II video, followed by the independent development of H.264, and the eventual unification of technologies from these two competing standards as MPEG-4 Part 10, which we now know as AVC.
The reason for the difference between enterprise and M&E standards lies as much in business considerations as in technological realities. Broadcast workflows are extremely demanding – requiring high-density, high-reliability, real-time encoders. These video streams go through editing systems, graphics overlay and other processes, and pass through a number of products including statistical multiplexers, receivers & decoders, transcoders, servers, set top boxes and playback devices to finally be rendered at the consumer end. It takes months, if not years, for this large community of products from a vast array of vendors to achieve the levels of interoperability, scale, cost and maturity that are required for broad adoption and deployment.
That is why standards bodies work slowly, methodically and collaboratively to develop compression technology that can serve a new generation of video applications with a half life measured in decades. This is in stark contrast to consumer device technologies and even OTT streaming technologies today, where a new platform can emerge, mature and fade all within the space of a year or two.
The economics of video technology in consumer devices sits at the confluence of these two worlds. Entertainment content is coming from ever more diverse sources, from ever more diverse types of businesses, under ever more diverse business models. For CE devices to stand out in a crowded field of their own, they will do what it takes to attract as many content services to their devices, with the best possible quality. Royalty issues have always been a challenge for CE device vendors, as they often are seen to foot the bill on behalf of content services and even studios. As an example, we’ve often seen pushback on DRM security standards by CE device vendors, who are seen to be paying the security taxes in terms of protected hardware paths, trusted execution environments and more in order to protect the IP revenues of content companies against piracy.
At the end of the day, however, the industry finds a palatable medium across technology providers, service providers and CE devices to create an end-to-end ecosystem that drives new CE products, enables better service quality and grows the total pie of video revenues. As a case in point, studies have shown that HD+HDR delights consumers more (and in more use cases) than 4K. The natural question then is whether there is a move underway to retrofit HDR into the AVC standard so it can be deployed more widely. Universally, the perception is that TV vendors are eager to move forward with HEVC and HDR, and there is little to no appetite for working HDR into AVC.
If HEVC were indeed on the verge of oblivion, we’d be seeing a rush to incorporate VP9 into MPEG-DASH and an urgent drive to retrofit hot technologies such as HDR into AVC. We would not see continued increase in investments in accelerating HEVC and building it into silicon. We would see a halt in rollout of new broadcast standards such as ATSC 3.0 and DVB-T2 which are based on HEVC. We’d see HEVC-enabled set top box sales grind to a halt, but instead, we’re seeing numbers rise steadily with a rush of new service releases and rollouts slated for the coming year.
Is there uncertainty? Absolutely. Are royalty issues the single point of failure for a codec? Absolutely not. There is plenty of room to sidestep patent pools to negotiate directly with patent owners. Companies already need to negotiate with Technicolor separately and may choose to do so with other patent holders as well. MPEG-LA continues to be a voice of reason, with licensing terms that are resonant with market needs and the ground realities of how sales are reported and licenses are paid. The rest of the ecosystem will fall in line for M&E applications over time, and a growing number of enterprise applications will transition over as performance improves and costs fall. Real-time, dense compression, standardized delivery and ubiquitous playback are required for content ecosystems to flourish.
By this measure, HEVC continues to climb up the maturity curve. The chasm has been crossed, and an upswing is underway. AVC remains the competitive alternative for most video applications today, but HEVC’s time is here, bolstered by killer applications such as 4K and HDR in the short-term and assured by superior video compression in the longer term.