New Patent Pool Wants 0.5% Of Every Content Owner/Distributor’s Gross Revenue For Higher Quality Video

Updated: [Companies Should Reject Licensing Terms From HEVC Advance Patent Pool]

In March, a new group named HEVC Advance announced the formation of a new patent pool [see: New HEVC Patent Pool Launches Creating Confusion & Uncertainly In The Market] with the goal of compiling over 500 patents pertaining to HEVC technology. The pool of patent holders, which is “expected” to include GE, Technicolor, Dolby, Philips, and Mitsubishi Electric has just announced their royalty rates and are going directly after content owners and CE manufacturers. HEVC Advance wants 0.5% of content owners attributable gross revenue for each HEVC Video type. To put in perspective how unjust and unfair their licensing terms are, they want 0.5% of Netflix, Apple, Facebook, Amazon and every other content owner/distributor’s revenue, as it pertains to HEVC usage. Considering that most content owners and distributors plan to convert all of their videos over time to use the new High Efficiency Video Coding compression standard, companies like Facebook, Netflix and others would have to pay over $100M a year in licensing payments. The licensing terms apply to all content services that get revenue from advertising, subscription and PPV – which pretty much equals every content owner, OTT provider, broadcaster, sports league, satellite broadcaster and cable provider you can think of.

Making matters worse, HEVC Advance says their licensing terms [listed in detail here] are “retroactive to date of 1st sale”, so companies would be required to make payments on content they have already distributed using HEVC. In addition to content owners, HEVC Advance is also going after CE manufacturers of TV, mobile and streaming devices. TV manufacturers would have to pay $1.50 per unit and mobile devices incur a cost of $0.80 per unit. Streaming boxes, cable set-top-boxes, game consoles, Blu-ray players, digital video recorders, digital video projectors, digital media storage devices, personal navigation devices and digital photo frames would cost a manufacturer $1.10 per unit.

While HEVC Advance is quick to say how “fair and reasonable” their terms are, they aren’t. The best way to describe their terms would be unreasonable and greedy. MPEG LA, another licensing body for HEVC patents, charges CE manufacturers $0.20 per unit after the first 100,000 units each year (no royalties are payable for the first 100,000 units) up to a current maximum annual amount of $25M. HEVC Advance’s rates for TV manufacturers is seven times more expensive than MPEG LA’s licensing fees. In addition, MPEG LA charges content owners nothing for utilizing HEVC technologies in their business. (Updated 7/24: Removed reference to the licensing terms for AVC to make it easier to compare pricing)

Licensing groups typically don’t go after content owners; instead they go to hardware and platform vendors in the market who are customers of content distributors. But in this case, HEVC Advance is going directly after content owners and isn’t asking CDNs, encoding vendors or others in the video ecosystem to license their patents. What HEVC Advance doesn’t grasp is that this approach of trying to get a share of content owners revenues has been tried in the past and failed miserably. MPEG-4 Part 2, the original MPEG-4 video compression that pre-dated AVC failed in the market because of this licensing approach. Content owners are not willing to share in their revenue, and HEVC Advance is taking a fatal flaw in their approach. The fact that they think someone like Facebook, Apple or Netflix is going to hand over tens if not hundreds of millions of dollars to them, each year, shows just how delusional they really are. While I don’t expect HEVC Advance to get any traction with content owners, their licensing terms could have some major impacts in the industry. Right now, content licensing deals around streaming media services do not account for the cost of royalty payments. So if more money is required to play back higher-quality video, content licensing costs will go up, and consumers are going to foot the bill for higher priced streaming services

Another big problem is that there are no caps on the proposed royalties. This creates an immense burden for Internet-based technologies and software applications that may be looking to incorporate HEVC, since there is, in most cases, no realistic way of predicting what percentage of your content will be consumed using HEVC each month. Secondly, the 0.5% royalty on all revenues attributable to HEVC-based content is, to put it mildly, a loose cannon. This umbrella is intended to cover both direct revenue such as from subscription and PPV services as well as indirect revenues such as advertising supported business models. One could argue that the definition could be pushed so far as to cover the purchase price of merchandise that is advertised using HEVC-compressed video. If Zappos has a product video of a shoe on their website encoded using HEVC, Zappos would have to give a percentage of the sale of that show to HEVC Advance. Furthermore, this is 0.5% of gross revenues, not net profit, and so it is effectively a “compression tax” that spans content licensing fees and all content delivery expenses that any content service provider needs to generate in order to be profitable. Recall again that there is no cap on fees, and you can see how this one’s almost inevitably headed to the courts.

Currently, these terms only capture B2C applications such as social media, streaming video and Pay TV but licensing terms for B2B use cases such as video conferencing, video surveillance and enterprise video webcasting are still being considered by HEVC Advance. It is conceivable that those use cases will not be licensed at the same onerous terms as the content-based fee, but the burden generated by the current B2C licensing terms is almost certain anyway to increase the perceived risk by enterprises of adopting HEVC. This is a shame because HEVC has the potential to begin to transform the video delivery infrastructure, and was finally approaching an inflection point where shipments and usage was projected to rise to meaningful levels. 4K content is already reeling under the pressures of unviable economics. From limited improvement in visual quality to storage and transmission costs that rise at a much higher multiple than monetization can, the financial argument for 4K was already hurting for the vast majority of use cases. The present curveball thrown by HEVC Advance further impacts this already risky value proposition.

Adding insult to injury, HEVC Advance has yet to provide any details on which patents they expect to be in the pool. The company has said they will have more details to share later in the year, yet they acknowledge that the patents have not yet gone through an independent patent evaluation process, which they expect to start next month. HEVC Advance’s CEO also mentioned that some of the patent owners that are “expected” to be in the pool, are still finalizing their paperwork, so there is no confirmation yet of exactly which companies are officially in the pool. No patents have as yet been identified by HEVC Advance as being essential to HEVC, even though HEVC Advance says many of the patents are essential. In other words, there is still room for patent holders to take the responsible road and monetize their intellectual property in a fairer, more scalable and more industry-friendly manner, on their own, or in other pools other than HEVC Advance.

While some content owners have told me they feel these rates don’t apply to them since they use cloud providers to encode and deliver their content, that’s not a valid argument. They are not protected in their contracts with vendors when the vendors are not required to have to license the technology. If content owners band together and agree not to license from HEVC Advance, which is what I suggest they do, HEVC Advance will fail in the market and be forced to change strategy, or change their terms to be fair and reasonable. Since HEVC Advance is simply a licensing body, they can’t sue anyone. The actual patents holders would have to legally go after thousands of content owners and CE manufacturers, which I don’t see someone like Technicolor, Dolby, Philips, and Mitsubishi Electric having the time or energy to do. But make no mistake, there is a lot at stake here. 0.5% of a market that is over $100B a year is a lot of money that HEVC Advance is going after.

Another interesting impact this could have on the industry is the potential for content owners and CE manufacturers to move away from HEVC and adopt Google’s competing VP9 codec, which requires no licensing. This might be hard for many who have already tied their services to hardware, but nothing is stopping them from re-encoding their library to use VP9 for playback via the web and apps and then only use HEVC for playback tied to TVs and other hardware devices. HEVC Advance’s licensing terms definitely put VP9 in the spotlight and are going to have many content owners running the numbers to see how much money they can save, if they had to pay the royalties, versus the cost to re-encode into VP9. The whole reason content owners are moving to HEVC is better quality, with fewer bits, which equals a cheaper cost. If the cost savings is now erased by new royalty payments for HEVC technology, what’s the point of using HEVC over VP9? This is a question many content owners are going to start asking themselves.

The bottom line is that HEVC Advance is bad for the industry, for consumers, for the growth of 4K and in my two calls with the company, it’s clear that lawyers are driving the licensing, not technology people. The company was under the impression that content owners deliver their own content, which most don’t since they use third-party CDNs. So even if a content owner wanted to license patents from HEVC Advance, they don’t currently have the data that’s needed to determine what they pay. This means they would have to spend more money and time to to set up a data collection process, in addition to the added cost of the license. HEVC Advance thinks content owners and distributors track what percentage of their content is consumed via different codecs, which isn’t accurate, and they were dumbfounded when I told them that. Almost all of their answers to my questions was that they would make it “easy” for companies and “work with them”, but of course they don’t understand the basics and don’t have the skills to even know what kind of help content owners would need.

HEVC Advance excels when it comes to being vague, speaking in lawyer terms, not being specific, and showcasing their complete lack of understanding of the market they are going after. Frankly, it’s insulting that their press release from today speaks to how they are providing “efficient and transparent access to patents”, yet, have provided no details on any of the actual patents. This pool is completely incompetent and lacks any real understanding of the market.

This won’t be the last we’re hearing about patents pertaining to HEVC and higher-quality video/audio as Dolby has already told content owners that they should expect another royalty, as it pertains HDR in addition to HEVC. So don’t assume that HEVC and 4K are going to get the kind of traction that many are predicting. (Updated 7/23: Edited post to reference Google’s VP9 codec, not VP10)

Frost & Sullivan Analyst Avni Rambhia contributed to this post.

Note: I am available to talk to any content owner, vendor, member of the media or anyone else who wants details on all of this. This is bad for everyone, and I am making it my job to try to educate everyone as much as possible. I have already had multiple calls with lawyers and intellectual property groups at content firms, MSOs and others potentially impacted by this. All calls are off-the-record and confidential. I can be reached anytime at 917-523-4562 or

  • John Willkie

    Seems like a reasonable amount. Charging content owners was tried early on in the AVC patent pool, but was removed. That might happen again. BTW, MPEG-LA charges $2.50 per encoder or decoder for the full MPEG-2/MPEG-4 license.
    As for the retroactive part, “fools rushed in.” Vendors of professional encoding gear (not the toy software-only stuff) waited to market their systems until they had their HEVC licenses in place.

    • Avni Rambhia

      Existing vendors may have had their licenses in place with MPEG-LA, but they don’t have licenses in place with HEVC Advance yet. Additionally, content owners/service providers have not to date been required to get an HEVC license. So that’s still an issue. I’d also disagree that software-only = toy product, but that’s not really relevant to the discussion here.

      • John Willkie

        I have “customer serving partnerships” with at least two hardware-based encoder vendors, and Mutual NDAs. These vendors have had their HEVC encoders ready for market since a month or so of the HEVC standard being finalized. I’ve continually kept up with them with respect to the launch to market. These vendors had their licenses in place for some time for most of the IPR, but there were three holdouts. Only one of the holders in the advance pool were the holdouts. Early this year, the vendors had reached agreement with those holding the rights to the standard-essential patents that “saved the most bits.”
        The situation may not be apparent from afar (retail), but “going through a patent pool” is not the only way to acquire standards-essential patents if your firm has intellectual property that the holders are interested in cross-licensing. When a vendor is involved in the standards-development process, your firm knows of the standards-essential disclosures before they are even disclosed.

      • Stefan Caunter

        Hi. Software is totally relevant. Everything is software. Software encoding vendors pay license fees. Software users pay significant ongoing license fees. My business pays thousands of dollars every month in such fees, because we have lots of customers who depend on us.
        To suggest that “hardware” is magical and superior ignores the fact that it runs, … software.
        Casually dismissing an entire side of the industry is easy. It’s called equipment snobbery, and it’s hardly a surprise to see it. It’s like me calling someone’s home computer a toy because I’ve got racks of servers. Is someone’s home internet connection a “toy” because my business pays for gigabit fibre connections all over the world? Different scale, different use cases, and that’s what’s actually relevant 😉

    • Matej K.

      MPEG-2, MPEG-4 Visual and AVC are three different pools. No one is using MPEG-4 Visual because of per content license fees. While there are license fees for pay-per-view in H.264 (fee for free content has been waived), it is capped to 100k/year for subscriptions. HEVC Advance offers no caps and the per content fee is based on gross revenue. That’s *not* reasonable.

      • John Willkie

        I think you meant to say MPEG-2 Systems for “MPEG-2.” You are incorrect at least two more times. (I work in the broadcast industry primarily.) MPEG-2 Visual (for manufacturers) actually includes MPEG AVC rights at the same rate as formerly MPEG-2 Visual. I know not if “no one is using MPEG-4, but with broadcast gear, nobody needs to, since MPEG-4 video must be conveyed on MPEG-2 Systems transport stream. MPEG-4 video is broadly used: the encoder on my workbench (hardware, not a toy) includes MPEG-2 video and MPEG-4/AVC video. MPEG-2 and MPEG-4 is baked into (whether MPEG-4 is enabled) in almost all TV sets and set top boxes currently on the market.
        I think you are whining about HEVC Advance. If you take in $1,000,000 from HEVC streams, HEVC advance requires a license fee of $5,000 for that; about the cost of one server.
        Nobody is required to use HEVC; but by halving your bandwidth bill (or enabling twice the streams in the same bandwidth, HEVC would seem to enable infrastructure/transport savings.

        • Matej K.

          I didn’t mean MPEG-2 systems. I meant MPEG-2 visual, the video codec (h.262).

          Not everything is broadcast. H.262 is virtually useless for internet video streaming. It makes no sense to lump H.262 and AVC programs together in this context.

          Those are separate programs with different patents pools and they be licensed separately, with AVC being significantly cheaper (IIRC starting $0.2 per codec instance, which is about an order of magnitude less than H.262). Also there is a royalty cap on AVC while there is none for H.262. And you don’t need to license encoder and decoder separately.

          No one is using MPEG-4 Visual regardless of how it is muxed, it didn’t gain traction because of licensing issues. Again, I’m not talking about broadcast here where the adoption is difficult for technical reasons, I’m talking about the darker ages of video streaming when AVC was not yet around.

          I’m not whining. I just don’t see the licensing cost and structure as reasonable.

          Btw. AVC license does still have fee on pay-per-view content and subscription content, but the latter is capped at 100k, which is hardly an issue.

          • John Willkie

            Read this carefully. You said that there were two MPEG-2 pools. One you called MPEG-2 and the other MPEG-2 Visual. The first pool is actually called “MPEG-2 Systems.”
            Sure, not everything is broadcast. But, broadcast/cable/satellite is MUCH BIGGER than streaming.
            Ifyou hadn’t noticed, YouTube (which I suspect you have heard of) IS an MPEG-4 licensee, because VP8 “read on” one or more of the MPEG-4 pool patent holders. YouTube USES MPEG-4 technology. Repeat this paragraph until it makes sense to you.
            Two years ago, a vendor of hardware encoders tested every television set sold in the US and determined that 60% of them demultiplex and render MPEG-4 video. The percentage is higher now. Those “smart TV apps — streaming media, you see — all support MPEG-4.
            When I watch SVOD on my cable system, owned by the 4th largest Multiple System Operator in the US, all the content is streamed to me using an MPEG-4 codec.
            If you feel that the fee is unreasonable, I you can stick with MPEG-4 or MPEG-2. Or, “go rogue.” From my reading under US law, the terms, fees and conditions are fair, reasonable and non-discriminatory. But, for my current business, I need not become an HEVC Advance licensee, and what I need from MPEG-4 I get with my MPEG-2 Visual license.
            By the way, the MPEG-4 streaming cap is $100k PER YEAR. Odd, isn’t it, that when Google (finally) paid for their many uses (due to the “royalty free” VP8 infringing on MPEG-4 AVC patents, they ended up paying millions in payments in arrears. And, they didn’t indemnify VP8 licensees.
            So, Google can use VP8, paying no more than $100K per year going forward, but all their VP8 licensees are subject to infringement suits. Fun, that!

          • Matej K.

            You were the first to called MPEG2 MPEG2 Visual. I just just the same name to refer to MPEG 2 to avoid confusion. So let’s call it H.262.

            By MPEG 4 do you mean MPEG 4 Visual (MPEG 4 Part 2) or AVC (MPEG 4 Part 10)? Because if you mean mpeg 4 visual (which I referred to many times) then your comment doesn’t make much sense

            Please show me On2 Technologies in the MPEG 4 Visual Licensees list


            And where exactly is youtube using MPEG 4 Visual? As far as I can tell they are using VP8/9 and AVC, I’m not aware of any videos in streamed in MPEG 4 part 2.

            Nevermind, I can now see that you referred to MPEG 4 streaming cap. So you have obviously confused AVC and MPEG 4 Visual. Please be aware that there is a big difference between those two, otherwise your comments are just confused (and confusing).

          • John Willkie

            You are delusional. Here’s the first words on your first post on this subject “MPEG-2, MPEG-4 Visual and AVC” …
            I’m not confused; your own words confuse you. Everything I’ve written is rather clear; if you still don’t understand what I’ve written and what you’ve written, ask your mother to read them back to you. I’m done with you.

          • Matej K.

            Exactly. MPEG-2 (H.262), MPEG-4 Visual (H.263, MPEG 4 Part 2) and AVC (H.264, MPEG-4 Part 10). Note the word “visual” after every occurrence of MPEG 4 in my comments.

            Yet your previous comment you’re obviously referring to AVC as MPEG 4, but that doesn’t make sense as reply to my comment. I was talking about *MPEG 4 Visual* (H.263) adoption being nonexistent because of licensing issues, and you keep telling me I’m wrong because everyone is using AVC (H.264, to which you referred to as MPEG 4).

            But those are two completely different codecs! Get it through your thick skull. MPEG 4 Visual was never used in broadcast as far as I can tell so I can understand why you don’t know about it, but I did try really hard to explain. Also, your childish tone doesn’t really bother me.

          • John Willkie

            You shouldn’t be bothered. I’m giving you all due respect.

            Here is the list of MPEG-4 visual licensees.

            704 licensees. You say “nobody is using it.” Yet, that is 704 companies providing MPEG-LA with quarterly reports.

            Let’s compare that with AVC/H.264, which you believe is what everybody is using.

            1360 licensees. Not even quite one order of magnitude more licensees than the MPEG-4 part 4 (MPEG-4 Visual) that “nobody” uses.

            Since I’m an engineer who loves to burst foolishness, let’s compare the number of licensees of MPEG-4 Visual that nobody uses with the MPEG-4 Systems patent pool that truly nobody uses.

            37 licensees in good standing, and the patent pool is closed; no new licensees are accepted.
            You are entitled to your opinion that paying $5,000 for each $1,000,000 in revenue made from streaming HEVC even if your position approaches ignorance of actual costs involved in streaming.
            You are not entitled to your own personal set of facts. MPEG-4 visual has 704 licensees in good standing, slightly over half the number of licensees of AVC/h.264, which we can agree is widely deployed.
            I was once of the impression that Adobe Flash uses MPEG-4 part 4 video. Last time I checked, Adobe Flash was widely deployed, indeed (lamentably) the most widely deployed video client out there.
            And, just to seal another of my points, Google is a licensee in good standing of AVC/h.264 and MPEG-4 Visual (part 4). In addition, Google Fiber is a licensee of MPE$-4 visual, as is Yahoo.
            Have you ever read an MPEG-4 license; from a business sense, it creates a highly intrusive situation — right to audit, etc. Why go to the trouble to create monthly reports and remittances if you aren’t using the technology?

          • Matej K.

            So? There are many companies with products that have H.263 decoders, if for nothing else then for the sake of completeness (and it was used for video conferencing).

            Codecs were never the issue. Every Windows and OS X instance has licensed H.263 decoder. Every Android phone, iPhone, iPad, out there has licensed H.263 decoder in it (because of 3GPP). Also, compared to other codecs the annual cap on H.263 decoder licenses is quite low.

            Content was the major problem – there was almost no commercial content distributed in MPEG 4 visual because of the content fee, which hasn’t even been defined in the beginning (even in 2002 it was not certain how will free-to-view video be licensed).

            The licensee list is not a good indicator. The companies listed there don’t even have to produce anything actually using the technology (read the disclaimer at the end of the list). And you don’t see from the list which companies license codecs and which license content. Also, the content licensing fees have changed significantly compared to the original terms from 2002.

            Can you seriously imagine ABC, CBS and NBC paying 0.5% of their revenue for HEVC licenses? Granted that’d assume all over the air broadcast being in HEVC, which won’t happen for a while, but still, that’s ridiculous.

            Both H.263 and H.264 programs waived fees for free-to-watch content, I don’t see anything like that from HEVC Advance, but it may be too soon to tell. However not doing so would be insane. I’d mean every website on internet that streams video and has an ad in it would need to get licensed. Again, that’s ridiculous.

  • Tomi Jalonen

    Why do suggest VP10 as alternative and not rather VP9 that exists today and is currently being implemented in many SoCs?

    • danrayburn

      Thanks for noticing. I meant VP9. Have edited.

  • Dave Cody

    Did Apple suggest that they would pass on to consumers the cost savings relating to reduced storage costs and reduced bandwidth distribution costs to consumers that would be enabled by this switch to HEVC? Or did they plan to simply pocket the extra margin?
    I’m not singling out Apple here, the statement applies to ALL video retailers who monetise content via the HEVC codec.
    It is perfectly reasonable that the IP owners of that technology should be rewarded for their invention, and their ask is trivial by comparison to the cost savings they are enabling.
    Pay up and get on with your life.

    • Matej K.

      It’s not about not wanting to pay, it’s about how much and about the pricing structure.

      Btw. when it comes to codec licenses, Apple is not being cheap. They are paying for MPEG 2 license, MPEG 4 Visual, AVC license, MPEG Audio, AAC, even Dolby Digital. Those are all codecs that are shipped with every Mac.

    • Tom Vaughan

      No one is suggesting that IP owners don’t have the right to license
      their IP. However, when you join a standards body, you agree to license
      your contributions on fair, reasonable and non-discriminatory terms.
      Asking up to 12.5 times what MPEG-LA (which may be a more valuable and essential portfolio) charges for the HEVC patents they are licensing is not reasonable. Trying to tax top-line revenue of companies that use
      HEVC is definitely not reasonable. It simply won’t happen. They’ve
      overplayed their hand. If these IP owners aren’t reasonable, no one
      will use their IP.

      • Robert O’Callahan

        It’s difficult to simply “not use their IP” when products using that IP are already shipping, and “not use their IP” possibly requires modifying the HEVC spec (perhaps hurting performance) and updating encoded content.

        This all assumes HEVC Advance actually has, or will have, essential patents. If not, nothing to see here.

      • johnBas5

        It’s just capitalism!
        It’s the nature of for profit driven companies.

        People keep being surprised when companies behave the way they are selected to do!

  • ToyotaBedZRock

    I doubt many patents on math done on a computing device can hold up after recent supreme court rulings.

  • Kisai

    Here’s the thing. It may ultimately save Facebook or Netflix millions of dollars if they “wholesale” switched to a new codec, but those cost savings will not be realized till after the patents expire by which some new codec will come around.

    Take for example the super crappy smartTV’s that LG and Samsung put out. None of them are capable of playing back 4K h265, let alone High Profile h264. They are still designed around being a “dumb” device attached to a Cable box. Cable boxes are still all using MPEG-2, and only use AVC on their PPV/VOD streams because it has to use the “internet” connection instead of the cable broadcast. IPTV devices are using AVC and generally the hardware devices are too weak to be “soft upgraded”. If a company wants to wholesale switch to h265, they have to replace all the customer premises equipment, which some people hang onto for a decade. They may as well just wait out 20 years and replace it when it costs them nothing.

    This is why 3D is currently a flop, and “VR” is a flop again (see 1995.) Nobody sees any value in adopting this tech, and thus no content is created to utilize the tech. If you want to see something adopted, you have to effectively give away the tools to create the content. As soon as you put licencing costs up front, that disincentives usage of it in favor of whatever is “just good enough”

    What I predict is we’re going to see h.265 skipped and current consumer equipment that is “capable” of playback or creating it will just be ignored as people use use Adobe CS5, or Final Cut Pro get error messages saying that the codec isn’t supported, and several “free” software products appear to “fix” videos so they work. The only people who will adopt h.265 will be the porn pirates who don’t care anyway.

  • MrL0g1c

    So H.265 will be ditched for a long time.

    Good, it is far too processor intensive and would use massive amounts of electricity worldwide as compared with h.264 or earlier codecs.

  • johnBas5

    The future looks brighter for open and royalty-free alternatives:

    And VP9 isn’t the only competitor in the making:

    – Daala video codec:

    Daala is the code-name for a new video compression technology.
    The effort is a collaboration between Mozilla Foundation,
    Xiph.Org Foundation and other contributors.

    The goal of the project is to provide a free to implement,
    use and distribute digital media format and reference
    implementation with technical performance superior to h.265.

    – Dirac video codec

    Dirac is an open and royalty-free video compression format,[2] specification and system developed by BBC Research at the BBC.[3][4][5][6] Schrödinger and dirac-research (formerly just called “Dirac”) are open and royalty-free software implementations (video codecs) of Dirac. Dirac format aims to provide high-quality video compression for Ultra HDTV and beyond,[4] and as such competes with existing formats such as H.264 and VC-1.

    And many others, a nice list can be found here:

  • You raise clear and damning observations, Dan Rayburn. The HEVC position is a pity for everyone: artists & content owners, streamers & other content providers, hardware manufacturers and consumers. H.265 is a great standard backed by an outstanding collaborative effort. Just a week ago, there was terrific potential for market unification, bandwidth reduction, storage savings, and an array of high-quality video services. BD-BR measurements give HEVC the edge in coding efficiency and the playback load is very light.

    Although I might be able to live with an 0.5%, 18 delivery tax (or consumption tax, depending upon your view), the effort to collect with a requisite calculation of the share-allocated revenue is a deal stopper.

    A multi-billion dollar market that would have ensued. In fact, it was just starting to approach that critical adoption knee, in which a 2-sided network floats all boats. If I could talk with the lawyers at HEVC advance, I would review the economics with them…

    But like you, I would prefer to talk with the technology stakeholders. They stand to enjoy a stunning return with a more reasonable model. My suggestion: take a royalty hardware and application codecs, but not content. A reasonable model that frees explosive growth would be:

    • 0.1% of all software codecs distributed with revenue-generation software applications or processes
    • 0.15% of playback codecs built into hardware devices *
    • $2 or 0.15% for each encoding process or hardware device **
    • 0.1% of paids apps that are extensible (those that support plug-ins or open source codecs)

    Free – Personal reference app (published by patent consortium). It supports stand-alone video playback

    Free – Hosting or distribution Content encoded with H.265

    * Royalty applies to any hardware device or app that suggests the download of HEVC plug-in or compatible routine

    ** Up to 16 cores in a single gadget, PC, or device less than 1 cu feet not including external display.

    This stacks on top of playback royalty. So, for example, if an video player application can open an x264 video and save as x265, it would pay a royalty of 0.1 or 0.15% (for the playback codec) and $2 or 0.15% for the encoding feature, whichever is more.

    I have run the numbers for every believable growth curve, and THIS FORMULA is not only more palatable, more enforceable, and more reasonable, it delivers higher revenue to the patent stakeholders. More importantly, it makes them the good guys.

    Ellery Davies
    CRYPSA CEO & Co-Chair

  • I’ll be announcing the launch date for a new Adaptive Definition technology within two weeks. It will instantly transform SD and HD to 4K streams and higher without creating files. It’ll do much more than any encoding tech. Examples are: realtime denoising, auto-scaling, multi-display support, compositing multiple sources, effects generated from semantic descriptions, and more. All of this will happen on the local device saving bandwidth and storage. Video is about to experience a revolution. It will become future-proof as the software will adapt to the hardware to deliver the highest quality that the hardware supports.

    • BTW, it can also Downsample HD and 4K in realtime. It isn’t focused on compression. It’s a new approach that detects objects and geometrically folds in details at greater definition or less based on modifiable rules, such as the spec of the hardware or user choices. Thus the term adaptive definition.

  • electroteque

    Goodbye 4K when people ever get a stable fibre connection to even use it. I highly doubt real 4k is even possible even with low latency connection to the server. Good bye possible other codecs support unless it’s an embedded device or a single browser. Enforce a single browser ?

  • Francesco

    The real winner is V-Nova with Perseus. I wonder….

    “V-Nova was built as part of a growing consortium of 20 global players using Open Innovation to solve real business and social challenges through advanced video technology.”

    Are among those 20 “global players” some of the companies killing H.265 with HEVC Advance?

    Wouldn’t be the first time.