At the start of 2015, the future of HEVC seemed clean and green. There was a single patent pool, and royalties were capped at a reasonable rate. Meanwhile, the open source world was a mess, with multiple codecs from multiple sources, and only a hint

HEVC’s Journey in 2015: Going Downhill and Gaining Speed

At the start of 2015, the future of HEVC seemed clean and green. There was a single patent pool, and royalties were capped at a reasonable rate. Meanwhile, the open source world was a mess, with multiple codecs from multiple sources, and only a hint of potential cooperation. Ten months later, the situation has totally reversed. HEVC is in disarray, with two patent pools (the second with near-usurious rates and no caps) and the threat of a third, while all open source efforts have consolidated into a single, focused whole. To paraphrase Talking Heads: “Well, how did we get here?” Let’s review.

At the start of the year, HEVC turned 2, and there was a single royalty pool from MPEG LA that charged $0.20 per unit for encoder and decoder after the first 100,000 units, with a $25 million cap in the first year, and no royalties on HEVC-encoded content. Several services had already deployed HEVC content, most famously Netflix with House of Cards.

On the open source front, Google was delivering about 30 percent of all content via VP9 to save big on bandwidth and improve the quality of lower-bitrate files. In October 2014, The Internet Engineering Task Force (IETF) sponsored the Internet Video Codec (netvc) working group with a goal of delivering the specification for a competitive open-source codec by May 2017. One proposed codec was Daala, a collaboration between Mozilla and Daala was making progress, but it wasn’t close to commercial availability. The other candidate was VP10, the next-generation codec after Google’s VP9.

Pre-NAB Announcements

On March 26, HEVC Advance, an independent licensing administrator, announced a new HEVC patent pool with an initial list of licensors that was expected to include GE, Technicolor, Dolby, Philips, and Mitsubishi Electric. The new company promised to announce royalty rates and licensing terms in the second quarter of 2015.

On April 1, V-Nova, a London-based company founded in 2011, announced the new Perseus codec, which, according to the press release, offers “UHD quality at HD bitrates, HD at SD bitrates, and SD video at audio bitrates.”

Streaming Media has asked repeatedly to test Perseus, and V-Nova has declined, though before IBC, the company claimed that it was “working with a number of operators” to trial and evaluate Ultra HD using its Perseus codec. At this point, Perseus remains an outlier—not standards-based, and not open source—and without third-party tests, it’s difficult to handicap its potential.

Breaking the Camel’s Back

On July 21, HEVC Advance announced its licensing terms. Briefly, encoder/decoder pricing, whether in hardware or software, ranged from $0.80 per unit to $1.50 per unit, with no de minimis exceptions, and no caps, backdated to the technology’s first use—take that, you pesky early adopters! HEVC also claimed a 0.5 percent royalty on attributable revenue, essentially a royalty on HEVC-encoded content.

Industry reaction to the proposed royalty was almost uniformly negative on multiple fronts.

Writing for the Streaming Media blog, Dan Rayburn pointed out that HEVC Advance is long on claims but short of details. As I write this column in late September 2015, the HEVC Advance site still doesn’t list the patents that it represents, or even who is joining the group, which obviously makes it difficult to determine the essentiality of those patents and whether the royalties claimed are legitimate.

Potential licensees also vehemently rejected the content royalty. For example, Joe Inzerillo, the highly respected CTO of MLB Advanced Media, told Fierce Cable, “The notion of gross revenue is the part that’s just a nonstarter. If it was just another toll to pay and the toll was sort of reasonable … that wouldn’t be such a big deal. But the gross revenues … no mainstream company is ever going to do that.” Inzerillo went on to say, “The H.265 patent stuff has really taken the wind out of 4K sales and 8K.”

On the encoder/decoder side, it’s also unclear whether HEVC Advance’s proposed royalty rates, which exceed those proposed by MPEG LA by as much as 10 times over, would withstand a FRAND (Fair, Reasonable, and Nondiscriminatory) challenge as required for technologies used in an industry standard. With companies such as Apple looking at a $120 million first-year payout, it seems like a FRAND challenge is almost assured.

Finally, as Rayburn wrote in the blog post mentioned above, a third HEVC licensing group was also forming. Suddenly, HEVC morphed from fait accompli into an unmanageable mess. Meanwhile, behind the scenes, the open source community was making plans to consolidate their efforts. But first, there was Thor.

On the Open Source Front

On Aug. 11, Cisco announced Thor, an open-source codec the company submitted to the aforementioned IETF NetVC workgroup. Given that Thor was “years away,” the announcement had the feeling of being more sizzle than steak. Still, that didn’t stop the Broadcast Bridge from trumpeting, “Cisco to Nix HEVC with Thor?” Well, at least they put a question mark in the title.

However, the big news came on Aug. 31, when a new consortium called the Alliance for Open Media announced that it’s working on a codec that could be delivered as soon as January 2017. The group includes a number of internet bigwigs, including Google, Amazon, Cisco, Microsoft, Mozilla, Netflix, Amazon, and Intel, and all agreed to forgo royalties on their IP contributions.

Significantly, the group consolidated the development of the three major IETF next-gen codecs (VP10, Daala, and Thor) perhaps forever cementing Thor’s place as the world’s shortest-lived video codec. More to the point, this should accelerate the development of the Alliance codec, and assure its selection as the NetVC codec for the IETF.

What are the chances for the Alliance codec? As discussed in this commentary, while the standards-obsessed broadcast market will likely stick with HEVC, it looks like the Alliance codec will eliminate any chance for HEVC to succeed in browser-based playback. With Google and Amazon as charter members, the Alliance codec could also make waves in mobile and OTT devices.

All this, of course, assumes that the Alliance codec doesn’t infringe upon any HEVC or other patents, which may be unlikely, according to Elvir Causevic and Ed Fish from Black Stone IP, an investment bank that advises operating companies on trading intellectual property and technology assets. As to the true purpose of the Alliance, Causevic and Fish posit that it might be to create “a dialogue among HEVC Advance and leading IP holders and implementers to arrive at terms that meet the needs of all key parties in each industry segment.” In other words, come to your senses and don’t kill the golden goose before it starts laying eggs. According to Streaming Media editor Eric Schumacher-Rasmussen, this was the talk at IBC—that the Alliance is purely a political move, designed to get HEVC Advance to back down.

If so, there’s some indication that the move may be working. On Sept. 24, HEVC Advance said it was adding MediaTek as a member of the patent group and that it will “adjust fees to support widespread use of HEVC.” No other details were provided.

The only thing we absolutely know at this point is that uncertainty and risk always slows technology adoption. Not to lecture, but if HEVC IP owners had sat down and planned a strategy to derail their codec’s success, they couldn’t have done a better job than what occurred in 2015. Given that the open source community seems to have caught the cooperation bug, HEVC ends the year looking a whole lot worse off than it did when it started.

This article appears in the November/December 2015 issue of Streaming Media magazine as “The Rise (And Fall?) of HEVC.”

About Jan Ozer

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I help companies train new technical hires in streaming media-related positions; I also help companies optimize their codec selections and encoding stacks and evaluate new encoders and codecs. I am a contributing editor to Streaming Media Magazine, writing about codecs and encoding tools. I have written multiple authoritative books on video encoding, including Video Encoding by the Numbers: Eliminate the Guesswork from your Streaming Video ( and Learn to Produce Video with FFmpeg: In Thirty Minutes or Less ( I have multiple courses relating to streaming media production, all available at I currently work as as a Senior Director in Marketing.

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