Codec Economics and Royalty Analysis

Perspective:

Codec decisions now involve significant royalty exposure. What used to be a primarily engineering decision now pulls in legal, finance and often C‑suite review.

New codecs deliver real benefits, including new features like HDR, bandwidth savings and quality improvements. They also introduce new costs. Some are obvious, such as higher encoding and storage expense. Others are less visible, such as reduced cache efficiency and entirely new royal ty costs.

Most new codecs are promoted with impressive efficiency gains, but actual savings depend on many factors. These include how well the baseline and new codec implementations are tuned, actual encoding and delivery costs, which ladder rungs viewers actually consume, and how effective your CDN caching is.

Who this is for:

This engagement is for any company that is considering adding a new codec and wants to fully understand how it will affect costs, viewer experience, operational complexity, and related licensing risk.

What we do:

Assess the efficiency of your current H.264 implementation, including encoding ladder and encoding parameters. This establishes a clean baseline.
Assess the efficiency of the planned advanced codec implementation.
Compare implementations using your actual encoding costs, bandwidth costs, and distribution patterns to estimate bandwidth savings and quality changes from the new codecs.
Estimate royalty obligations under relevant patent pools and identify other major patent owners that may claim royalties.
Estimate overall royalty cost on a per‑user and percentage‑of‑revenue basis.

This is a project‑based engagement. The work is scoped up front and carried through to a written report and working model that your team can reuse when conditions change.

See case study here.

You get:

An independent, fully documented, multi-factor analysis that accounts for efficiency, real encoding and delivery costs, viewing patterns, distribution efficiencies and both current and potential royalty exposure, so leadership can commit capital with a clear view of the upside, downside and tradeoffs involved.

About Jan Ozer:

Jan Ozer has been encoding video since the mid-1990s and is an established authority in H.264, HEVC, VP9, and AV1 compression. His books include Video Encoding by the Numbers: Eliminate the Guesswork from Your Streaming Video and Learn to Produce Video with FFmpeg in 30 Minutes or Less.

Ozer has tracked video codec licensing policies since 2008 and published the industry’s first structured comparison of the Access Advance and Avanci patent pools (Access Advance vs. Avanci Video: How the Streaming Programs Calculate Royalties). Though no longer practicing in either discipline, Ozer’s numbers-based approach and economic analysis are grounded in his legal and accounting background, holding both a law degree and a CPA.

Next step:

If you are evaluating a new codec and want an informed third-party opinion, contact Jan at jan.ozer@streaminglearningcenter.com.

Selected Bibliography:

These recent articles and studies illustrate the kind of work and analysis that informs this engagement.

Codec Licensing

Meta just took a patent license covering AV1 and VP9 from the Access Advance VDP Pool, (hopefully) ending the AV1 is royalty-free narrative, LinkedIn, July 2026

All Encoding Decisions Are Economic Decisions. It’s Time to Start Treating Them Accordingly, Streaming Learning Center, April, 2026.

Independent Report Compares Codec Royalty Costs Across Two Major Licensing Pools, Streaming Media Magazine, April 2026.

H.264 Streaming Fees: What Changed, Who’s Affected, and What It Means, Streaming Media Magazine, March 2026.

Avanci Video Signs First Licensee and Publishes Rates, Streaming Media Magazine, February 2026

Beyond H.264. Why Codec Choices Now Carry Legal and Financial Risk, Streaming Learning Center, January, 2026

AV2 Arriving: What We Know, and What We Don’t Know, Streaming Media Magazine, September 2025.

Access Advance Reveals Royalty Rates for Video Streaming Services, Streaming Media Magazine, July 2025.

Codec Royalties on Content and the Jaws Moment, Streaming Learning Center, August 2023.

Encoding Techniques

Capped CRF in a Multi-Codec World: FFmpeg and NVIDIA Implementations, Streaming Learning Center, February 2026.

Lies, Damn Lies, and Estimated Bandwidth Savings, Streaming Learning Center, February 2026.

Per‑Title Before New Codecs: Fixing Your H.264 Baseline, Streaming Learning Center, January 2026

Codecs

The State of Streaming Codecs 2026, Streaming Media Magazine, March 2026

Comparing H.264, HEVC, VP9, and AV1 in SBE: From BD-Rate to Contextual ROI, Streaming Learning Center, May 2025.

Inside AV2: Architecture, Performance, and Adoption Outlook, Streaming Learning Center, October 2025.

Buyers’ Guide: Hardware Transcoders, Streaming Media Magazine, March 2025