H.265 Licensing Deal Saves Creators Royalty Fees

HEVC-LogoBar for Pay Per View fees high, HEVC will charge none

By James DeRuvo (doddleNEWS)

The MPEG LA group, which controls management of royalties and fees pertaining to the ultra high definition codecs H.265 and HEVC, have ironed out a basic framework which will free content creators of the burden of paying any royalty fees on projects that use the codecs. And that’s good news for the future of 4K.

 there are no content-related royalties; if H.264 video is sold via pay-per-view or subscription in sufficient quantities, royalties will apply. With HEVC, there will never be any content-related royalties.

While content creators will avoid any royalty payments unless there’s massive success in the realm of pay-per-view, the manufacturers of encoder/decoder hardware aren’t so lucky. According to the agreement, which has the support of over 25 companies including Apple, NEC, and the BBC, companies will foot a bill of .20 per unit, after an initial sale run of 100,000 units. Then, once sales of H.265 hit five million, the royalty drops to $0.10 after 5 million units with a cap at $6.5 million through 2115. The HEVC royalty, on the other hand, never drops, and will top out at $25 million.

The result is that HEVC may end up stalling in widespread adoption, as UHD encoders look for better deals. And the one that could benefit the most from the deal, might actually be Google’s VP9, which Google plans to push as a royalty-free codec in order to gain market traction. So far, it hasn’t really helped, but that was largely due to the fact that the royalty rates hadn’t been ironed out. Now that they look to be adopted, manufacturers may look Google’s way, much phone manufacturers have with Android and now it’s the most used mobile operating system in the world (even though Apple still enjoys the highest selling iPhone numbers, one-to-one).

Still, H.265 will definitely benefit from the new arrangement over the run of the entire life of the codec. And not only because of the deal that was hammered out, but because starting in 2015, royalty fees for the current H.264 HD codec are expected to skyrocket, and that is probably one of the driving factors that manufacturers have had to push past HD and move into 4K. Because the more people they get to adopt the ultra high definition standard, the less they’re being double dipped by MPEGLA for royalties on both, and H.264 is going to hurt.

But regardless, content creators are able to avoid laying out royalty fees on projects that use the codec for streaming video distribution. And that’s going to generate wide spread adoption and hasten 4K adoption.


Press Release:

MPEG LA Announces License Terms for High Efficiency Video Coding (HEVC/H.265)
HEVC Holds Promise for Mobile Video and Ultra High Definition TV Applications

(DENVER, CO, US – 16 January 2014) – MPEG LA, LLC announced today that a group of 25 companies have agreed on HEVC license terms expected to issue as part of an HEVC Patent Portfolio License in early 2014. A summary is attached. Final agreements are yet to be concluded.

High Efficiency Video Coding (HEVC, also known as H.265 and MPEG-H Part 2) is a standard designed to improve video coding efficiency for the benefit of Internet and mobile service providers and consumers with increased speed and capacity. HEVC is also expected to deliver next generation higher resolution HDTV video displays for 4K and 8K Ultra High Definition TV (“UHDTV”).

“As contemplated, the HEVC license will utilize a modern streamlined pool licensing approach with simple easy-to-understand terms making the technology readily accessible to the largest possible market in the shortest possible time,” said MPEG LA President and CEO Larry Horn. “MPEG LA salutes the cooperation of patent owners who have worked hard to reach common ground in making a joint patent license available for the convenience of HEVC adopters. As a result of their efforts, consumers benefiting from a marketplace of competitive technology choices will be the clear winners.”

As work continues on evaluating patents for essentiality and concluding terms in final agreements, the license is currently supported by 25 prospective HEVC essential patent holders including the following:

Apple Inc.
British Broadcasting Corporation
Cisco Technology, Inc.
Electronics and Telecommunications Research Institute (ETRI) of Korea
Fraunhofer-Gesellschaft zur Foerderung der angewandten Forschung e.V.
Hitachi Maxell, Ltd.
HUMAX Co., Ltd.
JVC KENWOOD Corporation
KT Corp.
LG Electronics Inc.
M&K Holdings Inc.
NEC Corporation
Nippon Hoso Kyokai
Nippon Telegraph and Telephone Corporation
Orange SA
Siemens AG
SK Telecom
Telefonaktiebolaget LM Ericsson
Thomson Licensing
Vidyo, Inc.

Additional patent holders who are participating in the facilitation process also may be included, and others are welcome to join.

In its effort to include as much essential intellectual property as possible in one license for the benefit of the marketplace, MPEG LA continues to welcome the submission of issued patents for an evaluation of their essentiality to the HEVC Standard (defined in ISO/IEC 23008-2 MPEG-H Part 2 and ITU-T Recommendation H.265). Any party that believes it has patents that are essential to the HEVC Standard and wishes to join the HEVC Patent Portfolio License is invited to submit them for evaluation by MPEG LA’s patent evaluators. The terms and procedures governing patent submissions may be requested at http://www.mpegla.com/main/pid/HEVC/default.aspx.

Hat Tip – NFS

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Doddlenews is the news division of the Digital Production Buzz, a leading online resource for filmmakers, covering news, reviews and tutorials for the video and film industry, along with movie and TV news, and podcasting.

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