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MPEG-DASH Royalties: What We Know So Far
Who will owe royalties on MPEG-DASH? We spoke to MPEG LA to find out. Bottom line: If you use Media Presentation Descriptions (MPDs) in a player or app, it's time to call your attorneys.
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As you probably heard, MPEG LA yesterday announced a patent pool for MPEG DASH. After talking to representatives from MPEG LA, we know a little bit more now than we did yesterday. We'll continue to dig deeper about what it means for the industry, the legal ins and outs of the royalty language, the robustness of the patents, and potential workarounds.

Explanatory Language From the DASH Briefing

So, for today, here's what we know. First, as pointed out yesterday, you can view a summary of the Patent Portfolio License or download the official Briefing.  I spoke with Bill Geary, MPEG LA vice president of business development, for clarification on multiple points, and as you'll see, he confirmed several scenarios regarding when royalties would apply and who would owe them. It's important to note that the license won't be finalized until early December; MPEG LA shared some terms for the purposes of clarification, but didn't want us to quote the terms because they may change. 

By way of background, the license is on any patent rights "necessary for the DASH standard." So it's targeted towards those using the DASH Standard as defined as ISO/IEC 23009-1:2014. If you're using Media Presentation Descriptions (MPDs) in a player or app, it's time to call your attorneys.

The royalties apply in two cases; DASH Clients and DASH Initiators. Let's take them one by one.

DASH Clients

Dash Clients are defined in the summary as "products capable of parsing a Media Presentation Description and accessing or playing DASH Segments." The first question is whether this applies to browsers that support the Media Source Extensions (MSE). According to a technical contact from an off-the-shelf player vendor, the answer is probably not. That's because MSE doesn't "parse" the MPD, it parses the incoming file segments (in ISO Base Media File Format in the case of DASH) and passes the MPD to the DASH player. Unless the browser has a DASH Player, like Microsoft Edge, a browser wouldn't be a DASH Client.

Browsers without DASH clients have to call a separate DASH player to parse the MPD and play the video. These clients are either totally home grown or built from open-source components like DASH.js, or from off-the-shelf players like those from JWPlayer, Bitmovin, castLabs, or THEOplayer. Technically, these players are linked to the page where the video is made available, and load when the viewer clicks the play (or other) button.

These players would seem to be licensable DASH Clients, except that the current draft of the DASH Client definition excludes players that are temporarily loaded through the browser. However, the license terms also say that this exception will be reevaluated on annual basis.

So it appears that neither the browser or temporarily loaded player would give rise to a royalty. "The license does not collect royalties on browsers; it collects royalties for products with DASH functionality and those that initiate playback of DASH files," says Geary. "A DASH player temporarily loaded through a browser for the purpose of playing associated files currently falls outside the license and no royalties are payable for that at this time."

In my discussions with MPEG LA, the exclusion for temporarily loaded players appeared to relate to the administrative challenges of metering player usage. For example, if I watch ten videos from Service A that calls the DASH player ten times, is that one royalty or ten? If Service A built its player around DASH.js, and Service B does as well, and I watch ten videos from Service A and B, does this give rise to one royalty, two, or twenty? I think we can guess the intent after discussing DASH Initiators, so let's do that and then circle back.

But first, who owes the royalty? The company that actually supplies the player to the end user. So if an Android phone includes ExoPlayer, which is a DASH client, the mobile phone company selling the device to the end user owes the royalty. If Telestream decides to add DASH playback to Telestream Switch, Telestream would owe the royalty.

DASH Initiators

In a word, this category refers to apps, or "products capable of initiating transfer of Media Presentation Descriptions associated with DASH Segments." To continue with both examples from above, assume Service A distributes to Android phones via an app. The app itself doesn't include a DASH client, but rather calls ExoPlayer to manage DASH playback. The app is the DASH Initiator, and is royalty bearing, as is DASH Client ExoPlayer. This is true for any app on mobile devices, smart TVs, OTT devices, or game consoles that call an MPD for playback on another player.

Who owes the royalty here? In this case, it's the company supplying the app, even if it's provided on a device sold to an end user. So, if Samsung sells a phone with ExoPlayer and five video apps that call ExoPlayer to play MPD files, Samsung owes the royalty on ExoPlayer, and the supplier of each app owes the royalty on its respective app.

Returning to the issue of the temporarily loaded DASH player, it seems like MPEG LA's intent would be to figure out a way to license that player separately for each customer, like an app, but not for each use by that customer, which would be more like a content royalty. But MPEG LA didn't confirm or deny this assumption. Expect some royalty-bearing event to occur when playing DASH video with a temporarily loaded player from a browser other than Edge after the first year of the program.

MPEG-DASH Royalty Costs

In both cases, the royalty is U.S. $0.05 per unit after the first 100,000 units. There's an annual $30 million dollar cap per Legal Entity and Affiliates during the first term, which extends five years through December 31, 2022, with the license renewable for successive 5-year periods for the life of the patents. Royalties won't rise more than 20% at each renewal.

Note that royalties are payable for products from January 1, 2015 forward. For perspective, MPEG LA didn't announce the pool until July 27, 2015.

MPEG-DASH Royalty Scenarios

Here are the scenarios we ran by MPEG LA, with responses from Bill Geary.

MPEG-DASH Royalty Scenarios

Here are the scenarios we ran by MPEG LA, with responses from Bill Geary.

1.    Microsoft Edge plays DASH files. That makes it a DASH Client and a per-unit royalty is due. 

MPEG LA response: Assuming Edge plays DASH files, yes.

2.    All other current browsers support MSE, but can't parse, access, or play DASH files. These are not DASH Clients so no royalty is due.

MPEG LA response: Probably correct, but we will evaluate on a case-by-case basis.

 3.    If third-party players (JW, Bitmovin, dash.js), are loaded temporarily, they are excluded today, though this may change.

MPEG LA response: Correct

 4.    An Android phone comes with ExoPlayer, which is a DASH Client. The phone seller pays the royalty.

MPEG LA response:  Correct

5.    The same Android phone comes with multiple apps that call ExoPlayer to play MPD files. There are DASH Initiators generating a license payable by the app seller.

MPEG LA response: Correct.

6.    DASH Players on Smart TVs/OTT devices are DASH Clients. This gives rise to a royalty that the hardware vendor pays.

MPEG LA response: Correct – player in OS, browser, or a standalone player not associated with an app.

 7.    Apps on Smart TVs/OTT devices. These are DASH Initiators, giving rise to a royalty payable by the app seller.

MPEG LA response: Correct.

 8.    A consumer downloads an app after purchasing a hardware device. This is a DASH Initiator, giving rise to a royalty payable by the app sellar.

MPEG LA response:  Correct.

9.    I have a Netflix account and apps on six devices. These are all DASH Initiators, and Netflix owes six royalties.

MPEG LA response: Correct

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No royalties would apply to clients and "DASH segments based on DASH Initiators" for the first 100,000 units; royalties of 5 cents per unit would apply after the 100,000 unit threshold with a cap of $30 million per licensing term
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