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The Future of HEVC Licensing Is Bleak, Declares MPEG Chairman
Thanks to a fractured HEVC licensing system companies no longer have the financial incentive to innovate, but Leonardo Chiariglione suggests steps to reverse the damage.

For years we’ve been asserting that the HEVC licensing structure is broken; now, it seems, the chairman and co-founder of the Moving Picture Experts Group (MPEG) agrees.

In a remarkable blog post entitled "A Crisis, the Causes, and a Solution," Leonardo Chiariglione (right), the only head MPEG has ever known, reviewed the state of HEVC licensing and the impact of the Alliance for Open Media (AOM), and concludes, “At long last everybody realizes that the old MPEG business model is now broke, all the investments (collectively hundreds of millions USD) made by the industry for the new video codec will go up in smoke and AOM’s royalty free model will spread to other business segments as well.”

By way of background, Chiariglione is a learned and accomplished man who speaks five languages, writes beautifully, and has a Ph.D. in electric communication from the University of Tokyo. He founded the Moving Pictures Experts Group in 1988 with Hiroshi Yasuda with the goal of creating a compression standard for CDs that could retrieve data at 1.4 Mbps. The initial technology was called MPEG-1, which met with some success, but begat MPEG-2, which became huge when selected as the technological core for HDTV.

From MPEG-2 came H.264 which enjoyed even more success in streaming, broadcast, and devices. Of course, H.264 had one primary patent group that charged a reasonable royalty with an annual cap of under $10 million USD. Then came HEVC, launched in 2013.

As Chiariglione describes, “The licensing situation is depicted by the picture below (courtesy of Jonathan Samuelsson of Divideon): there are three patent pools, one of which has not published their license and a significant number of patent holders that have not joined any pool (and not published their licenses either).” In other words, an incoherent mess, irreparably exacerbated by HEVC Advance’s cap-free launch in 2015 that seemed the primary motivator for the formation of the Alliance for Open Media. 

Figure 1. The fractured state of HEVC licensing: three pools and multiple undeclared entities.

What’s preventing IP owners from presenting a cohesive and affordable royalty policy? In assigning blame, Chiariglione explains that “IP holders—often companies not interested in exploiting MPEG standards, so-called Non-Practicing Entities (NPE)—have become more and more aggressive in extracting value from their IP.” Though he saw the problem that this fractured royalty policy would create in 2017, Chiariglione reports that his efforts to resolve the issues “were thwarted by a handful of NPEs.”

As a result, he concludes that “Alliance for Open Media (AOM) has occupied the void created by MPEG’s outdated video compression standard (AVC)...[and] unusable modern standard (HEVC). AOM’s AV1 codec, due to be released soon, is claimed to perform better than HEVC and will be offered royalty-free.”

Though the situation is dire, Chiariglione outlines several steps that could be taken, including developing coding tools with clear ownership, and the ability to switch tools on and off, an approach similar to that pursued by Divideon (see "Divideon Creates xvc, an HEVC Codec With Reasonable Pricing"). However, his outlook is pessimistic: “I personally doubt that something will be done, though, seeing how blindfolded the industry is. As I like to say, God blinds those He wants to lose.”

A Dystopian Future for Compression?

Chiariglione’s concerns for the future are not really MPEG-related. “If MPEG ends now it will be a pity, but if this is the decision of the stakeholders—the industry in MPEG—so be it.” Rather, he predicts that AOM’s success will eliminate the financial incentive for companies to innovate, stating, “There will simply be no incentive for companies to develop new video compression technologies, at very significant cost because of the sophistication of the field, knowing that their assets will be thankfully—and nothing more—accepted and used by AOM in their video codecs.”

As a result, he predicts that, “Companies will slash their video compression technology investments, thousands of jobs will go, and millions in funding to universities will be cut. A successful “access technology at no cost” model will spread to other fields.” Thus, he predicts, the future holds much less technological progress than was achieved by MPEG under his direction.

I’m guessing that AOM members would disagree with this last assertion; it’s not as if companies like Cisco, Netflix, Google, Apple, and others in the group don’t have a financial incentive to continue to advance encoding efficiencies. In fact, given that the open-source collaboration has already produced a codec better than HEVC, you could consider the assertion contrary to existing facts. It’s also interesting that Chiariglione never plays the IP infringement card that so many others have trotted out when discussing AV1’s chances in the marketplace.

Overall, one can argue that Chiariglione was the single most influential person on video compression and standards-based codecs, which makes him one of the fathers of our industry. It’s sad to see him contemplate the demise of his most famous creation, and to admit that the HEVC royalty mess is too big for even him to resolve. 

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