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It's Time to Move Forward with HEVC

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[Editor's Note: Earlier this week, Tom Vaughan, the VP and GM for Video of MulticoreWare, made a proposal on behalf of x265 licensees to all HEVC patent holders. We're reprinting the proposal in full in the interest of furthering the discussion surrounding HEVC's place in the online video ecosystem. It has been edited slightly, and we have added links to additional Streaming Media articles about the topic.]

Annual global Internet traffic is no longer measured in megabytes, gigabytes, terabytes, or even petabytes. This year, global IP traffic will be more than one Zettabyte (a trillion billion, or 1,000,000,000,000,000,000,000 bytes), according to Cisco. By far the biggest driver of IP traffic growth is video. Today, more than 70% of all IP traffic is video. By 2020, video will consume an estimated 82% of 2.3 zettabytes of IP traffic, also according to Cisco. Video has become strategic priority for many companies, including leading social media and messaging services. In addition to the explosive growth in on-demand video, we are in the middle of a transition from high definition video to ultra high definition (UHD) video, with higher resolution, higher color accuracy, and higher dynamic range. UHD content is forecast to grow to 20.7% of global IP video traffic by 2020. Internet bandwidth is never as cheap or plentiful as we would want, so there is a serious need for more efficient video compression. Fortunately, a new standard is available which can deliver identical quality to consumers using half the bandwidth of previous video compression standards. Imagine a technology that could theoretically free up more than 30% of worldwide IP bandwidth, reducing congestion and allowing that bandwidth to be used to deliver a much higher quality of experience. This technology is ready, mature, and optimized, but it's hardly being utilized.

Twice the Efficiency 

HEVC, also known as H.265, is a new video coding standard, ratified by the ITU and ISO in January 2013. Many leading technology companies and research groups contributed to the new standard, including Microsoft, Apple, and Samsung. These organizations contributed their researcher's time, efforts, and intellectual property to create a significantly more powerful video compression standard, and the results are outstanding. A 1080p movie that required 6Mbps to be delivered in high quality with AVC/H.264 (today's most widely used video compression standard), typically only requires about 3Mbps to be delivered in the same quality with HEVC/H.265. The improved efficiency of HEVC results in significantly higher quality at any fixed bandwidth. So, for anyone trying to watch a video over a congested or bandwidth limited Internet connection, HEVC is able to deliver much better picture quality than AVC.

Ready to Rock 

3½ years after the standard was ratified, HEVC hardware and software implementations, full-featured, efficient and widely available. HEVC hardware decoders are built in to the latest smartphone SOCs, high-end PC graphics chipsets, and most high-end televisions. Hardware HEVC encoders are embedded in smartphones, PCs, cameras and broadcast encoders. The x265 HEVC encoder software is available under the GPL v2 open source license, and it's been incorporated in FFMPEG, VLC, and dozens of open source and commercial applications. There are many other commercial HEVC encoder and decoder software implementations. HEVC is ready to rock and roll. Sadly, HEVC is not in widespread use. There isn't a whole lot of HEVC encoded content, or HEVC enabled software applications reaching end-users. The exception to this rule is for 4K content streamed by Netflix, Amazon and other movie streaming services to the latest generation of 4K TVs. But although billions of devices are capable of supporting HEVC, in almost every application we continue to use AVC/H.264, which requires roughly twice the bit rate (and file size) to achieve the same quality as HEVC. Consumers and enterprises aren't getting the benefits of this incredibly powerful new technology. There is no technical reason that HEVC isn't being used for most video applications. The hold up is due to the cost and uncertainty associated with HEVC patent licensing.

Patent Licensing Impasse 

The HEVC video coding standard was developed by a team of experts jointly managed by two standards bodies—ITU and ISO. It benefits consumers when multiple companies collaborate to develop a new industry standard. Standards development involving many contributing organizations reduces the overall cost of developing a new technology and can produce a better overall result by combining valuable, proprietary innovations from many contributors, while providing compatibility across many different companies' products. As per the policies of the ITU and ISO, the companies involved in setting the HEVC standard must disclose any patents they have or may file on the techniques that they contributed to the standard, and they pledge to license their patents on Reasonable, and Non-Discriminatory (RAND) terms.

Thirteen years ago, the majority of companies that developed AVC agreed to license their patents through one organization, MPEG LA. Today, some of the companies that developed HEVC have agreed to make their patents available through MPEG LA, and some have formed a 2nd patent pool, called HEVC Advance. A  number of important companies with HEVC patents have not yet joined one of the patent pools. This fragmentation, combined with total patent royalties that are potentially many times greater than video solution developers currently pay for AVC, has caused many potential HEVC adopters to hold off for now. We've all got too much invested, and HEVC is far too good to let the patent licensing situation delay adoption much longer.

Available Options 

HEVC is the best video compression standard available today, and it is likely to remain the best video compression standard available for the next several years. That isn't to say that it doesn't have any competition. Google's VP9 is a very capable video codec. Google, Microsoft, Netflix, Amazon, Intel, Cisco and Mozilla have formed the Alliance for Open Media (AOM), a group dedicated to developing a next-generation video compression standard. Some may have thought that the AOM was organized simply to gain leverage over HEVC patent negotiations. The work that the AOM is doing makes it clear that it is a very serious project. The AOM represents the merger of three royalty-free video codec development efforts (Google's VP10, Cisco's Thor, and Xiph/Mozilla's Daala formats). It has the backing of many industry leaders, including Adobe, ARM, AMD, NVIDIA and Vidyo. More leading companies will join in the coming months, and I expect the AOM to be successful in their goal of establishing a widely adopted, royalty free next-generation video standard. But it will take time to finalize this standard, and more time to develop and deploy implementations. There is a window of opportunity for HEVC to achieve the widespread, pervasive adoption we all want to enjoy, in order to ensure a long shelf life and a good return on the massive combined industry investment.

Moving Forward 

I manage the video software business for MulticoreWare, developers of x265; the world's most widely adopted HEVC encoder. This has enabled me to build strong relationships with many of the leading adopters of HEVC, including movie studios and postproduction companies, semiconductor companies, broadcast and streaming video encoding system vendors, web video streaming services, web video processing services, device OEMs, and major cloud and device platform owners. I have had many discussions on the topic of HEVC adoption with key players, and I've found that all involved are intelligent, reasonable people, but their perspectives differ widely. It's clear from the people I've spoken with that there is a big gap in the patent licensing discussions. It's time for a détente. HEVC is poised for breakout success, but it won't happen unless we see some significant improvements in the patent licensing situation. I'm optimistic that most organizations involved are recognizing this, and are ready to find ways to accelerate adoption.

Some believe the only way to solve the problem we see today is to move to royalty-free standards developed outside of international standards bodies. While that can work well, it's not the only way a great standard can be developed. I believe that it's perfectly reasonable for inventors to be given an incentive to contribute their valuable developments to a global standard, and to be compensated for their contributions. Every company recognizes that intellectual property; whether it is a movie, TV show, software, hardware or invention; takes a lot of time, money, and unique talent to develop. So it's unreasonable to expect that the only way to develop new standards is to force contributors to donate their IP to a new standard royalty free. However, in standards setting organizations, contributors shouldn't come to the party with the goal of earning a big windfall on their R&D investment. If that is your goal, you might be 'persona non grata' when it's time for the next party. A reasonable ROI is fine, but patents for techniques contributed to a technical standard are RAND encumbered, and must be reasonably priced.

So, how can the patent licensing situation be resolved?  There are several possibilities. The stalemate could continue, with many companies sticking with H.264 or VP9 until AV1 is available. In this scenario, most everyone loses. It could be resolved in court. Of course, a legal battle is the least attractive option for all concerned. The best option is for patent holders, including those on the sidelines, to come together and compromise and offer a licensing solution acceptable to the vast majority of potential licensees.

It's a Web and Mobile World

AVC/H.264 was finalized as a specification in March, 2003, roughly 10 years before HEVC/H.265. Ten years ago, at this stage in the life cycle of AVC/H.264, things were quite different. AVC/H.264 patent holders pooled their patents together, enabling licensing through a single organization, called MPEG LA. In terms of video distribution, was a "set-top box and DVD" world. The Blu-ray Disc format was competing with HD-DVD to become the next generation optical disc standard. The VC-1 video codec (developed by Microsoft and others) was competing with AVC, and both were supported by HD-DVD and Blu-ray Disc. VC-1 patents were offered under very competitive terms. The iPhone did not exist. YouTube was less 8 months old, offering 320 x 240 pixel videos. Netflix streaming, Amazon Video and Hulu were not available. Facebook was a closed social network for college students. Today, we live in a web and mobile world, where Internet video streaming is no longer a science experiment; it's the primary method of accessing video content for billions of people. Support from the leading web browsers and mobile platforms is essential for any new video standard to succeed.

Key to the success of AVC/H.264 was adoption by all of the leading device OEMs and web browsers. Once H.264 was supported natively on every popular computing device, software developers could utilize it without an additional patent license or added cost. Today, popular web services don't charge for the client software required to access the service. Instead, you just access the service through your browser, or download a free client app. HEVC will not achieve critical mass if streaming video services, social media services and video conferencing services can't continue to provide free client apps. Web browsers will not support HEVC if there is an added royalty cost. Unless they are content to cede the consumer PC and mobile video compression market to royalty free codecs, HEVC patent holders need to recognize the reality of today's technology ecosystem, and adjust their license terms to compete successfully. Treating software the same as hardware is a mistake. Hardware is the engine, but software and content are the fuel. Without the fuel, the engine won't start, and it won't run.

Proposal 

To accelerate HEVC adoption, I propose that HEVC patent licensors agree to the following principles;

  • All HEVC patent holders should make their patents available through a patent pool
  • Ideally, all patent holders should join one patent pool
  • Only one reasonable royalty should be paid per device
  • Software decoding on consumer devices must be royalty free
  • Software encoding on consumer devices must be royalty free
  • Content distribution must be royalty free
  • There must be a reasonable cap on total royalties owed for HEVC implementations

The HEVC standard was first ratified 3½ years ago. It's time for all HEVC patent holders to make their patents available under reasonable terms, through a single patent pool. Holdouts need to fulfill their obligation to license their patents on reasonable and non-discriminatory terms. Ideally, all patent holders should join a single patent pool, to eliminate redundancy, and to insure more reasonable royalty rates. It much easier for licensees to track and maintain compliance if they don't have to sign two or more patent license agreements.

I'm going to hold off suggesting the ideal compromise for patent royalty rates. This is something that needs to be worked out in discussions between licensors and licensees. Patent license revenues are a function of both royalty rates and adoption rates. At this point, patent licensors should be concerned with accelerating adoption.

Royalty-free software decoding would immediately enable more than a billion legacy devices to support HEVC playback, massively accelerating adoption. This proposal would enable all web browsers, social media and video player apps to immediately add support for HEVC. Royalty free software encoding would mean that video chat, video conferencing and video sharing services wouldn't hesitate to significantly improve the quality of their services. For clarification, this would not be a workaround for device manufacturers to offer HEVC support. Under my proposal, only software distributed to hardware devices by third party companies after the first sale of the device would be considered royalty free.

Native Hardware Support

Of course, software decoding and encoding is just a good first step to unleash the ecosystem. Consumers will recognize that dedicated video decoding hardware reduces power consumption, drastically improves battery life, and ensures reliable playback. Hardware accelerated encoding is desirable on battery powered mobile devices for video recording and live video messaging or streaming applications. As HEVC adoption quickly spreads to every app and service that utilizes video, native HEVC support will be essential for any device to remain competitive. This is not a problem, as every leading semiconductor manufacturer already supports HEVC in their PC, mobile device and embedded graphics.

Is this proposal unrealistic? Not at all. HEVC patent holders understand that it is in their interest to see HEVC adoption accelerated quickly and significantly, and that it is critically important for HEVC to become common for web video distribution and mobile applications. Effectively, this proposal mirrors the current state of AVC patent licensing. AVC has long been supported natively on every device that matters, and app developers don't have to worry about AVC royalties. Software and web service developers currently do not, and will not, pay “device royalties” for client applications, or for video playback in a web browser. Once leading browsers, apps and services are using HEVC, consumer demand for a fast, reliable experience will ensure that every leading device OEM offers native HEVC hardware support. There are roughly 2.5 billion consumer compute-capable devices (PCs, tablets and mobile phones) sold each year, according to Gartner, and hundreds of millions more consumer electronic devices (TVs, cameras, set-top boxes), it's clear that the total addressable market for licensing HEVC is more than sufficient to provide a reasonable return on investment to HEVC patent holders. It should be clear to all that the benefits of adopting this proposal will far outweigh any perceived cost. I believe this proposal represents a win/win situation for licensors and licensees, and the biggest winners of all would be the end consumer worldwide. I look forward to the conversation that is sure to follow.

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