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VVC's Adoption Hampered by Patent Uncertainty and Low Value

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Versatile Video Coding (VVC) is entering a competitive codec market where its future will depend more on royalty demands than on its technical specifications. As is detailed in an VVC economic report recently published by Unified Patents and authored by Charles River Associates, VVC is faced with strong competition from MPEG's new Essential Video Codec (EVC), and existing HEVC, AVC as well as from Alliance for Open Media's Advance Video 1 codec (AV1).  The royalty pricing pressure on VVC is exerted, first, by MPEG-LA's AVC pool, which is viewed by courts in the United States and in Europe as being a fair, reasonable, and non-discriminatory (FRAND) rate, and, second, by AV1 and EVC, which have been developed specifically to incur less if any royalties. 

HEVC's Mistakes Haunt VVC

VVC's plight stems from its predecessor High Efficiency Video Coding (HEVC) and the excessive royalties and licensing uncertainties that have stymied HEVC's adoption since its launch in 2013. As shown below, the formation of 3 competing pools to extract royalties from HEVC has led to licensing inefficiencies and royalty stacking that has increased licensing costs for HEVC to be 9-12 times higher than AVC. If this is repeated, VVC's adoption could be in jeopardy.

VVC's benefits are also weakened by the dramatic decreases over the past twenty years in download and storage costs. These decreases in costs outweigh gains in compression efficiency value generated by VVC for most contemplated uses.

Substantially Lower Royalty Rates Necessary

In order for VVC to be competitive against AVC, Unified Patents' report makes the economic case for VVC's effective aggregate decoder rates over a 5-year period to be as low as $0.10 for streaming devices, $0.08 for connected TVs, and $0.05 mobile terminals. These long-run, effective aggregate rates are more than 50% less than the corresponding rates for AVC.

In coming to these conclusions, Unified Patent's report applies a hybrid top-down methodology using the established, long-run effective royalty rates for AVC for three usage scenarios as a FRAND benchmark and adjusts those rates by comparing the cost savings generated by the compression efficiencies of VVC over HEVC against the costs savings generated by the compression efficiencies of AVC over MPEG-2. The comparison between the compression efficiencies of VVC over HEVC and of AVC over MPEG-2 is used to justify a value for VVC that is comparable to the value of AVC as established by MPEG-LA's pool.

Missing the Market

In assessing VVC's value it is important to understand that VVC is entering a market where its use cases are under scrutiny. For example, VVC excels in 8K video compression and is thus well-suited for broadcast TV. Unfortunately, 8K TV ownership is forecast to be only 3.9% of North American HD TV households by 2023 and broadcast TV viewing is on the decline. There are also low industry expectations that VVC will be widely adopted for use in cellular devices as the benefits of HD video are not discernable on small screen devices. For VVC to capture market share among cellular device manufacturers, VVC's royalty rates will have to be very attractive compared to the rates for AVC and AV1. 

Compression Superiority is Fleeting

Certainly, VVC is superior in compression efficiency over competing codecs since it can compress a video by as much as 40% compared to HEVC to achieve the same quality playback. Of course, this comes at the cost of coding complexity, which will require hardware updates and thus delay VVC's adoption. VVC's compression superiority is not however indelible. MPEG has developed a codec agnostic software enhancement layer called Low Complexity Enhancement Video Coding (LCEVC) that promises to increase compression ratios in the 40% range of the base codec and reduce battery consumption by 40%-50% over the base codec. The combination of AV1 with LCEVC could produce superior compression than standalone VVC. 

AV1 is Poised to Rule the Market 

VVC adoption is threatened most by AV1, which has been in the market already for 3 years and achieved significant support. Currently, AV1 is supported by the majority of the top 5 streaming platforms, browsers, cellular device manufacturers, and TV manufacturers. It will take VVC likely a few years before it can attract such support and this may prove fatal. 

Comparison of VVC and competitors regarding important factors for success





Release date

July 2020

March 2018

April 2020

Efficiency (vs HEVC)

~ 40%



Encoding Time

5-10x HEVC


 2.5-4.5x HEVC

Support by industry


AOM members (e.g. Amazon, Apple, Facebook, Google, Intel, Microsoft, Netflix etc.) and others (e.g. LG, Philips)

e.g. Samsung, Huawei, Qualcomm

Unified Patents' study calculates AV1's impact on VVC's royalty rate by comparing the cost savings generated by VVC's compression efficiency over AV1. The result is that VVC's aggregate long-run, effective royalty rates should be as low as $0.05 for streaming devices, $0.04 for connected TVs, and $0.02 for cellular devices in order for VVC to be competitive against AV1. These rates amount to a further 50% discount off of AVC's corresponding rates. 


Despite VVC's advances in compression capabilities for 8K video distribution and high-definition broadcast TV, its success is questionable because of the fragmented licensing market and unreasonably high royalties that have plagued its predecessor's adoption. These licensing challenges have given rise to the development of competitive video coding solutions that come with a much lower or even zero royalty burden. If VVC is to compete with these solutions or even with its predecessors, the royalty rates for VVC will need to be significantly less than the current AVC rates. If not, it is possible that AV1 will continue to attract support from device manufacturers and content distributors as the mainstay video coding solution. If royalty demands for VVC are at the level of HEVC or licensing confusion reigns through a multiple pool model, VVC could become a marginal codec that serves only high definition, fixed device video distribution.

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