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V-Nova LCEVC Royalty Structure Announced

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V-Nova, the primary developer of the Low Complexity Enhancement Video Codec (LCEVC), today announced royalty terms, which apply a capped, low per-user fee on the streaming service actually using the codec, and is free for encoder and decoder vendors. According to company president Guido Meardi, the structure is integrator friendly and applies the royalty to the "service operators who benefit directly from the standard, producing measurable quality and profitability benefits."

For perspective, though there are minor royalties on content with H.264 and HEVC, the bulk of the royalties apply to encoders and decoders in computers, mobile devices, OTT/STB boxes, and television sets. The VP9/AV1 royalties proposed in the Sisvel patent pools apply to consumer display devices like TVs, and consumer non-display devices, like set top boxes and OTT dongles. According to V-Nova, "we chose not to charge any fees to hardware manufacturers, operating systems, browsers and other ecosystem enablers, so as to facilitate rapid adoption at scale."

V-Nova's royalty involves different prices for different types of entities, like subscription and advertising-based services, and TV Everywhere, all capped at US $3.7 million per year. The presentation included the following examples.

 

In the press release and in the press materials, V-Nova referenced that they created this pricing structure "[f]ollowing extensive consultation with customers and key industry players," but didn’t announce any licensees. When the question came up during the press conference, V-Nova referred to testimonials on the lcevc.org website, which included comments from Proximie, Eleven Sports, MainConcept, Mediaset, Al Jazeera, and Xilinx.

The Analyst's Perspective

We spoke with Alex Davies, senior analyst at Rethink about the V-Nova announcement, and a coauthor of the recently released Media & Entertainment Transcoding Workload and Device Royalty Forecast 2020-2030 which predicts codec deployments and usage through 2030. In preparing the report, Davies spoke with codec developers, phone and TV manufacturers, streaming producers, and other stakeholders, providing a broad-based perspective. For the record, the report predicts that LCEVC will achieve a 30% penetration by 2030.

I asked Davies about V-Nova's pricing and targeting strategy, and he commented, "I think it makes sense. Policing the player is a pain, but going straight to the video service provider should be simpler." Regarding LCEVC’s uptake in the market, he commented that "we know that Harmonic is integrating LCEVC in its encoding suite and seems to be positioning it towards Italian users. We have also speculated that DAZN will be using it in Italy, for delivering Series A soccer over sub-par networks. Once Harmonic has it in place, we would expect its rivals to follow suit, particularly as they don’t have to pay a dime to implement it."

During a recent presentation at Streaming Media East, Davies showed the VVC patent pools and licensing structure being finalized in 2022, with the same occurring for EVC in 2023. Having known license terms much earlier puts LCEVC at a distinct advantage over the other two new MPEG codecs. All that seems missing now are high profile deployments to verify LCEVC’s readiness. Regarding this, Davies predicted "some deployments in 2021, in a small manner, and then gradually pick up steam."

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