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What Your Codec Will Cost You: Robert J.L. Moore Talks Avanci Video Codec Patent Pool Launch

Avanci, a Dallas-based licensing company founded by Marconi in 2017 that specializes in the consolidation of technology patents, recently announced the formation of Avanci Video, a new video pool designed to bring order to the video streaming codec licensing scene, establishing a new patent pool to bring AV1, HEVC, VVC, MPEG-DASH, and VP9 under the same licensing platform. The pool launches with more than 25 licensors, among major contributors to the codecs, such as LG and Huawei. Access Advance, another patent pool, will continue to license device OEMs for H.264 and H.265, while Avanci focuses on content providers.

Streaming Media contributing editor Jan Ozer of Streaming Learning Center, recently spoke with Volpe Koenig intellectual property attorney Robert J L Moore about Avanci Video, its implications for the industry, and why Marconi chose to expand its Avanci patent portfolio into video codecs. "Marconi perceived that there was a need to address risk that content providers were taking on with the full contingent of video codecs as well as MPEG-DASH," Moore says, "and that's what they're seeking to fill with this."

Minimizing Risk for Codec Licensors

Digging deeper into how these patent pools help licensors minimize risk, Moore explains, "If there is implementation of a standard and that risk is not licensed or otherwise authorized, there's a risk that the implementer could get sued. Now, that risk is cabined in many cases by things like the FRAND obligation, or even just simple business considerations--one party not wanting to sue its customer or not wanting to sue a rival for fear of a lawsuit. And all that said, there are parties that will make it their business to go and exact the cost for their investment in creating a standard. That risk can be accounted for in multiple ways. It can be accounted for bilaterally. That's the traditional way," he continues. "And secondly, patent pools can provide the market with an easier way to account for that risk more transparently. It can be more of a level playing field, and it can also, from the licensors' perspective, provide returns that are predictable and regular."

Where Does DASH Fit?

Regarding the technologies covered in the new pool, Ozer asks where MPEG-DASH fits, given its association with the longstanding MPEG-LA pool absorbed into Via LA earlier this year. "There was a pool for that with MPEG-LA back in the late teens. What happened with that and where are we with that now?"

"I think that pool was defunct. I'm not sure if that MPEG-LA pool was dropped before or after MPEG-LA merged with Via, but I think Avanci thought that it made sense to include MPEG-DASH along with the other codecs because the people that they were trying to license would probably want to clear all that risk at once."

Everybody in the Pool?

As for the "internet streaming companies" Avanci Video is targeting, Ozer asks, "Are they going after CDNs, are they going after publishers, are they going after service providers, or is it all the above?"

"I don't know if there's a definitive answer on that," Moore says. "I do recall reading that among the targets would be the OTTs. I'm not sure that's the extent of it."

Of course, the key question for content companies with this or any patent pool is how royalties apply to content and how those royalties will apply to the content they provide. But how usage is calculated and assessed from a royalty perspective remains a moving target as the nature of video encoding evolves. 

"Traditionally, patent pools identified one part of the value chain for the feature of video compression to push all the royalties onto, under the thinking that the rest of the universe that was perhaps also implementing that standard would adapt accordingly," Moore explains. "So if the devices are paying for the feature of video compression and the streamers are not, then perhaps that can be accounted for in other ways. There could be bilateral agreements, for instance, between the streamers and the device OEMs for a certain percentage of revenue every time a subscriber signs up using the device OEM's device. That's actually a fairly common way to account for that, but now we are seeing an increased move to isolate the patent risk for content providers. We're seeing some lawsuits in the relatively recent past. There was an injunction in Germany against Netflix, and that was using standard essential patents for HEVC and there's an increased perception. I intuit on the part of licensors to say that not even close to all the value of the feature of video compression is captured by the device OEMs, as more and more encoding, transcoding, and decoding are happening in the cloud and not on the device. So maybe it doesn't make as much sense to have the devices be the only port of call for patent royalties."

Assessing the Avanci 25

Ozer asks what percentage Avanci's 25 initial licensors represents of the overall landscape--particularly with several other similar patent pools in play--and what it all means for companies not on that list.

avanci video's initial licensors

"I thought this was an impressive list of initial licensors. You have a lot of major contributors to various codecs," Moore says. "LG had a strong position in HEVC. Huawei was one of the leading contributors to VVC, and they're part of the initial contingent as well. So you have a mix of licensors that you probably would want to clear the risk from. I can't tell you what the percentage of any given codecs are represented in this list of licensors, but it's generally true that the list of orders grows over time and the price doesn't change. So if you were a licensee and you signed up today, the price that they're giving you is what Marconi believes is a fair price for the feature of video compression, understanding that they're probably going to get more and more patent coverage over time."

Though Avanci Video does not provide pricing in the FAQ on its site, it does state (echoing Moore's point), "The royalty rates in your Avanci video license will not increase as new licensors join the Avanci Video. platform and the number of patents included in your license grows."

A Sea Change for Codec Licensors?

Looking more broadly at this latest development in the video codec patent pool saga, Ozer asks, "Does this mark some kind of a sea change? If you've not been assuming that you were going to end up paying royalties, all of a sudden will your financial people come and say, 'Hey, we've got to start accounting for this in our revenue and expense,' or do you think that's far off?"

"I'm going to go in the middle here," Moore hedges. "This is a sea change for the MPEG codecs in the sense that there was, at one point, an opportunity for content providers to get a free covenant not to sue from Access Advance, at least. I believe that Via LA had a similar program, so in that sense, implementations were free. And bear in mind that HVEC Advance in particular had a critical mass of the rights that you would need to license if you were a content provider," he continues. "So you may, at one point, have considered it free. If that opportunity to get the rights you want for free is going away, then that is a change. And I note that there are by my count five or six companies that are amongst the initial licensors to the Avanci pool that are also part of the Access Advance pool."

And how will Avanci's arrival on the scene affect companies' codec choices going forward?

"From the OTTs' perspective, I think it takes the question of which codec has a patent cost associated with it off the table, because now they all do," Moore explains. "The Avanci pool is, as I understand it, intended to create a level playing field in the sense that there's going to be a patent cost associated with each of the codecs, so you may as well choose the one that works best for your needs. At one point," he continues, "the prevailing wisdom was that [OTTs] might have to pay for the MPEG codecs, but not for the vpx suite of codecs excluding AV1. I don't think that's going to be the case going forward. I hope that the OTTs draw the appropriate lessons from this announcement that they are going to have to pay something."

To learn more about the forever-in-flux status of streaming codec patent pools and their implications for the industry, join Robert Moore at Streaming Media Connect on November 15 as he moderates the virtual panel Deep Dive: How Codec Patent Pools Will Impact Streaming in 2024.

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