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The Future of HEVC: It's Coming, but with Plenty of Questions

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In May 2010, Google announced WebM, an open source alternative to H.264 that offered very similar quality and playback performance. In August 2010, MPEG LA announced that there would be no royalties on free internet usage of H.264 in perpetuity. Though MPEG LA never publicly admitted that the availability of a free, open source solution contributed to this decision, the timing would suggest it did.

Why HEVC Probably Won’t Be Free

Fast-forward to 2013. HEVC is ready, and at this point, it has no real competition. Sure, you can point to VP9, but considering how poorly Google executed taking VP8/WebM to market, it’s unlikely that any producers -- or patent groups -- will take it seriously. In 2012, online video advertising jumped to $2.9 billion, so it’s tough to say that this market is still in flux.
For these reasons, it seems unlikely that if HEVC enables large publishers to cut their bandwidth costs by 50%, HEVC patent holders wouldn’t want their share. It seems equally unlikely that publishers seeking to reduce bandwidth costs via HEVC would start using the technology until the cost structure was known. So HEVC implementation seeking to harvest this benefit is likely on hold pending the announcement.
Now let’s look at the potential for HEVC to jump-start new markets for UHD video.

HEVC and UHD Video

Again, I’m focusing my analysis on the streaming and OTT markets, since those are the ones I know best. Even without considering the royalty cost uncertainties, it seems unlikely that HEVC will spawn many new UHD-related products and services over the next 2 or 3 years for three reasons: bandwidth, the lack of 4K displays, and the lack of content.
Let’s start with bandwidth. In his blog post “H.265/HEVC Ratification and 4K Video Streaming,” compressionist Alex Zambelli, previously with Microsoft and now with iStreamPlanet, estimated that if HEVC produced a 40% bandwidth saving over H.264, a 4K movie would require bitrates of between 12Mbps and 15Mbps. Assuming that HEVC actually produced the 50% target, these numbers would drop to 10Mbps and 12Mbps.
According to the latest Akamai Technologies “State of the Internet” report, for 3Q 2012, the average connection speed in the U.S. was about 7.2Mbps, up from about 6Mbps the previous year. While users connecting on some premium services could handle HEVC’s 10Mbps–12Mbps in the short term, it’s unclear when a significant portion of the U.S. population will be able to support 4K HEVC movies.
Though the U.S. is far from the performance leader, only South Korea, with an average connection speed of 14.7Mbps, could sustain a 4K movie today, with Japan next at 10.5Mbps. Again, while dedicated satellite or cable networks could certainly carry this load, it’s unlikely that the type of shared internet connection used for OTT would be able to in the short term.

‘Why 4K TVs Are Stupid’

The second issue relates to the installed base of 4K-capable sets, which obviously will be necessary to view 4K movies. According to analyst DisplaySearch, global shipments of 4K sets will be well under a million in 2013, and just over 2 million in 2014 (see Table 1).
HEVC Future Table 1

Table 1. Projections of 4K and OLED TVs through 2016 

Obviously, these are not inspiring numbers, and as you might have gleaned from the section title, there are those who feel they may be overly optimistic. In a CNET article titled “Why 4K TVs Are Stupid,” Geoffrey Morrison ran the math about how much detail your eyes can resolve, and the minimum size of pixels on a screen, and concluded that at a viewing distance of 10', the difference between 1080p and 4K wouldn’t be noticeable on TVs less than 77" in diagonal. It’s a pretty familiar argument, very similar to the 720p versus 1080p debate, where the rule of thumb was that you couldn’t tell the difference on TVs 50" or smaller when watching from farther than 8' away.
In other words, while 4K TVs might make sense for a home entertainment center or man cave, they probably don’t for the typical living room, where mass markets are made. At some point, economies of scale will take over, and 4K sets will be cheaper than 1080p. Until that happens, however, it’s hard to predict that 4K sets will fly off the shelves, particularly because of the third item that will hinder 4K sets, and services targeting them -- a paucity of content.

No Content for 4K

By the time 1080p TV sets became affordable for the masses, there was plenty of HD content to watch. While ultimately we may say the same thing about 4K TVs, that time is clearly not now, both regarding affordability and content.
A good example of both is the 84" Sony XBR-84X900 (see Figure 1), which retails for $24,999.99 and includes 10 4K movies from Sony’s movie library and a variety of short-form 4K content. To supplement these movies, Sony plans on launching a 4K movie download service in the summer of 2013, potentially delivered on a new Blu-ray Disc standard for 4K movies.
HECV Future Figure 1

Figure 1. Sony’s $25,000 XBR- 84X900 4K TV ships with 10 Sony 4K movies. 

Many movies today are being shot in 4K, and many film-based movies can be rescanned for 4K delivery. Beyond this, however, there’s very little other 4K content available, and minimal 4K production in sports and general-purpose television. So even those viewers who purchase a sufficiently large 4K monitor so that they can see the advantage over 1080p will have little 4K content to watch.
Of course, many 4K TVs can upsample SD and HD content to 4K, with mixed results. One U.K. reviewer found the results “astonishingly good,” while another, more expressive reviewer from Gizmodo commented, “As a result, anyone who spends £20,000 on a 4K TV at the moment will be doomed to watch upscaled HD content. That sucks. You don’t spend quite-nice-car cash on a TV, just so you can watch upscaled content.”
Note that some of the less expensive 4K TVs, such as Westinghouse Electric Corp.’s $2,499 50" set, don’t come with onboard Smart TV functionality or 4K upscaling technology. In these cases, you’d be dependent upon the upscaling provided by the set-top box, optical disc player, or game console.
What does all of this mean for the UHD OTT market? Overall, even though it seems likely that inexpensive HEVC-capable set-top boxes will be available by the end of 2013, there will be minimal 4K content to watch, few 4K TVs to watch it on, and insufficient bandwidth to deliver it.

Download and Watch

One market that seems potentially ripe for larger-than-1080p viewing is the traditional download to view, particularly given the multiple viewing options. For example, TimeScapes is a film by Tom Lowe featuring slow-motion and time-lapse cinematography of the landscape, people, and wildlife of the American Southwest. Shot in 4K, the movie is available in 10 versions, ranging from SD DVD and 1080p Blu-ray to 4K, including custom versions for 30" 2560x1440 displays and the MacBook Retina display (2880x1620). It’s an innovative strategy that could portend the optimal strategy for UHD movie distribution (see Figure 2).
HEVC Future Figure 2

Figure 2. This 4K movie is available in 10 different versions. 

I asked Lowe about how his sales were distributed among the available offerings. He responded, “Actually the ‘30 inch’ 2560x1440 version is selling like hotcakes. Sales have exceeded my expectations, in terms of percentage sold vs Blu-ray, 1080p download, etc. I would say for every one [in] ten 1080p HD downloads we sell, we sell about four 2560 copies. So many people have the Dell and Apple 2560 displays, but have never, ever had any video to play at that resolution.”
Interestingly, watching video on tablets and computers seems like the optimal use of 4K screens, as viewers are actually close enough to the device to see the difference. Though it will likely never see the light of day, Panasonic showed an 18.7 x 13.1 tablet computer at CES with a 4K screen -- could true 4K tablets be far behind? And once they’re available, wouldn’t 4K movie downloads from iTunes seem like the natural next step? Once HEVC playback becomes available, it would cut download times and storage space by 50%.
How likely is true 4K viewing on computers? I asked Lowe for his thoughts about computers and tablets as a potential viewing platform. He replied, “I have always believed that 4K monitors are where 4K will really catch on. On a projector, or large TV, you don’t notice it as much. On a monitor only a couple feet away, the difference between 1080p and 4K is very striking. I think 4K monitors will catch on fast once they come out, among gamers, Photoshop enthusiasts, and people watching or making high-res video.”


What’s this add up to? For producers seeking to distribute SD and HD content encoded with HEVC, the lack of a known royalty structure is a major buzzkill. At this point, no one knows whether a single royalty structure will be in place or whether multiple IP properties will pursue royalties independently, or the timing of either of these efforts.
HEVC encoding should be generally available by the end of 2013, if not sooner, and the player-related picture should also be clearer. Though it’s impossible to predict what Apple will do, I would be surprised if there wasn’t an HEVC decoder for the iPad 3 and MacBook Retina line announced before the end of 2013. Ditto for Adobe announcing HEVC playback in Flash.
Those attempting to leverage HEVC to create new opportunities for the distribution of UHD video have the royalty mountain to climb, as well as a paucity of content and viewing platforms and the lack of bandwidth to deliver the streams. Given the data rates involved, it feels like downloading for viewing is a better short-term model, providing custom resolutions for specific resolution displays.
The increased efficiency that HEVC provides will ultimately make streaming video more affordable and deliverable. However, until the royalty picture clears, it’s hard to get excited about any projected cost savings from HEVC. On the UHD side, HEVC is only one piece of the puzzle that must come together to make 4K viewing a reality, and not a very important piece of the puzzle at that.
This article appears in the April/May 2013 issue of Streaming Media magazine as "The Future of HEVC."

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