This latest forecast from Rethink TV is examining the adoption timeline for codecs in the media and entertainment landscape, focusing on the arrival of VVC, AV1, and eventually AV2. As well as the expected timeline, it charts the expected royalty revenues generated by the patent pools that have formed around these video compression tools, which we expect to reach $2.4 billion in 2030.
However, much has changed, since we last covered this market, in early 2021. Perhaps most significant was the exit of Velos Media from the VVC patent pool game and shuttering its HEVC pool, leaving just MPEG LA and Access Advance. The impact of Dolby’s Via acquiring MPEG LA and establishing the Via LA organization, cannot be understated.
Given Dolby’s involvement in both, it seems likely that the two pools will eventually merge, down the line, at least to cut down on administration costs. There is a question of whether a single pool option might help snare more licensees, but the practice of direct licenses with IP-holders, outside of the patent pool system, will continue apace.
VVC TVs have arrived slightly ahead of our previous predictions, via MediaTek’s Pentonic SoC, but Qualcomm has been slow to add AV1 to its flagship silicon in the mobile sector. Potentially the most seismic shift has been Google’s relenting in Chrome, finally allowing HEVC in the browser, and opening the door for a possible explosion in the mobile sector for the codec.
The LCEVC enhancement layer has moved slower than we expected, but seems poised to announce a breakout year of deals. Given its software-only approach, it can move much quicker than the fully-fledged codecs, and its novel business model should demonstrate clear returns on investment for the video services that implement it.
Away from codecs, the ‘fair contribution’ debate has kicked off, with both fixed and wireless ISPs calling for OTT platforms to pay their ‘fair share’ for the use of traffic on the platform. We have a dim view of these positions, largely because these same ISPs are averse to pursuing Multicast ABR on the basis that they ‘can just fire up some dark fiber,’ and maintain their familiar comfy unicast model.
‘Fair share’ or ‘fair contribution’ smacks of double dipping, and it speaks volumes that these ISPs would prefer to be paid than invest in technologies that might solve their bandwidth problems. To this end, the demand for new codecs seems to have been muted, and to wear our most cynical hat, there will be little pull from the ISPs to speed up the codec roadmap – as this would undermine their fair share argument.
The main issue at the heart of this is the secrecy of the success rate of achieving royalty payments for shipped devices. Assuming that every device sold has paid all the royalties that these pools believe they are entitled to is naïve, and so any modeling done on device sales requires a judgement call about the success rate of codec royalty reclamation.
This is the latest forecast in the Rethink TV Archive, which now includes:
- Media & Entertainment Codecs Market Forecast 2023-2030
- AVoD, FAST, and SVoD Market Forecast 2023-2030
- Sports Rights Forecast 2023-2033
- Investigating the Energy Use of Video Delivery and Consumption 2022-2027
- Video Delivery Market Forecast 2022-2028
- Open Internet Contribution Protocols Forecast 2022-2027
- Content Recommendations Software Forecast 2022-2027
- Low Latency Distribution Protocol Forecast 2022-2027
- Multicast-ABR Forecast 2022-2027
- WiFi Cloud Management, Multi-AP, WiFi 6, 6E, and 7 Forecast 2021-2026
- Decentralized CDN and Multi-CDN Forecast 2021-2026
- Cloud Production Technologies – Market Forecast 2021-2026
- Set Top Box, Smart TV, and Connected TV Device Operating System Forecast – 2020-2026
Rethink Technology Research is an analyst firm that has established itself over its 22-year history as a thought leader in 5G, and all forms of wireless; the entertainment ecosystem and streaming media; the Internet of Things; and has now embarked on the energy marketplace. Rethink TV is our video research team, producing market forecasts, technology white papers and tracking operator-technology vendor relationships in OTT video.
DOWNLOAD THE FULL EXECUTIVE SUMMARY
