A new industry group called HEVC Advance is threatening to demand royalties for the new HEVC video codec that could halve the bandwidth required for streaming online video, or offer higher resolutions with the same bandwidth usage. The organization is promising to demand a royalty of 0.5 percent of revenue from any broadcaster that uses the codec. This move could re-ignite the arguments surrounding video codecs on the Web, and may well jeopardize services such as Netflix's year old 4K streaming service.
H.264, the de facto standard for video compression in online streaming video, has long had a shadow cast over its existence due to its patents and the royalties that must be paid for their licensing. A consortium called MPEG LA, representing many of the different patent holders that have intellectual property relevant to H.264 including Apple, Samsung, and Fujitsu, collects royalties on H.264 encoder and decoder hardware and software. However, to ensure that H.264 remained attractive and viable to online streaming services such as YouTube and Netflix, MPEG LA has committed to not charging any kind of a content-based royalty.
This situation wasn't perfect, in particular presenting a problem for open source software decoders. Mozilla for a long time refused to support H.264 in Firefox, as it had no good way of paying the royalties that an integrated decoder would incur, and further felt that the Web should not settle on a patent-encumbered specification. After a long period of reflection, and in particular the growing realization that H.264 was far and away the market share leader, Mozilla eventually relented. First it built support for hardware-based playback—a workaround, of sorts, as the hardware manufacturers had already paid the licensing fees—and this was later followed by a donated software decoder from Cisco, with the networking company footing the bill.
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