HEVC Advance patent group might give Netflix, Amazon and other 4K players a break

HEVC Advance, a new patent group seeking to collect 0.5% of the revenues from all HEVC-encoded 4K content sold, said it will adjust its fees … maybe.

The group hinted at a potential change in its fee structure in a press release announcing the inclusion of technology company MediaTek into its fold. However, it's whether HEVC Advance will definitely change its fees or whether it is simply considering a possible change.

"HEVC Advance is also actively soliciting input from market participants and considering adjustments to arrive at a royalty structure that enables continued and rapid adoption of HEVC and brings the associated benefits to stakeholders within the media and technology industries," a company statement said. 

But Pete Moller, CEO of HEVC Advance, was more emphatic in a quote included in the press release: "We have received significant market feedback, particularly on content fees, and will adjust fees to support widespread use of HEVC," he said.

"It's a bit of a confusing message as they say they will 'consider' adjusting fees, but then later say they 'will adjust' them," said Dan Rayburn, an analyst with Streaming Media who closely covers the streaming media industry. "Either way, it sounds like the companies that make up HEVC Advance are coming to their senses and realizing the rates they are charging are not ones that content owners are willing to pay."

Asked to clarify HEVC Advance's position on pricing, spokesperson Eden Haile said: "Right now the company is gathering feedback from stakeholders in the marketplace so we'll keep you posted when there are additional developments to share around pricing." Haile did not provide details.

HEVC Advanced first emerged in March, touting a list of members that includes GE, Technicolor, Dolby, Philips, and Mitsubishi Electric. The group said it holds key technology patents for the preferred compression standard for 4K/Ultra HD, High Efficiency Video Coding (HEVC, or H.265 as it's also known).

HEVC Advance says it represents 500 patents that are "essential" to HEVC.

In July, it announced its pricing: On the top end, makers of 4K TVs would pay HEVC Advance $1.50 per unit, while manufacturers of streaming boxes, set-tops, gaming consoles, DVRs, Blu-ray players and other living-room devices would pay $1.10 per unit. Makers of mobile devices would incur an 80 cent charge per unit. Content makers, meanwhile, would pay 0.5 percent of attributable revenue.

"We took a long hard look at what was the most fair and reasonable way of attributing royalties to different product categories," Moller told FierceCable in July. "We basically divided the world into devices and content [and] we gave discounts for those things that don't use all the HEVC features."

"To put in perspective how unjust and unfair their licensing terms are, they want 0.5 percent of Netflix, Apple, Facebook, Amazon and every other content owner/distributor's revenue, as it pertains to HEVC usage," said Rayburn in July. "Considering that most content owners and distributors plan to convert all of their videos over time to use the new High Efficiency Video Coding compression standard, companies like Facebook, Netflix and others would have to pay over $100M a year in licensing payments."

For more:
- read this HVEC Advance press release
- read this Streaming Media report

Related articles:
Emergence of new HEVC patent pool clouds 4K's future
Analyst urges video industry to reject HEVC Advance patent pool
HEVC Advance patent pool announces pricing, CEO; threatens to disrupt 4K market

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