HEVC Advance patent pool announces pricing, CEO; threatens to disrupt 4K market

The HEVC Advance patent pool has unveiled a flurry of new details about itself after emerging suddenly in late March to inject uncertainty into the economics of 4K video program distribution.

First, the group--which says it represents Philips Electronics, Technicolor, Mitsubishi Electric, Dolby and General Electric--has a new CEO. Former GE executive Pete Moller will oversee the group, which will be headquartered in Boston and officially launch at the end of September.

Second, the group announced its royalty pricing. On the top end, makers of 4K TVs would pay HEVC Advanced $1.50 per unit, while manufacturs 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, meanwile, would pay 0.5 percent of attributable revenue.

Barcelo, Harrison & Walker, a San Francisco law firm specializing in intellectual property, will be the group's patent evaluator. The firm will start evaluating patents for inclusion into the HEVC Advance portfolio starting August 1.

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

In March, HEVC announced its formation and that it will begin licensing patents for high efficiency video encoding technology (aka "HEVC" or "H.265"), a key technology for delivering 4K content. HEVC Advance says it represents 500 patents that are "essential" to HEVC.

The emergence of a new patent licensing group--and the cost that will likely entail for producers and distributors of 4K content--injects an air of uncertainly into a 4K market that has only recently captured a little momentum towards its long-term goal of ubiquitous consumer adoption.

There is already an established patent pool, MPEG LA, that is licensing patents for 32 different patent holders for HEVC.

Moller says MPEG-LA has not set rate terms that are satisfactory to HEVC Advance's constituents. "We're still early in the process," he said. "And anybody who has adopted h.265 recognizes there's a lot of companies that haven't been spoken for."

Arris, a vendor of 4K technology to the pay-TV industry, would not comment on how the new patents might impact its business. However, speaking to FierceCable shortly after HEVC introduced itself in March, Envivio CEO Julien Signes said, "Patent pools, when they get established, can slow down initial deployments. But if you review the history of the development of MPEG-4, and before that MPEG-2, we went through the same phases of posturing and competition among patent holders and different patent pools. History shows that rights ownership issues will always be resolved. No one thinks AVC is not usable today, so there is no reason HEVC can't move forward."

For more:
- read this HEVC Advance press release

Related links:
YouTube experiments with 4K video at 60 fps
8K screen shipments won't even reach 1M by 2019, IHS says
Emergence of new HEVC patent pool clouds 4K's future

UPDATE: This story was updated on July 23, 2015 to reflect a clarification in patent pricing.

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