HEVC Advance, LLC, the second patent pool announced for the MPEG-H Part 2 High-Efficiency Video Coding standard (HEVC, also known as ITU H.265), had raised concerns among broadcasters and others in March 2015 when the organization announced that its licensing terms would include a levy of “0.5% of Attributable Revenues” on any distribution of content using HEVC encoding.
On December 18, 2015, however, HEVC Advance announced a broad and substantial revision of its licensing terms, eliminating many of its previously proposed content-licensing royalties while reducing device-based and other fees, establishing annual caps, and creating other concessions and incentives.
Source: HEVC Advance, LLC
Of most interest to broadcasters, HEVC Advance no longer plans to levy usage fees on any free-to-air (FTA) broadcast content, from both commercial and non-commercial channels. Freely distributed HEVC-encoded content on the Internet will also be free from licensing fees. These fee waivers are pledged to be permanent (i.e., for the life of the HEVC Advance program), but execution of a usage license with HEVC Advance may still be required by the distributor/broadcaster.
Paid distribution (such as cable TV) will still be assessed usage fees if HEVC is used for delivery to the end user, but royalties will be based on end-users’ subscriptions with the distributor, and not assessed on any retransmission consent fees or other arrangements by the distributor with content providers. It is further understood that FTA broadcaster content delivered via HEVC to cable or other redistributors, but then transcoded by the redistributor to another codec for delivery to end users, will not be subject to any HEVC Advance usage royalty assessed to the FTA broadcaster or the redistributor.
Other paid media services using HEVC, such as future pay-per-view or video-on-demand (PPV/VOD) content, will be assessed usage royalties on a per-title basis, as will packaged media such as future optical disk distribution that might incorporate the HEVC standard. All of these fees will now be subject to annual caps, however, determined both by category and by enterprise. This implies that a company that offers subscription services along with PPV/VOD rentals, and/or optical media or other content sales, would have their usage-royalty assessments limited by caps on each type of service, as well as by a limit on the company’s overall worldwide assessment, whichever was reached first, on a calendar-year basis. Similar device-category and enterprise-wide caps have now been established for hardware product royalties as well.
Usage royalties for paid distribution will be based on a fixed monthly fee per subscriber, or per transaction in the case of individual titles’ rentals and sales, rather than a percentage of “attributable revenue,” as had been previously announced. These fixed fees will then be subject to the caps described above. In the U.S. (and other developed nations), this fee is set at 2.5 cents per subscriber/month, or per title rental/sale, but for subscription services (only), these fees will be phased in over five years (see Table above).
For device royalties, the HEVC Main, Main Still and Main 10 profiles are included in the basic royalty rate, but advanced profiles (including the scalable variant technology known as SHVC) and optional features (such as SEI messages) are subject to additional assessments. No such tiering applies to HEVC Advance’s content distribution licensing fees or waivers, however, in which all HEVC features and known extensions are included.
Other announced changes to the HEVC Advance pricing structure include annual royalty credits to assist smaller-market participants, reduced royalty fees (half-price) for emerging markets, and limits to royalty increases over time. An incentive program was also announced, providing temporary rate-reductions for those executing licenses during an early window, and remaining in compliance with all terms throughout the licensing period.
For more details, visit the HEVC Advance website