Netflix + 4K Content Streamers Face Increased Costs As Patent Fight Looms
The problem is an HEVC codec which is used by Netflix and TV manufacturers to stream 4K content from a source to a device.
The underlying technology of the High Efficiency Video Coding (HEVC) is compression technology that significantly reduces the bandwidth needed to stream 1080p content, when applied to a 4K stream, bandwidth is reduced down to 1080p levels.
Without HEVAC broadband suppliers such as Optus, Telstra and iiNet could see their networks choked as consumers watch 4K content such as over one million Australians watch shows such as Orange is the New Black, Marco Polo or House of Cards on their Netflix stream.
Three months ago a HEVAC Advance consortium was formed by the owners of over 500 HEVAC patents. The principle partners of the consortium are General Electric, Technicolor, Dolby, Philips, and Mitsubishi Electric.
Now the HEVC Advance consortium is demanding that anyone generating revenue by streaming videos using their HEVC codec should pay royalties to the organisation.
Initially the consortium is looking to recover 0.5% of the total revenue generated by organisations who stream 4K content.
The move could see the price of services such as Netflix rise in coming months.
Initially the owners of the patents were working on only collecting fees from manufacturers of devices such as 4K enabled TVs, smartphones, Blu-ray players, and PC operating systems that delivered 4K streaming.
Now the HEVC Advance consortium wants to collect both content streaming fees and fees from product manufacturers.
Currently the fees are US $0.80 for a phone and $US1.50 for a TV.
It’s expected that organisations such as Netflix will have no choice but to pass on the charges to consumers.
Recently Netflix moved to work with TV manufacturers such as LG, Panasonic and Sony to ensure that their TV were Netflix certified, this involved the use of HEVC codecs to ensure the smooth streaming of content.
Observer’s claim that Netflix’s offering has now been compromised by HEVC Advance’s demands. It’s also likely that the demands will turn off other players from entering the 4K streaming business. They claim if a 0.5% royalty fee makes 4K streaming cost-ineffective, less companies will be keen to offer 4K content, and 4K TV sales could struggle as a result.
Currently both Google and Mozilla are trying to develop rival codecs that can offer competitive bandwidth efficiencies when rich media content is streamed.
At CES 2016 we will also see the emergence of 8K TV’s with several Hollywood Studio’s now looking to deliver 8K content.