“Generative AI is the most powerful tool for creativity that has ever been created. It has the potential to unleash a new era of human innovation.” – Elon Musk
Video has become the dominant form of content on the Internet. The rise of streaming services, social media platforms, remote work, and learning because of the COVID-19 pandemic fuels this. The demand for higher-quality video has spurred the development of a new video compression standard: versatile video coding (VVC).
The industry has taken notice, with Nokia looking to boost licensing revenue by securing its first video streaming platform deal.
Also known as H266, VVC provides up to 50% more efficient compression than its predecessor, H265. It enables ultra-high-definition streaming while supporting an expansive range of applications beyond entertainment.
As video becomes ubiquitous, VVC’s widespread adoption is complicated by the tricky IP landscape surrounding video-compression standards. This includes patented technologies from many different companies and institutions.
Finalized in 2020 after years of development, VVC (H266) emerged as the successor to prior codecs, such as AVC (H264) and HEVC (H265). It was developed to keep up with the strong demand for higher-quality video across devices. Also, it allows ultra-high-definition 4K and 8K video with high dynamic range to be streamed with comparable quality at much lower bitrates.
The ‘versatile’ in its name stems from VVC’s design to support an expansive range of applications beyond entertainment video – from machine vision for autonomous vehicles to remote robotic surgery.
As video becomes increasingly prevalent in consumer and industrial use cases, adopting VVC will be critical for managing bandwidth demands and enabling new technologies. However, the challenging IP landscape for video-compression standards will make this rollout very complicated.
Like most technical standards, VVC incorporates patented technologies from many different companies and research institutions. Any product implementing the VVC standard could potentially infringe hundreds or thousands of SEPs held by various owners.
To bring products to market legally, companies must obtain licenses under FRAND terms. Historically, patent pools are formed to simplify such licensing for widely adopted standards like H264 and H265 video codecs. However, despite efforts from industry groups, no single unified patent pool has emerged for VVC.
Instead, two separate patent pools launched in 2021 – MPEG LA’s VVC pool and Access Advance’s separate offering. In 2023, Avanci launched its own Avanci Video platform, targeting streaming providers (eg, Netflix and YouTube) rather than pitching to device manufacturers.
With multiple overlapping pools, the licensing landscape is increasingly fragmented compared to previous generations of video codecs.
To further complicate licensing, no definitive public database lists all VVC-related patents and their owners.
Standards bodies like the International Telecommunication Union (ITU) only require companies to make blanket declarations of holding potential VVC-related SEPs without disclosing specific patent numbers.
As of early 2024, only five out of 43 companies declaring VVC SEP ownership had provided patent lists to the ITU.
To uncover the full VVC patent landscape, AI was used to analyze patents related to prior video codecs and technical VVC contributions. By analyzing patents associated with previous video codecs and technical contributions to VVC. This analysis identified thousands of VVC-relevant patents beyond those disclosed in patent pools. This provides a more comprehensive view of the technology’s ownership.
Figure 1. Cumulative number of VVC JVET incorporated contributions by publication year.
Based on our data, Chinese firms Huawei and Tencent, as well as US-based Qualcomm, emerge as leaders with the largest shares of VVC patents and technical contributions to the standard. Other major patent holders include LG, MediaTek, Samsung, InterDigital, Sony, Canon and Panasonic. However, no single company or pool controls a dominant portion of VVC’s patent mass.
With VVC’s worldwide adoption, patent owners and licensees span companies across US, Europe, China, Japan and Korea among other locations. While US and European firms contributed the bulk of the technical foundations, many implementers of VVC products are based in China and the rest of Asia.
Figure 2. HEVC and VVC patent pool listed licensees by region of headquarters.
The VVC licensing landscape will become even more complex as deployment expands from consumer entertainment to enterprise video analytics, robotics and more. Patent owners and pools are now pursuing new market entrants (eg, streaming platforms) for SEP royalties.
Manufacturers of VVC-compliant products and streaming service providers should anticipate royalty claims related to SEPs from patent owners, including those from collective pools and platforms.
Analyzing video standard-related patent landscapes is crucial for effective FRAND licensing negotiations. By mapping out a patent owner’s size of VVC portfolio (numerator) and the overall number of VVC patents in the market (denominator), SEP licensors and standards implementers can determine the share of relevant patents held by individual patent holders, pools and platforms for standards like AVC, HEVC or VVC.
The data allows comparison of licensing offers and assessment of the relative value of different video-codec patent portfolios. Additionally, monitoring SEP filing and ownership trends helps to quantify risks and forecast future royalty expenses. This includes tracking activities of patent assertion entities acquiring SEPs.
The road ahead
VVC promises major bandwidth efficiencies for ultra-high-definition video and enables innovative new use cases. Its widespread adoption hinges on navigating an increasingly tangled web of SEP ownership and licensing practices. As the number of VVC products and services grows, so too will disputes and legal battles over licensing terms.
For the video technology industry, establishing more transparent and comprehensive data on VVC patents and their owners is paramount. Doing so can facilitate reasonable licensing negotiations and prevent royalty stacking that could hinder VVC’s rollout.
As the next transition nears, stakeholders must learn from the previous codec generations. Then they need to work toward a balanced and accessible licensing landscape for VVC and future video standards.
