![\"Article](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/457842-so-codecs-cms-ORG.png\")
<\/div>\nStreaming codec adoption used to be an engineering abstraction governed by RD curves, BD-Rate tables, and road map slides that no one outside of R&D ever considered. Over<\/span><\/p>\n the last 15 months, codec adoption decisions have morphed into a much broader discussion, involving C-level execs from finance and legal.<\/span><\/p>\n While the precursors to this transition occurred pre-2025, the situation coalesced in 2025. During the same period, we saw one codec step to the front (AV1) and another shrink before our eyes (VVC).<\/span><\/p>\n This year in review considers the following six events and discusses their implications for those involved in codec implementation decisions:<\/span><\/p>\n As you\u2019ll see, while several of these events relate to codec technology itself, most concern who will pay for codec usage, and how much, in 2026 and beyond. Let\u2019s jump in.<\/span><\/p>\n On Jan. 16, 2025, <\/span>Access Advance announced its Video Distribution Patent (VDP) Pool<\/span><\/a> covering content distribution using HEVC, VVC, AV1, and VP9, <\/span>with rates published in July 2025<\/span><\/a>. Royalties are calculated as the higher of three metrics shown in <\/span>Table 1<\/strong>: average monthly active video users, average monthly video subscribers, or semi-annual streaming revenue. Significantly, Access Advance offers a royalty waiver that excludes many small streaming services from any liability.<\/span><\/p>\n Note that only those subscribers who view a video encoded by one of the four listed codecs are included in the three metrics shown in Table 1. So, if a publisher initiated AV1 usage exclusively to serve Android users, rates would be calculated only for those users, not for the total subscriber base.<\/span><\/p>\n Access Advance wasn\u2019t the first content pool; <\/span>Avanci launched its Avanci Video Pool back in 2023<\/span><\/a>. At press time, Avanci released partial rate information and announced that it signed its first licensee<\/a>, which it didn\u2019t name. You can read about the rate and licensee <\/span>here<\/span><\/a>. Significantly, at least for the rate options Avanci announced, based on revenue and a per-user charge, there is no cap at the top or de minimis exception at the bottom.<\/span><\/p>\n In contrast, the Access Advance pool has both an annual cap and (as mentioned) de minimis exceptions for smaller services. The pool has <\/span>six licensees<\/span><\/a>\u2014five of which are also licensors\u2014and <\/span>Roku, which became a licensee in January 2026<\/span><\/a> and is not a licensor.<\/span><\/p>\n Confusing the royalty situation further is that the programs share 16 common licensors, which means that licensees of both programs get an offset for any double royalties paid. Both programs should know what that offset is, but it\u2019s not listed on their respective websites. If you\u2019re trying to estimate your potential royalty obligation to both pools, this offset is critical information to obtain.<\/span><\/p>\n Viewed broadly, new codec adoption is driven by two different factors; one is practical entry into a new market, like HEVC\/HDR provided for 4K premium content. Streaming publishers in this category must use licensed codecs or drop out of the premium content race.\u00a0<\/span><\/p>\n The other motivation is to harvest bandwidth savings from increased compression efficiencies. <\/span>Once Access Advance\u2019s royalty rates landed in July<\/span><\/a>, the math for streamers deploying advanced codecs for additional efficiency changed immediately. In 2019, the AV1 or HEVC pitch was simple: spend 3x\u20135x more on encoding to save 20%\u201330% on CDN for all compatible endpoints. In 2025, for services above the VDP Pool thresholds, that same pitch becomes 3x\u20135x the encoding cost, plus a royalty that can reach mid-eight figures annually and (if you\u2019re large enough) attract attention\u00a0<\/span>from individual patent owners like Nokia (see the next section). While the roughly 30% bandwidth reduction hasn\u2019t changed, CDN fees are much cheaper, reducing the associated savings.<\/span><\/p>\n In short, larger services delivering HDR need AV1 or HEVC for optimal QoE, so content royalties are a cost of doing business. For FAST services and others working with 8-bit 1080p content, HEVC and AV1 are largely an efficiency play, and content royalties radically change the break-even math.<\/span><\/p>\n In early 2025, <\/span>Nokia and Amazon reached a global patent settlement<\/span><\/a> after Nokia sued Amazon over video and streaming-related patents across multiple jurisdictions, including Germany, the U.S., and the U.K., and in the European Unified Patent Court. This was one of the first known settlements relating to content royalties as opposed to device royalties.<\/span><\/p>\n In its complaint, Nokia<\/span><\/a> \u201caccused Amazon of allowing customers of its Prime Video, Freevee, and Twitch services to stream video content encoded in the H.264 standard and a newer one called H.265,\u201d alleging infringement of at least 15 Nokia patents. Nokia has described these as \u201c<\/span>multimedia inventions<\/span><\/a>\u201d used in Amazon\u2019s streaming services and devices, not just chipset IP (see <\/span>Figure 1<\/strong>).<\/span><\/p>\n The threat of German injunctions and related pressure from the U.S. International Trade Commission were particularly notable because they created real, <\/span>near-term remedies<\/span><\/a> against both the Prime Video service and Fire TV devices, rather than abstract legal threats.<\/span><\/p>\n Amazon was the first tier-1 streaming service forced to the table over video and streaming patents, not just hardware licensing. Nokia signed at least two other large agreements <\/span>without naming names<\/span><\/a>. Inside legal and commercial teams, the message translated quickly and bluntly: If Amazon can be enjoined over streaming functionality, no major service is immune. The longstanding strategy of ignoring codec and streaming IP exposure and assuming it would never block service delivery stopped looking credible.<\/span><\/p>\n Nokia is not the only codec IP owner asserting rights over streamed content. In early 2025, InterDigital sued Disney in the U.S., Brazil, Germany, and the European Unified Patent Court over technologies used in Disney+, Hulu, and ESPN+. The Munich (Germany) Regional Court ruled that Disney cannot use InterDigital\u2019s advanced video compression technology on its streaming platforms in Germany, issuing an injunction based on infringing EP 1 905 233, which covers dynamic overlay of one video stream with another (for example, subtitles). A Brazil court found in favor of InterDigital, while the suits in the U.S. and European Unified Patent Court are still pending.<\/span><\/p>\n Broadcom has pursued Netflix in the U.S. and Europe over content encoded using HEVC, including a German case in which Netflix was initially found to <\/span>infringe<\/span><\/a> a Broadcom streaming patent before <\/span>a second court found the Broadcom patent to be invalid<\/span><\/a>. Not to cut too fine a slice, but while this relieves Netflix of any liability to Broadcom, it does not reverse the broader conclusion that encoding and delivering content using a codec can infringe patents covering that codec\u2019s technology.<\/span><\/p>\n The bottom line is that beyond content-side patent pools, the largest streaming services should expect direct approaches and potential enforcement from Nokia, InterDigital, Broadcom, and other patent owners, not only for HEVC or AV1 but potentially for H.264 and related streaming functionality as well. Once a few of these suits are settled, it\u2019s likely that all of these patent owners will target progressively smaller services.<\/span><\/p>\n Although I do have a CPA in my distant background, I\u2019m not here to offer financial advice. Still, by 2026, no responsible financial executive should greenlight the deployment of any advanced video codec without at least considering a reserve for potential royalty obligations. With device-side pools operating, content-side licensing programs publishing rates, and enforcement proven possible at scale, a zero-royalty assumption increasingly looks optimistic rather than conservative.<\/span><\/p>\n Once finance starts booking reserves or accruals for codec royalties, the psychological battle is over; those costs are 99% of the way toward normalization. At that point, the question stops being \u201cCan we avoid paying for codecs?\u201d and becomes \u201cWhich codecs are worth paying for and at what scale?\u201d<\/span><\/p>\n On July 31, 2025, <\/span>Sisvel announced that its AV1 patent pool had licensed roughly 50% of the finished-product AV1 device market<\/span><\/a>, covering TVs, set-top boxes, and other consumer hardware shipping with AV1 decode. By any measure, 50% is quite an accomplishment, but particularly so for a technology launched as \u201croyalty-free.\u201d<\/span><\/p>\n In a more general sense, this announcement makes it increasingly difficult to assert that AV1 is somehow different than HEVC or VVC and is royalty-free. That said, to quote Yogi Berra, \u201cIt ain\u2019t over till it\u2019s over.\u201d H.264 and HEVC are done and dusted, with multiple court decisions for devices and content and Amazon Prime paying content-related royalties to Nokia. As far as I know, there are no equivalent cases for AV1 on either the device or the content side and no content-side agreements for AV1 like the Nokia-Amazon Prime agreement.<\/span><\/p>\n All that said, we won\u2019t know if AV1 is truly royalty-free until it\u2019s litigated in court in all relevant jurisdictions. However, from a financial perspective, if you\u2019re a company that\u2019s large enough to meet one of Access Advance\u2019s minimum royalty thresholds, anticipating that AV1 will be royalty-free has gone from prudent planning to wishful thinking.<\/span><\/p>\n The first thing any publisher should know about InterDigital\u2019s acquisition of Deep Render (see <\/span>Figure 2<\/strong>) is that it will not matter operationally for years. Nothing about this deal changes encoding ladders, device support, or delivery economics in the current planning cycle. Whatever emerges from AI-native compression research will arrive closer to 2030 than 2026.<\/span><\/p>\n The reason the acquisition belongs in a 2025 codec year in review is directional. If you were hoping that AI-based codecs would disrupt the current codec licensing schema, this deal signaled \u201cmeet the new boss, same as the old boss.\u201d<\/span><\/p>\n By way of background, InterDigital is a non-practicing entity (NPE) that drives \u201cthe development of advanced technologies and contributes them to global standards that define the future of wireless communication and video.\u201d The NPE designation is descriptive, not derogatory. If you\u2019re looking for validation of InterDigital\u2019s technology contributions or business model, look no further than an $8 billion market cap from around the start of 2025.<\/span><\/p>\n InterDigital didn\u2019t buy Deep Render to release a new AI-based codec and sweep the feet from under MPEG and the International Telecommunication Union (ITU). Rather, according to Rajesh Pankaj, InterDigital\u2019s CTO, \u201cAcquiring Deep Render means that we\u2019re perfectly positioned to lead the development of the next generations of video technologies, building on our existing leadership in HEVC and VVC.\u201d This explicitly ties AI-native compression to the same standards-driven, IP-centric model that has defined previous codec generations.<\/span><\/p>\n For publishers, the implication is economic rather than technical. If AI-native compression techniques are being accumulated by the same organizations that monetized AVC, HEVC, and VVC, then the post-AV2 world won\u2019t reset the royalty conversation. Instead, it points toward a future where new codecs will arrive with familiar IP exposure. The acquisition does not make AI codecs imminent, but it makes the longterm direction difficult to ignore.<\/span><\/p>\n On Aug. 27, 2025, Brazil\u2019s president formally established the ATSC 3.0-based DTV+ (\u201cTV 3.0\u201d) system as the country\u2019s next-generation free-to-air broadcast standard, with commercial services expected to start in time for the 2026 World Cup. VVC and LCEVC vendors have pointed to Brazil\u2019s TV 3.0 plan, which describes VVC as the main video codec and LCEVC as an enhancement layer, as <\/span>a beachhead that will drive global adoption<\/span><\/a>. A review of what the other major standards families are doing in the same time frame suggests a more fragmented reality.<\/span><\/p>\n Let\u2019s start with ATSC, which applies to the U.S., South Korea, and other, smaller jurisdictions. In 2024, <\/span>ATSC introduced VVC as a Candidate Standard <\/span><\/a>and stressed that it would be \u201can option in addition to\u201d HEVC, not a replacement. In July 2025, <\/span>ATSC approved VVC as a full ATSC 3.0 standard<\/span><\/a>, but made it optional, while leaving HEVC as the practical baseline for advanced codecs. DVB defines broadcast specs across Europe and other regions, and <\/span>its 2022\u20132023 updates added both VVC and China\u2019s AVS3 to its core DVB-AVC specification<\/span><\/a>. However, DVB explicitly describes its role as \u201c<\/span>setting standards, not adoption<\/span><\/a>,\u201d meaning that actual deployments of advanced codecs are up to the individual countries.<\/span><\/p>\n In China, AVS3 is the nationally backed next-generation codec, and it is already used in <\/span>4K\/8K broadcasts<\/span><\/a>. <\/span>DVB\u2019s inclusion of AVS3 alongside VVC and AV1<\/span><\/a> reflects broader awareness of AVS3 beyond China.<\/span><\/em><\/p>\n Some have claimed that VVC adoption will be driven by Chinese VVC patent owners<\/span><\/a>, especially those behind video-heavy services like TikTok\/Douyin and other major platforms. However, there is no clear indication that large Chinese streaming platforms are pushing VVC as a commercial standard in the same way YouTube, Facebook, and Netflix have driven AV1 adoption. In China today, VVC interest appears more rooted in standards participation and patent involvement than in overt market or publisher pressure to deploy the codec at scale.\u00a0<\/span><\/p>\n These standards are summarized at a high level in <\/span>Table 2<\/strong>, although the actual facts are so detailed that a standards wonk could disagree with almost every entry. The bottom line as it relates to VVC and LCEVC is that Brazil is a standalone jurisdiction, and what happens in Brazil likely stays in Brazil. Yes, at some point in the not-so-distant future, many TVs in Brazil will have VVC\/LCEVC decode, but that influence is likely local, not global.<\/span><\/p>\n As we\u2019ve seen, ATSC and DVB adopt and incorporate codecs, but don\u2019t dictate their use. As I\u2019ll cover in a moment, AV1 has much greater publisher adoption than VVC and LCEVC. That\u2019s why AV1 hardware decode is included in most currently shipping TVs, while VVC and LCEVC decode, which are available in multiple chipsets, are rare, if not totally unavailable. In this regard, Brazil appears to be more of an Alamotype scenario than a Normandy.<\/span><\/p>\n In late 2025, AOMedia finalized the AV2 specification and bitstream. This was not a deployment event, but it was a real milestone. AV2 moved from research slides<\/span><\/p>\n and conference talks into something silicon vendors and encoder developers could target. From that point on, AV2 belonged in the 5- to 10-year road map section of any serious codec strategy deck, with potential early deployments from the big three AV1 users: Meta, Netflix, and YouTube (see <\/span>Figure 3<\/strong>).<\/span><\/p>\n Here\u2019s what we know about AV2 from recent AOMedia presentations by Netflix and Meta<\/span><\/a>. Architecturally, the codec remains a conventional hybrid block-based design, which simplifies hardware planning and continuity with existing pipelines. Film Grain Synthesis is retained as a mandatory tool, with improvements underway, reinforcing AV2\u2019s suitability for premium and cinematic content.<\/span><\/p>\n Regarding encoding efficiency, measured gains over AV1 are consistently in the high-20%-to-mid-30% range across random access, adaptive streaming, HDR, extended color formats, and subjective testing. From a purely compression standpoint, AV2 appears capable of closing much of the efficiency gap between AV1 and VVC, although not clearly surpassing it.<\/span><\/p>\n What remains unknown is just as important. No concrete data was shared on encoder complexity, software decode performance, or power efficiency, all of which will heavily influence real-world deployment. Hardware feasibility has been reviewed, but no silicon timelines or decoder benchmarks exist yet.<\/span><\/p>\n Licensing and IP exposure were not discussed, despite the codec\u2019s reliance on long-established compression architectures. <\/span>Sisvel has already announced its intention to create an AV2-related patent pool<\/span><\/a>, and you would expect the same from Avanci and Access Advance.<\/span><\/p>\n Ironically, AV2\u2019s arrival helped clarify how the AV1 ecosystem had progressed to enable deployments beyond AV1\u2019s largest supporters: Meta, Netflix, and YouTube. Netflix recently <\/span>reported<\/span><\/a> that AV1 was powering roughly 30% of its streams and had expanded into HDR delivery, finally providing feature parity with HEVC, if not the proven installed base of 4K\/ HDR-compatible players.<\/span><\/p>\n\n
Access Advance Launches The VDP Pool<\/strong><\/h2>\n
![\"access](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/InlineImages\/457603-ozer-table-1-ORG.png\")
Table 1. <\/em><\/strong>Access Advance VDP royalty rates<\/em><\/p>\nThe Implications of Content Royalties<\/strong><\/h2>\n
Nokia and Amazon Settle Worldwide Claims, Including for Content Royalties<\/strong><\/h2>\n
![\"summary](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/InlineImages\/457605-Ozer-Codecs-Fig1-ORG.png\")
Figure 1.<\/em><\/strong> Summary<\/span><\/em><\/a> of Nokia\u2019s claims against Amazon\u00a0<\/span><\/em><\/p>\nImplications for Publishers<\/strong><\/h2>\n
Sisvel Claims to Have Licensed Half The AV1 Device Market<\/strong><\/h2>\n
InterDigital Acquires Deep Render<\/strong><\/h2>\n
![\"interdigital](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/InlineImages\/457606-Ozer-Codecs-Fig2-ORG.png\")
Figure 2. <\/strong>InterDigital locks up patent IP for AI-based codecs.<\/span><\/em><\/a><\/p>\nBrazil\u2019s TV 3.0 Decree Locks In VVC + LCEVC<\/strong><\/h2>\n
![\"codec](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/InlineImages\/457608-Ozer-Codecs-Table2-rough-ORG.png\")
Table 2. <\/strong>Codec usage in broadcast standards<\/em><\/p>\nAV2 Arrives, AV1 Advances<\/strong><\/h2>\n
![\"netflix](\"https:\/\/dzceab466r34n.cloudfront.net\/Images\/ArticleImages\/InlineImages\/457607-Ozer-Codecs-Fig3-ORG.png\")
Figure 3. <\/em><\/strong>Netflix\u2019s timeline of AV1 adoption and deployment (image credit: Netflix)<\/span><\/em><\/p>\nWhat AV2 Revealed About AV1<\/strong><\/h2>\n