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HEVC Advance Releases Revised Licensing Terms

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When HEVC Advance first proposed royalty rates and policies in July 2015, the terms were almost universally criticised, if not vilified. Recognizing that the proposed structure would slow HEVC adoption rather than promote it, HEVC Advance has issued a sweeping revision that addresses nearly all of the earlier concerns. While the ultimate fairness of the new terms will be determined by those who have to sign the license agreement and pay the royalty, the new terms are much closer to those for competiting offerings and older technologies like H.264.

The new terms differ from the previously proposed terms in four ways:

  • They reduce the royalty rates on devices and institute an annual cap of $40 million.
  • They eliminate the concept of royalties on attributable revenue, and impose a content royalty (with a separate $5 million cap) only on subscription, pay-per-view, and digital media. There will be no royalty on free on-air or streaming video, even if it is advertising supported.
  • They provide a structured incentive (with both carrots and a big stick) for potential licensees to quickly adopt the new license structure.
  • They provide a royalty credit of $25,000, essentially a de minimisexception for low-quantity use.

In this article, I’ll detail the new policies, then transition to a question-and-answer session with HEVC Advance CEO Peter Moller.  I’ll also present a short Q&A with Joe Inzerillo, executive VP and CTO at MLB Advanced Media, who was one of HEVC Advance’s most vocal critics.

Changes to HEVC Advance Royalties

Table 1 shows the new hardware/software royalty structure for licensing the Main Profiles in Region 1 countries (essentially, the developed world). As you can see, the royalty in each class was reduced, but the big news is the annual cap.

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