The Codec Market in 2018

2017 was a dynamic year from a codec perspective, and 2018 should be even more active. In this article, I’ll review what happened last year in the codec world, talk about what to expect this year and conclude with a brief discussion about how this might affect different types of publishers.

The Year in Codecs: 2017 Sees the Rise of HEVC

At the beginning of 2017, H.264 was clearly the dominant codec, with playback available on virtually every device and platform on the planet. Though VP9 played in all major browsers (save Apple Safari), it still wasn’t widely used, apart from YouTube and a handful of other services. The only browser that supported HEVC (also known as H.265: the latest evolution of the H.264 codec) was Edge on Windows 10 computers with HEVC hardware decoding. However, HEVC dominated for 4K videos delivered to Smart TVs, due to its efficient, high-quality compression capabilities. At the start of 2017, Android devices could play both HEVC and VP9, while Apple devices (iOS, tvOS and Mac/Safari) could play neither.

The Alliance for Open Media’s AV1 codec was widely talked about, but not available for deployment, as the expected ship date was pushed from mid-2017 to early 2018—and still hasn’t happened. (The Alliance for Open Media is the industry group originally formed by Intel, Google, Microsoft, Cisco, Mozilla, Amazon and Netflix in 2015 to consolidate efforts towards creating an open-source codec, which ultimately became AV1.)

The first big news of 2017 came when Velos Media announced a new HEVC patent pool, which included intellectual property from Ericsson, Panasonic, Qualcomm, Sharp and Sony. Velos didn’t announce royalty terms, and still hasn’t—and their FAQs don’t preclude content-related royalties. Any royalties will be in addition to those charged by MPEG LA and HEVC Advance. MPEG LA’s policy has no content-related royalties; HEVC Advance charges royalties on pay-per-view and subscription content, but not on free content.

The bottom line: If you’re distributing video for free, it seems unlikely that any entity will attempt to charge royalties. That is, of course, unless you’re distributing using MPEG-DASH, which is subject to an MPEG LA license pool; but I’m focusing on codecs here, not formats, so I’ll leave it at that.

Apple Makes Waves With HEVC Support, AOM Membership

The second news flash from 2017 came at Apple’s WorldWide Developers Conference, where Apple announced they were adding HEVC to HTTP Live Streaming (HLS), and also supporting high dynamic range (HDR) video. This means that HEVC-encoded video would play on iOS devices; on Macs, in Safari; and on Apple TV devices that could upgrade to the newest OS software.

This move was widely celebrated by codec developers and encoding vendors—and rightfully so, since it opened up hundreds of millions of potential endpoints. Initial tests showed that even on older, supported devices, such as the iPhone 6, HEVC playback was relatively efficient, and shouldn’t degrade battery life as significantly as H.264 (most likely due to hardware-based HEVC decoding included on these devices). On newer devices, such as the iPhone 7 and beyond, HEVC playback consumed about the same CPU percentage as H.264, indicating minimal impact on battery life.

Despite these benefits, it appears adoption of HEVC within HLS has been slow—probably for a number of reasons, including the additional encoding and storage costs and the confusing royalty picture. There’s also the issue of how to support older Apple devices not compatible with HEVC, as well as other non-Apple endpoints that play HLS streams. Nonetheless, most industry analysts expect HEVC usage in HLS to increase in 2018 and beyond.

The second bit of Apple-related codec news came in early January 2018, when Apple joined the Alliance for Open Media (AOM). This was an understated move marked only by the addition of Apple’s name on the AOM website as a founding member; Apple has made no statements regarding the timing or extent of their support for AV1 or existing codecs such as VP9.

At this point, AV1 is an unknown entity performance-wise, as we don’t know the encoding quality, encoding time or CPU requirements for decode. Unlike HEVC, Apple devices don’t have AV1 decoding hardware—so unless AV1 decode requirements are much lower than expected, it’s unlikely AV1 will make great inroads into iOS playback until 2020 or so. However, if Apple incorporates VP9 playback into Safari, iOS and tvOS, it could spark some additional interest in this codec.

In 2018, Expect Wider Support for AV1, HEVC—and VP9?

AV1 should become available in the first quarter of 2018, and will immediately be supported in all browsers from members of the AOM, including Chrome, Edge, Firefox and (most likely) Safari. I’m hedging on Apple because they haven’t announced any intentions to do so, while all other AOM members have, to some degree. I would also expect YouTube and Netflix to start distributing AV1-encoded video by mid-year or so.

It would be great if Apple also added VP9 support on their mobile, computer and OTT platforms, since that would open up playback of 4K videos from YouTube, which are currently only encoded in VP9 format. But again, no word from Apple on this.

Apple’s support for HEVC in Safari, and Edge’s support on Windows 10 computers with HEVC hardware decode, will put pressure on Google and Mozilla to support HEVC decode in their respective browsers. Since they can do this without paying royalties by leveraging the HEVC decode already in the operating system, there’s a good chance both companies will support HEVC in their browsers by mid-year or so.

What Does This Mean For You?

HEVC, VP9 and AV1 will have the most penetration into live and VOD (video on demand) services that are distributing 4K and higher-resolution content. If you’re not currently distributing 4K content, you probably can wait a year before considering augmenting the H.264 files you’re already creating. On the other hand, if you’re currently encoding content into HEVC format for delivery to Smart TVs, you should look into integrating those files into your HLS feeds.

AV1 should hit the market with a splash, but realistically, the primary companies that will be encoding into that format are those in the Alliance for Open Media, such as Google, Netflix, Hulu, Amazon and Facebook. Most other companies can comfortably wait from afar until the performance parameters of the new codec become known.

Finally, live event producers should consider deploying HEVC encoders from companies such as LiveU and Teradek—even for 1080p and smaller streams, and particularly for events transmitted via 4G. HEVC can shave 35 to 50 percent of the bandwidth from these streams, making them easier to deliver to the cloud, and Wowza (and other vendors) can transcode HEVC as well as H.264.