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Facts on H.264

I want to start a set of articles around H.264 encoding standard and related topics.
In this first part let me introduce the standard and make a quick consideration about one of the more vexed question: the H.264 licensing fees.

What is H.264?

H.264 is a standard for video compression. Also known as MPEG4 Part 10 or AVC (Advanced Video Codec), it is the *state of the art* video encoder. It is quite complex and very flexible, the goal is to cover any needs from low bit-rate mobile video streaming to high bit-rate, hi-definition broadcasts.
H.264 is already used on the web (quick time), is used on camcorder for High Definition recording, is used on HD-DVD and BlueRay to encode high definition bitstream at the same bitrate of the “old” MPEG2 DVD.
Differently from On2 Vp6 (and Vp7), H.264 is an open standard. This mean you can download the codec specification and build you own encoder and decoder. This also means you can already find a plurality of commercial and free codecs available on the net. However, the use of H.254 standard is NOT COMPLETELY FREE. it is regulated by licensing rules.
These rules has been defined by MPEG LA which hold the patent-pool and involves codec manifacturers and content providers too.
Comparing to H.264, Vp6 require an encoder license but does not require *contents* licenses.

H.264 licensing fees

The fees schema is complex, I can suggest to read this if you want to know it in details. I briefly summarize the main points. Licensing fees must be paid by:

encoders and decoders manufacturers:

under 100,000 unit / year -> no fees
beyond 100,000 unit / year -> 0.2$/unit
beyond 5Million / year -> 0.1$/unit
there is also a fees cap per enterprise per year

– video contents or service providers:

in a pay-per-view scenario:
2% of the video licensing cost or 0.02$ per title encoded with H.264 with lenght higher than 12 minutes (below there’s no fees to pay).
in a subscriber scenario:
below 100,000 subscriber per year -> no fees
from 100,000 to 250,000 -> 25,000 $ / Year
from 250,000 to 500,000 -> 50,000 $ / Year
from 500,000 to 1,000,000 -> 75,000 $ / Year
grater than 1,000,000 -> 100,000 $ / year
there is also a fees cap per enterprise per year and a similar licensing plan for television broadcasting.

What this means for developers ?

Obviously it depends by the size of your project. Notice that under 12 minutes there is no need to pay fees, so no problem for trailers, interviews, small news, and so I’ll expect a massive adoption of H.264 by “YouTube like” companies in the next future.

What happen if you have to publish a longer video ?
If you charge your visitors to see the video and if you have a large audience you have to pay. If the video is self-produced or royalty-free, the MPEG LA licensing summary file seems to “suggest” the payment of at least 0.02$ per title. In any case, there is a partecipation to revenues, if they exist, also if they derive from advertising or other non-direct means.
H.264 licensing fees can be a problems and a cost only for big project. In this case a very small portion of the incomes must be paid to MPEG LA. This is the price to use the stable, mature, efficient, “ubiquitous” and flexible H.264 standard.

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