Final VC-1 patent licensing terms set by MPEG group
by Erik Hanson 
posted Aug 18th 2006 at 3:51PM
Following up on some comments made in this week's podcast about licensing terms, the MPEG Licensing Administrator group has announced the final patent terms for manufacturers wishing to product equipment or content using the VC-1 video standard. By combining the patent portfolios covering VC-1 into one blanket license, the MPEG group has helped businesses license essential products using one license, which is then split up to the entities that contribute patents to the pool.Details after the break
The VC-1 licensing standard, which was developed in large part by Microsoft, and is used in both HD DVD and Blu-ray standards, is expected to be released later this year as a final portfolio fee. To summarize, manufacturers of products that decode or encode VC-1 (standalone Blu-ray and HD DVD players) must pay between ten and twenty cents per unit depending on number of units sold, up to USD $5M per year. Products in personal computers pay the same, but with an $8M cap. For the content creators, there is a fee of two cents per title or 2%, whichever is lower, up to $4.25M per year ($5M in 2010). If there is ever a company that decides to go the subscription route, the fee is between $25,000 and $100,000 per year, depending on the number of subscribers. For all these categories, if you produce relatively few products, the fees are waived, and content fees are waived completely before September 1st of 2006, so get cranking if you want to make some license-free content for your blue-laser media.
It's interesting to see all the various fees and licensing agreements that come into play when producing products or services of any kind, and for a major manufacturer like Samsung or Toshiba, these numbers can be easily passed onto us consumers. But as I mentioned in the podcast, once you start adding up all the fees for all the different patents in one product -- just think about all the logos you see on an average consumer electronics box, and pretty much every brand name and standard supported, and you'll start to see what we mean -- it's not hard to see where a $500 product becomes a $1000 one, just so the manufacturers can make a little profit.
Reader Comments (Page 1 of 1)
ScootOnDown @ Aug 18th 2006 4:37PM
Erik, Matt, or Ben,
I was just wondering why would a studio, like Warner Brothers for instance, want to create a movie in 2 different codecs? It seems to me that once the film was created /converted in a codec whether it be VC-1 or Mpeg-2 that it would not make sense for them to convert that film again in a different codec? They would have to pay royalties to one of the codecs being used why pay both? Both players seem to support all the codecs? I guess I'm missing something here? Thanks.
The Jeremy @ Aug 18th 2006 6:03PM
Scoot,
That's why I've already suggested on HDBeat that once a price war truly begins with HD-DVD and Blu-Ray, the HD-DVD platform will drop the H.264 MPEG4 AVC codec. Microsoft is supporting the platform behind the scenes and its not in their best interest to allow H.264 to be supported when they'd lose licensing revenue from the studios switching from VC-1 to H.264.
Not only does Microsoft want to make licensing revenue off VC-1 per HD-DVD player and title sold, they also want HD-DVD to succeed so they make money of the iHD software as well. To a monopolist such as Microsoft, they don't want H.264 to succeed because it will directly benefit Sony and Apple and thus offer a reason for the rest of the consumer electronics manufacturers not to license Microsoft's technology.
While supported in name by the Blu-Ray Disc Association, it will be a cold day in Hades before VC-1 gets more than begrudging support (and especially from Sony). Warner Home Video will likely transition to VC-1 because it is not beyond the pale to assume that they were given a price break on the technology as part of the comprehensive antitrust settlement between Microsoft and TimeWarner just a few short years ago ($790 million plus various licenses in exchange for TimeWarner forcing its AOL division to settle instead of holding out for a judgment in favor of AOL's $10 billion claim against Microsoft).
The real hard spot currently is being a Blu-Ray supporter (with sticking it to Microsoft as an added bonus) because Sony won't ship any titles outside of the obsolete MPEG2 codec because they don't want to help Microsoft establish VC-1, and the existing Blu-Ray players (and HD-DVD for that matter too) have too weak of a decoder chip present in them to do decent H.264 decoding. Neither platform should be on the market now, but we can thank Toshiba/Warner/Microsoft for rushing and pushing this format war on Joe Consumer.
B.Greenway @ Aug 18th 2006 6:51PM
"but we can thank Toshiba/Warner/Microsoft for rushing and pushing this format war on Joe Consumer."
Mind boggling, Sony deserves no ‘thanks’ in all of this?
zombieflanders @ Aug 18th 2006 8:21PM
Nope. Blu-ray was developed and announced in advance of HD DVD (aka AOD, at the time). Not only that, if Warner had gotten their way, HD DVD would probably be no more than 15GB. Microsoft entered the race both as a spoiler, and to piss off Sony and other consumer electronics manufacturers (that's why so few of them are making HD DVD hardware). If they can force a format war, then the chance that both die off is high, and Microsoft can swoop in and "save" us with discless media. Think DRM is bad now? Wait until you don't even have a physical copy that you have at least nominal claim over. All that over an infrastructure that's incapable of handling 1080p and lossless sound, which means more compressed HD. Yay!
Erik Hanson @ Aug 18th 2006 11:07PM
Flanders, ultimately, I do think you're right about Microsoft, they would surely love to sell us discless media, and since VC-1 is really Windows Media 9, they already have all they need to give us some WMV video and PlaysForSure audio. We'll have to see how the new Zune player stacks up to the iPod and iTunes in the technology department, I bet it's no better than ACC in quality, and probably sacrifices quality for a bit more compression, after all, they probably don't think we even notice the difference. Since VC-1 is sort of based on next-gen MPEG, it has a better compression ratio and therefore can handle a higher bitrate, I still would rather see fully-compatible MPEG-4 or even just high-bitrate MPEG-2 with better quality and low compression. But that could be me being a video snob.
Thanks everyone for your comments on codecs, I know sometimes it can be one of those behind-the-scenes nerdy kind of articles and it's good to see people putting thought into why one might be better than another, or why a company would put so much effort into one or another, just based on licensing or quality issues, or even possibly ulterior motives.
B.Greenway @ Aug 19th 2006 12:11AM
Zombieflanders, does that tin-foil hat itch?
zombieflanders @ Aug 19th 2006 1:35AM
Dude, most of my comment comes straight from the mouths of at least three Microsoft executives (including Bill Gates), and the rest is from actually knowing about what's been going on with HD for the last twenty years. But of course you don't need me to tell you that, right? I mean, you do have your own website, so I figured you've read the interviews, or maybe one or two books on HDTV, or even talked to a veteran of the industry. Maybe I was wrong.
B.Greenway @ Aug 19th 2006 2:32AM
Proclaiming a move to disc-less media is neither surprising or unheard of and honestly it’s a little trite to keep banging on the Microsoft is evil drum, but not surprising from such a unabashed Blu-ray fan as yourself. You act like VC-1 is HD DVD, try telling that to the Japanese publishing houses, they seem pretty big on AVC for their encodes.
Speaking of research and “Blu-ray was developed and announced in advance of HD DVD” since when does an announcement equal a superior product? right never. And on the development front again, might want to brush up on your own research before handing advice to others. Toshiba was developing hi-def DVD in 1997.
http://www.toshiba.co.jp/about/press/1997_02/pr2401.htm
GhostDoggy @ Aug 19th 2006 6:59AM
So, at this point which video codec offers the cheapest licensing approach for someone making players (Toshiba, Sony, or Samsung LG), software players (Theatertek, PowerDVD, WinDVD, etc.), or authoring disks?
Steve J @ Aug 19th 2006 7:26AM
"it’s a little trite to keep banging on the Microsoft is evil drum"
Haha... have a word with the HD-DVD fanboys who continually dump all over these comments sections with their anti-Sony (or is that "$ony"???) propaganda.
zombieflanders @ Aug 19th 2006 11:32AM
"Toshiba was developing hi-def DVD in 1997."
Pfft. Sony had already started work on non-red-laser solutions well before that:
http://www.sony.ca/sonyca/view/english/corporate/corporate_milestones90s.shtml
http://www.sony.net/SonyInfo/News/Press_Archive/199601/96D-014E/index.html
http://pioneer.jp/crdl/org/history-e.html
As you can see, Sony--and others like Philips and Pioneer--were already working on blue-laser solutions as early as 1992. Sony and Philips consolidated efforts in 1997 after the MMCD/DVD pissing contest. Sony was well already well-versed in HDTV. They helped develop it, made the first HDTV cameras, were responsible for the first US HDTV broadcasts, and released the first commercial HDTV displays, among other things.
B.Greenway @ Aug 19th 2006 1:25PM
Odd, for all those early excursions into blue-laser technology, I still don’t see any working demonstrations of a hi-def DVD playback system before 1997.
But apparently that’s not the point of this anymore…. next you’re going to dig up some reference to Sony’s involvement with the founding of UNICEF and early research on the smallpox vaccine. What is your fascination with Sony? Did a Sony exec pull you from a burning building as a small boy?
You mentioned “actually knowing about what's been going on with HD for the last twenty years” that’s impressive man , especially considering the first HD broadcast took place (in the U.S.) in 1996.
So with that, it’s obvious you followed the prior HD developments in Japan and you’re no doubt aware NHK first demonstrated a working HDTV (without Sony’s involvement) in 1969, with early research (again from NHK) going all the way back to 1964.
And once again, completely irrelevant to who first showed a working hi-def DVD system. No matter what kind of advancement you want to trot out, there’s a damn good chance someone was doing it before Sony.
And Steve J, your right there’s just as much jock straddling on the other side, I don’t get why either side feels this near homoerotic fascination with formats.
But acting like Sony is non-complicit for their blunders and anti-consumer activities (Root kit ftw) just because big bad Microsoft supplies a codec, (to both sides no less) adds nothing to the real debate.
zombieflanders @ Aug 19th 2006 2:49PM
b.greenway: Just check through any of the major EE journals from 1997, and you'll see tons of references to demonstrations that year and the year before. And if you asked anyone in the HDTV industry, they'll tell you that we wouldn't even be having these discussions without NHK and yes, Sony's push for it in the US and Japan. It wasn't as if it just sprung up in 1996. Someone who worked at WETA or in certain Congressional committees in DC during the 80s and 90s would have a lot to say about it, and no doubt Sony's name would be mentioned more than once.
And you know what, you're very quick to jump on Sony for it's supposed anti-user stance (the rootkit wasn't even Sony's software), but let's not forget Microsoft's attack on any system that's not their own, from Java to Apple to everything open-source. Or their restrictive "Playsforsure" DRM, Windows customer activation scheme, and tons of litigation from individual users competitors, all the way up to the US Govt. and the European Union.
Not only that, there's a lot of people in the graphics industry who will tell you that the MS Digital Media division is merely standing on the shoulders of the giants who came before them with respects to VC-1. Not that that's any surprise, since Microsoft's been operating that way since working on the Altair.
B.Greenway @ Aug 19th 2006 6:43PM
"the rootkit wasn't even Sony's software" so because Sony didn’t actually write it they’re somehow less responsible for its appearance on their discs? Come on flanders.
Of course MS has intruded where they don’t belong before but your approaching this as Sony’s reputation is as pure as the driven snow. Which we all know is not the case.
My point with the 97 link was to dispel the notion that neither Blu-ray nor HD DVD (proper) were the first hi-def disc systems demonstrated.
I find your comment: “And if you asked anyone in the HDTV industry, they'll tell you that we wouldn't even be having these discussions without NHK”
Interesting because you didn’t seem inclined to bring NHK into the conversation until I brought it up as a counter to your statement of:
“Sony was well already well-versed in HDTV. They helped develop it, made the first HDTV cameras, were responsible for the first US HDTV broadcasts, and released the first commercial HDTV displays, among other things”
The official NHK recollection of their work in the 60’s makes no mention of Sony’s involvement, whatsoever. They (NHK) even went as far as using the phrase “independently developed technology.”
And I’ll point out your use of the plural “cameras”, “broadcasts” and “displays” was spot on, because you know as well as I do they weren’t singularly first on any of those fronts.
But of course Sony has accomplishments in the field, I’ve never insinuated otherwise. The real truth of the matter however, is that just about every major Japanese electronics manufacturer could claim the same.
GL @ Aug 29th 2006 11:45PM
B.Greenway, if you want to debate which company is the most evil. I'd say the prize goes to Microsoft! They are the most despised monopoly since IBM. And if you think that this wont have an affect on the adoption of any and all things M$ related (vc1, hddvd, xbox360) you have another thing coming. In contrast millions of Sony fans will not buy hddvd because it IS tied to M$'s vc1 and because it indirectly effects Sony's PS3 and BD-ROM. Toshiba picked on the wrong fanbase.