HEVC Advance, a licensing administrator for HEVC/H.265 patents, announced this week that it has eliminated “subscription” and “title-by-title” content distribution from its patent license as it looks to speed the adoption of the bit-saving codec among streaming, pay TV, over-the-air and satellite video distributors.

That move basically eliminates content distribution royalty fees and reduces certain royalty rates and caps, the organization said.

Further, the org said it has expanded its discounts for Region 1 Lower-Priced Connected Home and Other Devices Categories to include sales up to $80 per unit, and cut its combined $45 million Device and Content Distribution Enterprise caps to a single Enterprise cap of $40 million. It has also expanded its Trademark Program discounts to include physical media, while physical content distribution (i.e. Blu-ray discs) and devices will continue to be licensed.

StreamingMedia.com has a side-by-side comparison of the old versus new approach. Examples of companies on the HEVC Advance licensor list includes Dolby Laboratories, Humax, Philips, Samsung Electronics, Warner Bros. Entertainment, Mitsubishi Electric Corp., and GE Video Compression.

“HEVC Advance has worked hard since its inception to facilitate HEVC adoption and enable consumers to enjoy the best video experience. By eliminating non-physical HEVC content distribution from our license, we are transforming to meet the needs of distributors looking to adopt HEVC and bring the incredible bandwidth savings and clarity of 4K UHD to consumers,” HEVC Advance CEO Peter Moller, said in a statement.

Dan Rayburn, principal analyst at Frost & Sullivan, and chairman of next month’s NAB Streaming Summit, said other pressures led the group in this direction:

Patent licensing group HEVC Advance caves to pressure. Will no longer "license nor seek royalty fees for non-physical #HEVC content distribution including Internet streaming, cable, over-the-air broadcast and satellite". Has also discounted other fees. See https://t.co/5uAHLigkPF

— Dan Rayburn (@DanRayburn) March 14, 2018

StreamingMedia.com, meanwhile points out that MPEG LA, another HEVC patent pool, doesn’t currently charge for HEVC-encoded content, but hasn’t ruled it out, either. Examples of licensors in the MPEG LA HEVC program include Apple, BBC, Funai Electric, NTT, Siemens Corp., and Vidyo.

The revisions to the HEVC Advance patent license also come amid adoption of Google-developed open/royalty free VP9, and as some big names get behind the emerging AV1 video codec.

RELATED: Facebook Adds Heft to AV1 Video Codec Group

Beamr, a maker of video streaming optimization technologies, is getting into the encoding game via the acquisition of Vanguard Video, a vendor that counts Netflix, Microsoft and QuickFire Networks among its customers.

Beamr also announced a $15 million “C” round of funding led by Disruptive Growth, and participation from Marker LLC and Innovation Endeavours, an early stage VC that includes Google executive chairman Eric Schmidt as a founding partner.

Beamr has raised about $24.5 million from venture capital investors and a few million more from private investors, according to Beamr chief technology officer Dror Gill. Beamr will use the fresh funds to help finance the acquisition and to help it expand its addressable market, he added. 

With Vanguard, Beamr will add HEVC and H.264 encoding technology to its repertoire as it continues to work with OTT partners, including Crackle and M-GO (now part of NBCU’s Fandango and in the midst of a rebranding as FandangoNow),  and starts to pursue deals with cable operators and other types of MVPDs, Gill said.

Beamr’s technology optimizes already-encoded video in a way that reduces bit rates without reducing the quality of the video based by analyzing the action in individual scenes and utilizing a system that determines the perceptual quality of the video.  Beamr estimates that its techniques can reduce bit rates by an additional 20% to 50% while still adhering to the underlying encoding standards.

Today, Beamr does this offline for on-demand video, but the company is also working on a solution for live video that is expected to be available later this year, Gill said.

So where does Vanguard fit in? The plan is to match its video encoding with Beamr’s underlying video optimization platform.

Gill said Beamr’s customers tend to encode their own video before it handles the optimization, but some of those encoders sometimes produce artifacts that can’t be fixed with its optimization technology.

Integrating those ends will help to strengthen Beamr’s positon in the market,  and give  Beamr a way to further reduce bit rates while still maintaining video quality, Gill said.

That combination will also help Beamr address additional markets, given Vanguard’s work with partners that include Netflix, Microsoft Azure, Imagine Communications, QuickFire Networks, Sony and Arris, among others.

Beamr also believes the acquisition of Vanguard Video will create an independent source of encoding and video optimization technology amid a market that has seen recent mergers between Amazon Web Services and Elemental Technologies and Ericsson and Envivio.

The combined company will have more than 80 employees and offices in Palo Alto, Tel Aviv, and St. Petersburg, Russia. 

While broadband speed has been increasing so too have the bandwidth needs of the biggest OTT video services. Luckily the biggest consumer, Netflix, is ready to reduce its need, though it is shocking the company hasn’t addressed this before.

According to the latest State of the Internet report from Akamai, ISPs in both the US and UK have been hard at work improving the speeds of their broadband networks. Between Q3 2014 and Q3 2015, U.S. ISPs have boosted average speed 10% to 12.6 Mbps, and average peak speed has increased 17% to 57.3Mbps. The U.S. has also improved the reach of faster broadband. The number of people able to access connections at or above 15 Mbps increased to 24%, up from 19% one year earlier.

The UK has done even better than the U.S. Average broadband speed topped the U.S., reaching 13 Mbps, up 21% from one year earlier. However, the average peak speed still lags the U.S. slightly, at 54.2 Mbps. The UK has done a better job boosting the number of people with faster broadband -- 28% of UK broadband connections can now achieve speeds of 15 Mbps or above, up from 20% last year.

As broadband providers improve their networks, OTT video providers are increasing the demands they place on them. Sandvine says that the top four online video providers all increased their overall share of downstream bandwidth in the last year.* Leading the charge was, of course, Netflix. The company grew its overall share of downstream U.S. bandwidth from 34.9% to 37.1%. YouTube, the second biggest consumer of downstream bandwidth, also boosted its share over the last year, growing from 14% to 17.9%.

Hulu and Amazon both increased their share of downstream bandwidth, though they are consuming less than a tenth as much as Netflix. Hulu grew its share from 1.4% to 2.5%, and Amazon grew a smaller amount, from 2.6% to 3.1%.

Given the amount of bandwidth it consumes, I’m sure ISPs are very happy that Netflix has announced it will be moving to a new encoding scheme in the New Year. It could reduce the overall bandwidth it uses by 20% or more, and reduce the speed of broadband required to deliver a good quality picture. However, ISPs are probably less than pleased at how Netflix is currently encoding content.

Netflix admitted that when it streams a cartoon in HD and an action movie in HD it consumes the same amount of downstream bandwidth for each. These two video types are vastly different.

Cartoons can be compressed a lot because colors tend to be uniform, characters typically are not in constant motion, and the picture lacks a lot of detail (like skin pores, individual blades of grass, etc.) Action movies are the exact inverse of this, with lots of motion, color tones and details.

This means there is a lot of data required to represent an action movie accurately, and not a lot required for a cartoon. A cartoon in 1080p resolution can be streamed at 1.5 Mbps in the new Netflix encoding scheme, versus four times that using the old. The lackadaisical approach to encoding that Netflix has been using is part of the reason ISPs keep having to boost broadband speed to the home!

I can only hope that Hulu, YouTube and Amazon are less wasteful than Netflix when they stream their video.

Why it matters

ISPs are improving their networks to boost broadband speed and reach partly to keep pace with the growth in OTT video consumption.

At the same time, OTT video service providers are increasing their needs from those broadband connections.

OTT video service providers would consume a lot less broadband resources if they adopted a saner approach to encoding their videos.

*Downstream bandwidth is the capacity of a connection to receive data. Upstream bandwidth is the capacity of a connection to transmit data.

-Colin Dixon is founder and chief analyst of nScreenMedia. This post was republished with permission from the author.

In a move that could help Netflix keep bandwidth caps and usage-based broadband policies in check and boost the efficiency of its own streaming platform, the OTT giant has begun to introduce a new approach that encodes content on a title-by-title basis.

According to Variety, Netflix’s method could produce bandwidth savings in the neighborhood of 20%.

Netflix’s new bandwidth-friendly approach is emerging as the OTT provider continues to dominate the traffic running on North American fixed high-speed broadband networks during prime time hours. According to Sandvine’s latest Global Internet Phenomena Report, Netflix traffic accounted for 37.1% of downstream traffic in those periods, dwarfing what’s being generated by YouTube, Amazon Video, iTunes, Hulu and Facebook.

Netflix traffic is not dominant on mobile networks, but it’s an area of concern as more and more viewing occurs on tablets and smartphones. For its new zero-rated, “Binge On” streaming video offering, T-Mobile, for example, is employing a proprietary encoding scheme to get a handle on bit-rate requirements for video that’s delivered in 480p.

As it aims for a system that goes beyond traditional adaptive bit rate processes, Netflix explored the reasoning behind its new per-title encoding optimization scheme and provided some technology background on it via this blog item posted Monday.

“We’ve spent years developing an approach, called per-title encoding, where we run analysis on an individual title to determine the optimal encoding recipe based on its complexity,” Netflix’s Anne Aaron, Zhi Li, Megha Manohara, Jan De Cock and David Ronca noted in the post.

The idea is to apply more bits when needed (such as in a title with lots of action scenes) and fewer in titles where they aren’t needed, such as in animation titles.

“This allows us to deliver the same or better experience while using less bandwidth, which will be particularly important in lower bandwidth countries and as we expand to places where video viewing often happens on mobile networks,” they claimed.

Netflix, they explained, is pre-encoding streams at various bit rates that are guided by “optimized encoding recipes.”

Noting that this is not a simple process, they said Netflix’s video encoding engineers developed encoding recipes in late 2010 when the company started to deploy H.264/AVC encodes for its video catalog at the time. It was determined then, using a “bitrate ladder,” that a bit rate of 235 kbps, for example, was sufficient for resolution of 320x240 “without significant encoding artifacts,” while the same could be said for 1050 kbps at 640x480 resolution, and up to 5800 kbps for resolution for 1920x1080 resolution.

But that “one-size-fits-all” fixed bitrate ladder didn’t account for scenes with high camera noise film grain noise, meaning that even a 5800 kbps stream would still “exhibit blockiness in the noisy areas.” But for simpler content, such as cartoons, 5800 kbps was overkill.

To remedy this situation, Netflix is providing each title with a unique bit rate ladder, tailored to its specific complexity characteristics.

Netflix also illustrated some same results of its work, including BoJack Horseman, an animated Netflix original, to Orange is the New Black.

“Given this diversity, a one-size-fits-all scheme obviously cannot provide the best video quality for a given title and member’s allowable bandwidth,” they said, noting that it also wastes storage and transmission bandwidth.

According to Variety, Netflix has been testing the new process and recently introduced it to an initial batch of titles in its catalog, with plans to complete the process by the end of Q1 2016.

In a move that further consolidates the video encoding and infrastructure market, Harmonic has inked a deal to acquire Thomson Video Networks for $75 million in cash, plus $15 million in post-closing adjustments.

Harmonic said the acquisition of the Rennes, France-based maker of video compression and delivery products is poised to create more global scale and expand its customer base.

In a presentation about the deal, Harmonic noted that TVN has more than 800 customers, including Astro, BBC, Canal+, DirecTV, Foxtel, Telefonica and Vodafone. Harmonic noted that about 95% of TVN’s revenues, estimated to be €71 million (US$77 million) for calendar year 2014 based on the vendor’s audited financial statements, comes from outside the U.S.  Harmonic posted Q3 sales of $83 million, down from $108.1 million in the year-ago quarter as the vendor dealt with the consolidation of key service provider customers.

Harmonic also estimates that there’s a less than 50% customer overlap between the companies, and that the combined company would have an R&D organization of more than 600 engineers and a global services arm with more than 300 people and a network of more than 300 channel partners.

The deal comes as other video technology suppliers combine through M&A, including Ericsson’s acquisition of Envivio, and Amazon Web Services’s purchase of Elemental Technologies.

Harmonic said the proposed deal is anticipated to be accretive to Harmonic's non-GAAP net income in the first year after closing, exclusive of the amortization of intangibles and non-recurring charges. They hope to close the deal in Q1 2016.

"This combination of Harmonic and TVN will, if completed, set the bar for video innovation globally," said Patrick Harshman, Harmonic’s president and CEO, in a statement. "The combined product portfolios, R&D teams and global sales and service personnel would allow us to accelerate innovation for our customers while leveraging greater scale to drive operational efficiencies.”

Harmonic, which was advised on the deal by LD&A Jupiter, said the proposed acquisition is in the form of a “put” option that is subject to the selling shareholders exercising the put option following a consultation process with TVN’s employee works council in France.

Thomson Video Networks, a company backed by private equity partner Edmond de Rothschild, acknowledged it had received the offer, and agreed that it stands to give the company “greater global scale and resources needed to drive more value and continuous innovation to the benefit of its customers.”  

“Consequently, in reply to this offer, Harmonic has been granted exclusivity by Thomson Video Networks' shareholders while Harmonic secures adequate financing for the proposed transaction,” TVN said.

When it comes to video encoding sales, the price doesn’t necessarily have to be right.

That’s one of the takeaways I got from a new customer survey conducted by TechValidate Research on behalf of encoding firm and overall multiscreen video tech specialist firm Envivio, which found that most (68%) tapped in to add support for new services, while 43% were looking to improve their video compression efficiency.

Julien Signès, Envivio’s CEO, said he wasn’t surprised by those results, as there is currently a major emphasis on video quality for video transcoding and encoding. But he admits that such evaluations require a fairly complex process, as customers use a variety of methodologies and criteria to gauge quality. “It’s more of a grey area in a way,” he said.

Following quality, product reliability is the second decision-driver. And that in itself opens up a religious debate of sorts, as some customers still prefer to use hardware-based encoding versus a more software-centric approach such as Envivio’s.

While reliability and quality has historically been one of the trade-offs of software-based encoding running on off-the-shelf hardware, Signès is convinced that the gap (and the perception of that gap) is closing rapidly.

Overall, he said product picks are coming down to “summary features,” based, for example, on the number of types of screens that a platform can support, if the system can support multiple codecs, something that continues to be important as operators and content owners start to gravitate to HEVC/H.265.

“Features are where we feel software grants you a big advantage… and is as good as a hardware solution,” Signès, but notes that “some people are still in denial.”

Still, price still factors into those decisions, right? Absolutely. And it depends on the size of the customer.

Among tier 1 providers, they tend to dictate a target price, and it’s up to the vendor to fit it. Without that, “it’s tough to be considered,” Signès said. 

Encoding.com, a provider of cloud-based video encoding, said it has completed a $3.5 strategic “B” round led by Harmonic.

The new infusion, which raises Encoding.com’s total funding past $8 million, will be used to help Encoding.com scale up its marketing and sales capabilities, Jeff Malkin, Encoding.com’s president, said.

He said Encoding.com and Harmonic have been working together for more than six months, noting that his company integrated ProMedia Carbon, Harmonic’s file-based transcoding system, to the Encoding.com platform in April. That move, he said, has helped Harmonic add cloud-based media processing services to its portfolio, complementing its premises-based video processing capabilities.

“We’ll also be working on new products together,” Malkin said.

He said the Harmonic partnership should also open new doors for Encoding.com, whose “sweet spot” is media and entertainment companies, counting Discovery Communications, AOL, MTV, ESPN among its customers.

While some of those customers have their own encoding farms, they also look to Encoding.com’s cloud-based, software-as-a-service video processing model to tack on capacity when faced with usage spikes.

Founded in 2008, San Francisco-based Encoding.com employs fewer than 50 people, but expects to more than double its headcount over the next year, according to Malkin. Its competitors include companies such as Telestream, Brightcove, Elemental Technologies, Imagine Communications and Envivio, which recently launched a cloud-based platform called Nuage.

“Encoding.com has pioneered and continues to lead the cloud-based, video software-as-a-service market,” Patrick Harshman, Harmonic’s CEO, said in a statement. “As the market increasingly embraces the cloud, we look forward to working closely with Encoding.com to offer our customers the most compelling solutions to meet the rapid changes within the video ecosystem.”