CHAPTER 6

Looking Ahead—Migration and Adoption Issues

In this last chapter, we will touch upon a few issues that are equally interesting and important to consider in the overall picture of compression, migration, technology advances, and competition, to name a few.

Throughout this book, we have been analyzing the technical ins and outs of MPEG-4 and have also discussed some of the business aspects surrounding this international standard. Most of our information has been based on past and present facts, observations, and yes, opinions; however, the more difficult task is to discuss or illustrate what may possibly happen in the future. The problem is that none of us has a crystal ball or other magic to foretell what’s down the road. In technology, as in so many other industries, a vast amount of data is utilized to come up with certain views as to what the future may bring. All this information is based on statistical and empirical evidence. In our more limited context, the same situation applies. However, it is also possible to look at these things without having reams of figures as we try to determine the chances of success, the pros and cons, the timeframe of deployment, and so on. We can simply have a look at the implications of MPEG-2 to the multimedia world at the time and indeed over time as well as apply some of the knowledge gained out of this book plus common sense to the equation, and it is pretty evident that MPEG-4 can, should, and will play a major role in the multimedia world.

6.1. Migration and Transition

With respect to transition and migration, the key element is of course an actual decision to initiate change or a new beginning, which represents, in many cases, a challenge. Migration inevitably stands for change, for the introduction of something new. We will try to shed some light on some of the factors involved in the migration and transition process borne of a technological novelty, such as MPEG-4, that automatically impact the business and commercial side of things. In the context of looking at things from current market participants that are already in the multimedia business with having, for example, MPEG-2 systems deployed, the migration process is most likely a gradual one.

Gradual migration for this kind of legacy scenario will be most likely characterized by four different factors, either alone or in combination:

A gradual migration happens over a period of time, where current technology remains in place and is either complemented by new technology or two sets of technology co-exist temporarily. Regarding location, gradual migration can involve the deployment of new technologies in certain geographical regions with current technology remaining in place, for the time being, in other regions. Another approach to gradual migration, especially in the broadcast world, can be the selection of certain parts of the service provision, for example, specific channels (such as the VOD channel) that are fitted with new technologies, subsequently followed by others. The content selection approach is similar, except that specific content types (for example, news) are chosen. Besides the technological consideration, there are also a number of other factors such as:

These factors must be carefully considered in order to make a migration successful on all fronts.

Looking now specifically at MPEG-4, let us see how migration might work, and what strategies might be followed in the mobile and broadband sectors.

6.1.1. Mobile Communications Sector

In the mobile sector, the migration is characterized by a significant switch in the sense that not only data and pictures can be sent and received, but video is now also possible on a mobile handset. This does not, however, mean that everything will happen all at once. Even though 2.5G services (GPRS, EDGE) have been available for quite some time, not many handsets are enabled, and the content being offered is still limited. Having said that, and bearing in mind that the industry is gearing up for the deployment of 3G services, this opens up even more opportunities for mobile operators, because traditional methods of revenue generation known, for example, from the broadcast industry, can also be applied to the mobile sectors. Not only can subscription services and transaction-based fees be generated, but e-commerce is also likely to soon be utilizing mobile handsets and generating additional revenue.

This is quite a significant step—especially with 2.5G services (GPRS, EDGE) currently available and 3G services becoming more widely available across the globe, the actual migration process is already well underway. Certainly, one has to admit, the technology inside the handsets and in and around the network infrastructure is still evolving, but that’s only natural, considering how quickly a transition has taken place from plain voice to text messaging to Internet access to picture messaging, and now to video messaging and other multimedia services, the amount and range of which will definitely grow and expand over the coming years. The technology is available and deployed today, and there is plenty of room for further improvement.

Another, equally interesting aspect for the mobile sector is the fact that there is an additional opportunity for great business on the horizon: DVB-H, a specification issued by the Digital Video Broadcasting project group (DVB). DVB-H is the delivery of video content to mobile devices using the existing digital TV infrastructure. The good news is that DVB-H will in no way be a competitor to the services or delivery mechanisms we have described earlier. In fact, they will complement each other. So both mobile operators and the broadcasters are happy because there is another way for them to generate revenues and, in fact, probably charge a nice premium for that privilege, without affecting their existing business models.

Let us quickly define the difference between DVB-H and the video services currently available under 2.5G or 3G. In essence, and to keep it very simple, with DVB-H being “one-to-many” with longer videos (up to 30 minutes, maybe more) compared to the “one-to-one” scenario in 2.5G/3G, which are obviously on-demand driven, focused on rather short videos and not geared up to support millions of users at the same time.

But in this very difference lies the complementing aspect of both specifications. DVB-H is effectively a TV away from home, representing a much more efficient delivery channel for this purpose through its multicast nature. 3G, rather than of course 2.5G, is the ideal scenario when it comes to personalized, specific content delivery of on-demand mobile video. Also on the economic front it pretty much looks like DVB-H is the ideal delivery format of mobile video to mass audiences due to the network costs involved.

The obvious choice for the video coding part is MPEG-4 AVC, and quite a number of vendors are gearing up to provide products and services in this arena. From a logical point of view, DVB-H has an enormous potential, not only in combination with 3G, but also in conjunction with other services offered by operators and providers currently. New business models for the generation of revenues are available and content owners, as well as content providers and indeed operators can leverage the complementary aspects in their quest for revenues. In simple terms, DVB-H can open new revenues in the form of subscriptions from “fresh viewers” whereas the 3G revenue will be mainly driven by pay-per-view or other individual means.

6.1.2. Broadcast Sector

In the broadcast sector, there is sure to be a lot of movement. Everyone knows that technologies to succeed MPEG-2 are on the horizon, with MPEG-4 AVC being one of them, and, for reasons we highlighted earlier, the frontrunner. What will no doubt happen is that operators will bring in the new technology while holding onto the old one. They will wait and see which technology/standard will be the most dynamic and lucrative option and then make their choice. For the migration, that means that multiple standards have to be supported and that the overall term of migration can be pretty flexible. One must look at these things conservatively, because although we are passing a significant milestone in the evolution of video and multimedia services, this is not going to be a quick switch from the “old” standard to the “new” standard. It will happen, but gradually, utilizing a mixture of the various approaches, and taking a number of years.

There is, of course, always the question of whether it is a viable option for the broadcast world to migrate from MPEG-2 to MPEG-4 in order to benefit from the improved video coding. The net improvement may be considered too low to justify the cost of replacing MPEG-2-based set-top boxes with those that incorporate MPEG-4 coding technology. This poses a challenge for bringing new boxes to the marketplace. One solution may be to think about building set-top boxes that use a programmable processor. Changing decoders could then be accomplished by a simple change of software.

Soon there will be set-top boxes supporting MPEG-4 AVC, and some of them will most likely equally support MPEG-2. This is what is called Simulcast. The trouble with it is that transmission capacities are going to be compromised. There will be a variety of strategies that broadcasters will adopt in terms of migration, but we will probably see a good mixture of the elementary migration forms mentioned earlier. In addition, Windows Media 9, or better to say VC9, will be available on these set-top boxes as another alternative for the operators. There of course will be extra cost to go along with the overall service offering, which will include applications like Internet access, PVR, VOD, and so on. But customers will be happy to pay a bit more for their set-top boxes and/or upgrade to their subscription packages. The reason for this will be that on one side customers will want to be receiving the best possible service where possible. A lot of this is of course driven by the content provision, which continuously enhances in terms of presentation, for example. Sometimes the argument of watching the favorite sports from say four more camera angles is enough to convince the enthusiast to upgrade. Plus, certainly, the broader spectrum of content delivery as such. Say for example, you would not be able to watch your favorite show that starts at 8pm, you can actually come home later but still be able to watch it from the start without having recorded it. You can get it on demand. On the other side customers see the advantage of bundling a variety of services into one package from most likely one provider. With the pricing and the various combination of these sort of services becoming even more competitive, the popularity for a bundled package of Internet access and Digital Television will increase. All of the above is what operators and content providers have very high on their agenda, simply because the combination of customer requirement and demand paired with the providers ability to innovate and deliver guarantee a pretty functional and mutually convenient scenario. The roll-out of these sort of services has recently started. One good example for this is Video Networks, which has launched this kind of service in the UK.

As we mentioned early in this section, migration is about decisions and change. The deciding bit is very crucial, especially for broadcasters. The technical side of things is pretty much transparent from the perspective that some systems have been deployed in the past, so there is some experience to draw on when adopting new/evolved technologies.

The commercial and entrepreneurial decision in the context of migration also occurs in the realm of introducing brand-new services, which brings a whole different dimension to the “migration equation.”

In any event, no matter whether existing services are being migrated or new technologies are being deployed and implemented through the introduction of new products and services, in most cases it involves the fresh investment of capital into new hardware, both regarding content creation on the operator’s end, and, as we learned earlier, on the consumer end (need for new set-top boxes). In the case of MPEG-4 AVC this is clearly evident.

While the industry agrees that for the delivery the MPEG-2 transport stream will be used, which means in essence that the existing scenario will be further utilized and re-used, we will see some significant change on the decoder and encoder side. Both of them will have to be replaced. Certainly, this will not happen overnight, but the respective vendors, like for example Harmonic, have already positioned themselves with their respective products on the encoder side. Basically, operators that decide to go for MPEG-4 AVC will gradually migrate as described earlier and it goes without saying that the replacement of broadcast encoding systems will be an effort, but nothing compared to the migration on the set-top box side. Considering the millions of legacy MPEG-2 set-top boxes, that will certainly be very cost intensive. What we need to understand is that this is an investment into the future.

With stepping into the digital future, broadcasters most certainly face quite a few obstacles, such as the briefly described “replacement of set-top boxes” scenario as well as the challenge of continuing to offer state of the art services whilst improving the offerings at the same time. A lot of vision is required to distinguish between immediate and future requirements in order to stay competitive and ahead of the game. Having said that, as we learned earlier, there may be quite a significant investment necessary, which may be partially covered by increased subscription or initial set-up costs levied on the customer. Disregarding that, broadcasters find themselves in a situation, and indeed under pressure, where they must reduce costs to ensure their profitability. The significance of this becomes really clear, when one considers that in some markets, for example UK and Germany, customers can already get their set-top box for less than $3 by now, as part of a subscription package. There is certainly a shift in the pricing and a very sophisticated subsidy formula in place, as we can also see in the mobile telephone and other markets, but it is still a very competitive game that has to be played.

So, that is basically the superficial viewpoint. If one considers the long term perspective, it will become evident that, with the significant bandwidth savings through utilizing a highly advanced codec technology such as MPEG-4 AVC and its continuously improving coding efficiency over time paired with the introduction of new business model and additional revenue opportunities, this investment will perform well. Let us also not forget an important factor, that future decoders should not necessarily be considered “static” in the sense that what is loaded on them initially stays on it. Newly advanced technologies will make it possible to load “new” video decoders onto the set-top box. Why? Very simple, if one considers the overall length of the migration process it is very likely that set-top boxes being depleted will be fitted out to decode MPEG-2, with the ability to be re-programmed to MPEG-4 AVC as and when the provider switches over and moves along with this standard. Obviously, this would mean much less costs involved compared to exchanging lots of set-top boxes.

This whole migration issue is a logical, necessary, and useful step that the industry will undertake. As in many things in life and indeed business, very responsible decisions have to be made and the immediate road ahead may even be rocky. What counts is the end result. It is very interesting to see actually that MPEG standards have been designed with an economic thought. You may wonder now in what way—very simple, the technical complexity was shifted onto the encoder side of things whilst it was endeavored to keep the decoder side pretty straight forward and non-complex. If one looks at traditional broadcast encoding systems in place today, you will find that for most applications there is dedicated encoder hardware to ensure the most efficient encoding result possible. One cannot really say that price is not an issue as such, but by its very nature and complexity the pricing can also be quite high. On the decoder side, this sort of scenario would be absolutely bad news, because the more complex it gets, the more expensive. And that is what needs to be avoided.

So this foresight of MPEG plays certainly into the hands of the providers if we consider that aforementioned cost scenario in respect of deploying/replacing set-top boxes.

One business aspect, where there is obviously some concern in the broadcast world considering all these PVR models and VOD scenarios is directed at advertising. Advertising in the broadcast arena has traditionally been a significant contributor to the revenue generation of broadcasters. The food chain was and is very simple. Content owner sells a piece of content to a broadcaster, and the broadcaster “re-finances” part, or in some cases all, of that cost through advertising. In the case of Pay TV (i.e., where subscription and on-demand revenue is generated), it is slightly different but of course similar.

With all the technological advances we heard about before becoming a reality, the likelihood of a changing relationship between the content owners and broadcasters is not only probable, but inevitable. Revenues generated by broadcasters through advertising and in essence subsidizing the cost of content acquisition will go down. In other words, the technological evolution that we are describing here in this book and all the benefits and advantages that MPEG-4 is offering, are actually harming one of the most important revenue generators for broadcasters.

So, how can this be addressed? Looking back, adverts were mainly pretty static pieces of content that were mass-produced and positioned into the broadcast schedules on “long notices.” That will have to change, simply from the point of view that a consumer being able to fast forward during the broadcast will simply do exactly that in order to avoid the adverts.

There is actually a huge opportunity in this challenge for all concerned. A number of variants spring to mind and are indeed under consideration by the relevant companies involved in that business. One very simple approach is to tell the consumer that his subscription or pay-per-view fee will be cheaper if he agrees to watch his content with adverts (technically this is obviously possible through the vast possibilities offered by conditional access systems). Another alternative could be to go down the Internet route and introduce pop-up like adverts, but here as we can all imagine the reception would not be very positive from the consumer side.

Something more sophisticated needs to be used. A few concepts are already on the drawing board, and they are actually quite easy to understand and follow. Let us try to be simple again and look into our local supermarket. Every product is positioned in a specific location for a specific reason. Impulse buying is what the supermarket wants to achieve and lead the consumer through his buying experience making it easy to source and find the products required but equally favored to sell by the supermarket. From a lot of statistical and empirical data, over time supermarkets came up with the idea of loyalty cards and other schemes. The result is that supermarkets today know exactly which brand of beer, cereal, soap, and toothpaste we prefer and are utilizing this sort of evidence and information to offer us a special deal on this, or a special deal on that. They can also pinpoint demographically and geographically interesting facts that people from area A aged between the age of 30-50 prefer brand X, whereas the same age group coming from area B prefers band Y.

You are asking yourself now probably, in what way this is relevant in our context? Simply, the same principles of targeted advertising based on knowledge is something that is of value for advertisers. Instead of, in the true sense of the word, broadcast one message to everyone, with today’s technology advertisers can actually ultimately pinpoint and create a one-to-one relation with the consumer based on data that is and will be available to them. One of these inputs is obviously the content itself, information pertaining to the geographical location, age group, or other information available in the public domain about consumers enabling advertisers to provide adverts that are relevant to these consumers and therefore it is more likely that these adverts will have the desired effect.

There are quite a number of companies involved in this field not at least because this necessity has been identified, but also because this new constellation born out of the technological advance created new opportunities in this particular field as well.

In conclusion, migration is not only linked to technology- and business-related aspects, but also to corporate agendas and plans. We will consider this later in the chapter. Now we will examine compression’s role in the industry.

6.2. Compression Remains Important

Disregarding the fact that the industry has reached a pretty good level as far as where compression is today, the drive and ambition to further improve this compression, in our case with the use of MPEG-4, will certainly continue. It is also agreed between the experts that coding efficiency will improve over time—of course a necessity in order to stay competitive. This very fact is still today continuing with MPEG-2 although MPEG-4 AVC, and of course VC9, is becoming available. Some experts believe that there is still about 20% improvement possible in respect of MPEG-2. Economically, this drive for improvement of course is impacting further in a positive way since, as we all know, reduced bit rates is good for business so to speak (i.e., less costs and more profits).

We also need to consider the overall concept or objective when it comes to compression. MPEG-2 came along and revolutionized the broadcast world from the analogue age into the new digital era. That is more than 10 years ago and MPEG is still ticking along nicely, since it still works for most applications. MPEG-4 AVC, is a step forward taking the whole industry onto a different level, because through the resulting bandwidth efficiency new dimensions are opened for market participants. HDTV is making a significant progress in this respect and to deal with all the ins and outs would be too extensive in our context. In addition, as we have learned in earlier chapters, video over DSL and video on demand are two of the main drivers for this migration and expansion of services.

There seems to be a common misconception that compression relates solely to a network delivery scenario, (i.e., for streaming, broadcast, VOD, etc). But compression comes into play in many places, from the hard drive on a PC, to the still omnipresent CD and the further evolving DVD, to storage devices in mobile handsets and digital video cameras. All of these have a continuous need for better compression while the technical abilities to work with respective content grow and develop.

Here we will return to the three elements we briefly touched on in the last chapter, as they perfectly illustrate why compression will remain important.

With improved and indeed improving compression, it is possible to:

Having said that, we should also remember that without compression there is no practical transmission or delivery of digital video or audio over any type of network. This means that compression is the enabler that makes video/audio content available over a variety of networks. In this context, it does not really matter what sort of compression is utilized—in other words, any compression will do, whether it be standard-based or a proprietary technology. As a result, better compression enables the introduction of new business models that were not previously viable, widening the spectrum of how digital video and audio can be utilized in the ongoing quest to provide better products and services. With respect to MPEG-4, including MPEG-4 AVC, the much-improved efficiency, flexibility, and scalability of this standard will be adopted in traditional environments that are currently covered, at least partly, by MPEG-2—environments such as DVD, digital broadcast (cable, satellite, terrestrial), and VOD. Also, the wireless and Internet streaming industries will significantly benefit from better compression provided by MPEG-4 and looking ahead, the possibility of digital cinema enabled by MPEG-4 is likely in the near future.

If we were to look again particularly at the broadcast industry, we will find that compression is of course omnipresent and of major importance. But the best compression will be useless, to formulate this quite harshly, if the other important parts of the puzzle are not looked after in the same focused and advanced way.

Besides compression, one could list down the following factors that are important to keep in mind and of course work on to ensure a successful, maximum quality environment and service provision from a broadcasters perspective:

This basically means that, in order to fully capitalize on the advances in digital broadcast, providers need to plan very thoroughly every step of the way, (i.e., the overall workflow), so that costs can be reduced and returns increased. It is certainly not helped if one only sweeps throughout he entire organization and cuts costs on every angle. The tide is going away from, for example proprietary middleware or video on demand systems, to fully integrated solutions.

So, all in all, it is clear that compression cannot be discounted or disregarded in any shape or form. It is a fundamental part of the multimedia landscape, and especially the broadcast sector, and plays an important role in the workflow chain influencing quite a few technological and economical items on the agenda, as we have seen. Compression is and will remain a strong driver for technology advance and improvement in the digital media sector.

6.3. Advances in Technology—What About Patents?

We all know at what a remarkable pace technology is evolving and progressing, delivering better and better products and services to the market and giving participants the opportunity to expand their offerings. Products and services in any technological industry are the result of development and research phases, and whereas to the outside world, i.e., the consumer, only the prices of products and services are visible, there is also, in most cases, a price on the results of the R&D work. There seems to be a strong trend in which Intellectual Property Rights and patents are rising on the priority scale and are being developed into potentially significant revenue generators by many companies. This practice has of course been occurring, and rightly so, for a very long time, but consider that if a company is looking for investment, its chances rise significantly if it can offer either patented or at least patent-pending technology. In fact, this can be seen as a “must have” in order to be entering a serious conversation with potential investors, especially in the aftermath of the dot com crash. Therefore, it is high on companies’ agendas to develop patentable technology.

Once the IPR/patent has been “created,” obviously the ambition is to protect it and prepare for the value extraction by defining respective policies, and then start to enter into the active promotion and licensing. This is a totally understandable, appropriate, and viable thing to do; if one has patentable technology, it would be foolish not to secure and protect one’s rights.

In today’s technology landscape it seems that virtually everything is getting patented. The potential danger is that market participants might develop products and services not knowing that they infringe upon existing patents, and instead of marketing they may have to engage in litigation. This all sounds pretty dramatic, and may be slightly exaggerated, but the intention is to raise the awareness of the potential problems.

Having said all that, in the standards world in which MPEG-4 exists, patented technologies are of course being used. That is actually a good thing because the underlying technology within the standard is in itself strictly defined, which offers extra comfort to organizations utilizing the standard. As described earlier, the creation of patent pools, like in the case of MPEG-4, provides a coherent structure of protection for both licensees and licensors. The issue facing the market in this context is found in the requirement to identify and implement patent-licensing terms and agreements that work for both licensees and licensors. In addition, timing (i.e., the availability of license agreements) is extremely important. With respect to MPEG-4 part 2, the situation has been very unfortunate and potentially may have some impact on the deployment of MPEG-4 AVC, although licensors are aware of the opinions and concerns of licensees and are trying to accommodate them when it comes to the respective licensing terms. Whether or not the market will accept that, or when indeed, is a different matter.

Currently, the market faces the following issues regarding the patent licensing of MPEG-4 AVC:

Especially with regard to the use fees, there appears to be a very strong negative sentiment, and the market has made it clear, especially the traditional broadcast arena, that use fees are a complete non-starter. As an example, the World Broadcasting Unions Technical Committee (WBU-TC) issued a press release regarding MPEG-4 licensing in May 2003. WBU-TC is the collective technical body for the world’s eight broadcasting unions reflecting the opinions of national broadcasters across five continents. In this press release, the WBU-TC states, “Video compression technology is a major factor for broadcasters, and other content service providers in the consideration of new services. Their decision about which technology to choose is influenced by performance, availability, and licensing costs.” On the first two items, performance and availability, we have seen on numerous occasions that these are present and the remaining factor to be solved and implemented is licensing.

Generally speaking, the timing, and indeed the availability, of the final licensing looks far more promising than it did with MPEG-4 part 2, which was technically finalized at the end of 1998 and became a standard in early 1999 (additional extensions in early 2000). Final licensing terms were released in mid-2002 (license agreement available at the end of 2002). In the aforementioned press release, the WBU-TC also “believes that current licensing arrangements for MPEG4 Visual will be a major deterrent to its use.” This statement refers to the use fees, which do not exist in MPEG-2, and are based on equipment fees.

Clearly, licensing costs are also a major factor in deciding whether or not to go with MPEG-4 AVC. It should be noted that this WBU announcement was made prior to any licensing terms being announced.

After licensing terms had been announced, the European Broadcasting Union (EBU), which represents 71 broadcasters in 52 countries in Europe, North Africa, and the Middle East, went to the public with a statement in November 2003, in which it made its recommendation “that EBU members should not adopt or use the AVC standard” and “that the DVB Project should not include the AVC standard in any of its Specifications.” The reason for this opinion can be found in the fact that the EBU considers that the “licence terms and conditions for use of AVC are extremely unfavourable to broadcasters.”

There is also concern, in the context of the MPEG LA license, as to what happens after 2010 when the initial proposed licensing term expires. This concern, however has been addressed by now in the sense that after the initial term is over, royalties will not increase by more than 10% each time the license is renewed. Although 2010 seems pretty far away, one has to consider the timing with which MPEG-4 AVC will enter the scene. Over the next 12 months, we can anticipate numerous deployments of MPEG-AVC in the video-over-DSL market segment, with HDTV possibly following in about 24 months from now, and mobile services being launched with MPEG-4 AVC potentially in about 36 months. In any event, the chain of events in terms of MPEG-4 AVC deployment is likely to go in the order of broadcast, video over DSL, cable, direct-to-home, low-bit rate, and finally handhelds.

At the time of writing this book, the situation with respect to MPEG-4 AVC licensing is clear to the extent that final terms are available and a license in sight, which are expected for early 2004. The identification of final terms that work for all has been the challenge, but it is clear that both licensors and licensees wish to find a consensus and arrangement that is acceptable for all concerned. We should be thinking positive that this will be the case, and maybe by the time you read this, these issues will be in the past with the present looking much better.

Let us finally look at some of the adoptions of MPEG-4 AVC that have already been taking place or are most likely to take place.

Overall, adoption of MPEG-4 AVC will continue; widespread adoption is only a question of “how,” “where,” and “when.” We earlier looked at the technological and economical aspects of adoption, but, also from the perspective patent licensing, the corporate side of things needs to be considered. Companies are spending vast amounts on research and developments efforts and of course they would like to see a return. The objectives of this fact and the creation patents as revenue generators were considered earlier in this chapter. One needs to see the bigger picture and step outside the box as well as consider the current status quo, where it is evident that a lot of organizations are creating significant revenues through the provision of MPEG-2 products, but of course also the patent licensing. It is not a question of quality or any other technological feature, it is purely a question of timing as to when the market place decides that the time is there to fully embrace MPEG-4 AVC. If we remember the transition issues mentioned above it is also clearly evident that no one can expect that MPEG-2 is switched off over night and replaced by one of the new coding technologies like MPEG-4 AVC. That does not work technologically, economically, and logically. As everywhere in business, market participants follow different strategies, but bearing in mind the overall effort behind the MPEG standards and the continuous dedication to them by so many organizations, it is only a question of time until widespread adoption will be achieved. We are looking at this of course from the “non-competitive” angle, but we all realize that we will exist in a multi-codec world, which will be dominated by both MPEG-4 and VC9. The good news on that is that with the market being so huge, both technologies can perfectly co-exist.

Turning back to the standards world and the efforts involved, we probably all remember articles or presentations citing the thousands of man years of research and development that have gone into the development of MPEG-4. Obviously, this can easily be put in context with a monetary element and one would actually come out at a quite considerable investment undertaken by the participants in developing this standard, to say the least. In addition, work is of course on-going, and if we remember the structure of MPEG described in earlier chapters, it is also quite evident how much money is spent by the MPEG member companies every year through participating at the regular meetings. You can easily work out that the sum is again enormous when over 300 engineers meet four times a year for a week.

6.4. Conclusions

From a business perspective, as mentioned earlier, the main factor for successful adoption of MPEG-4 is that effective and competitive licensing terms are available, especially for MPEG-4 AVC. Knowing that technical superiority cannot, in theory, win over commercial disadvantage—MPEG-4 has proven to be robust enough in recent years to withstand all sorts of trouble, which makes us very confident for the days ahead.

The challenge for standardization in the future is to define a coherent and consistent patenting policy. It would be a great shame if many years of constructive research and development efforts go down the drain because of difficulties in the patent-licensing process. This kind of “brain drain” cannot be afforded on a long-term basis by any economy.

In the field of economics there is a term called the “tragedy of the anticommons,” which occurs when many individuals have rights of exclusion to a scarce resource. The tragedy is that rational individuals, acting separately, may collectively “waste” the resource by under utilizing it compared to what some observers may believe to be a social optimum. An anticommons is contrasted with a commons, where too many individuals have privileges of use of (or the right not to be excluded from) a scarce resource. The “tragedy of the commons” is that rational individuals, acting separately, may collectively overutilize a scarce resource. In both the anticommons and commons situations, there is no hierarchy among owners such that the decision of one owner can dominate those of other owners, forcing them to use their resources in ways they would not, if they were permitted free will by the authority. So let’s hope that MPEG-4 does not turn into another example of the tragedy of the anticommons. This may seem a bit harsh, however awareness has to be created in a sense that it would be a disaster of considerable dimension if the industry would manage to let MPEG-4 mutate into such a state. The probability is very remote, but a potential is existent.

Let us finally leave all that aside and quickly recap where we actually are and indeed can be with MPEG-4. MPEG-4 can be…

In addition there are obviously the various usages not visble to the consumer in which MPEG-4 plays a role, such as Media Asset Management and archive systems, etc.

With this book, we have tried to bring you closer to MPEG-4 by providing a broad variety of technical and business-related perspectives, but there are certainly some elements we were unable to expand upon in more detail, and could only scratch the surface. From a technological point of view, it is very much apparent what advantages and efficient functionalities are enabled by the MPEG-4 family, and the continuing development and improvement of the standard-based environment will assure that this remains the case. There is also every indication that new potential applications will surface, leading more market participants to embrace MPEG-4. The result will be that the overall multimedia landscape will only benefit and prosper further in the years to come.

6.5. Bibliography

dicas digital image coding GmbH www.dicas.de

MPEGIF White Paper “The Media Standard” 2002. download from: http://www.mpegif.org.

Popwire Technology www.popwire.com

Report “Global Digital TV Technology & Markets” by Nick Flaherty, Senior Analyst InsideChips.com

VBrick Systems www.vbrick.com

Web site 3GPP www.3gpp.org

Web site Apple www.apple.com

Web site DVB www.dvb.org

Web site Harmonic Inc. www.harmonicinc.com

Web site Internet Streaming Media Alliance www.isma.tv

Web site ISO www.iso.ch

Web site Microsoft www.microsoft.com

Web site MPEG Industry Forum (MPEGIF) www.mpegif.org

Web site MPEG LA www.mpegla.com

Web site MPEG www.chiariglione.org/mpeg

Web site Nokia www.nokia.com

Web site Via Licensing www.vialicenisng.com