Digital video forecast goes fuzzy

The next-generation video standard known as MPEG-4 promises to dazzle you with fast, high-definition video on your desktop and TV. But developers enthusiastic about the technology warn that nagging licensing issues could hobble its release.

MPEG-4 is a successor to MPEG-1, the technology that gave the world the popular MP3 audio format. It is also an heir to MPEG-2, which can encode DVDs and transmit video over digital cable and satellite networks.

Developers and customers should welcome a video and audio open standard like MPEG-4, because it means surer compatibility. Keeping it open typically encourages adoption. Content producers and others can then encode files without worrying whether the file will become obsolete if a company updates its technology. Besides higher video definition, MPEG-4 can make for smaller files. It also provides a degree of interactivity not allowed by earlier technology.

But the longer MPEG-4's licensing plan stalls, the greater the danger that proprietary formats will usurp it, say proponents. That would keep high-definition video and improved compression technology the exclusive province of dominant companies like Microsoft and RealNetworks. The issue is a topic of discussion at the Internet World and Streaming Media West events here this week.

Cost of a standard

But MPEG-4 could become too pricey to use. Under a proposal by MPEG LA, the licensing body that owns the rights to this next-generation video format, licensees would pay US$0.25 for each MPEG-4 encoder or decoder, up to an annual cap of $1 million. Patent holders, which include Sony, Philips Electronics, Microsoft, and 17 other firms, are considering charging 2 cents per minute for each hour encoded in the format.

That means for every hour of MPEG-4 content, whether on DVD or a file posted online, distributors would have to track how many hours of MPEG-4 video were encoded and pay license holders up to $1 million a year.

"MPEG LA and patent holders are just as eager to see this standard succeed as everyone else," says Larry Horn, MPEG LA vice president of licensing and business development. "We just need to make sure that licensees pay their fair share."

Still, the proposal rattles plenty in the industry, including RealNetworks chief executive Rob Glaser. While RealNetworks promotes its own technology, it has also supported other formats, including Microsoft's. Microsoft supports some competing formats, but not always to full functionality.

RealNetworks on Wednesday announced MPEG-4 support in its RealOne Player. But Glaser says the fee structure risks making MPEG-4 cost-prohibitive for his company and MPEG-4 developers.

Apple also condemns the proposed fee structure. The company is reportedly delaying release of its QuickTime 6 player, which supports MPEG-4, until licensing details are set.

MPEG-4 boosters further worry that delays will give proprietary technology a foothold.

"We don't want to have to make encoding video a political choice," says Rob Koenen, president of the MPEG-4 Industry Forum. He likens reliance on proprietary video technologies to allowing only certain car manufacturers to offer vehicles that are faster and more fuel-efficient.

An MPEG-4 primer

MPEG-4 is an open video standard that supports playing MPEG-4 encoded files on a myriad of devices. The advantage of an open standard is that it isn't tied to one proprietary format, like Microsoft's Windows Media Video or RealNetworks technology. Users and developers have fewer compatibility concerns.

MPEG-4 is a successor to MPEG-1 and MPEG-2, which are compressed video formats widely used to transmit video over the Internet and cable networks. MPEG-1 is also the core technology behind the audio standard MP3. MPEG-4 files are said to improve on MPEG-2's video quality by 30 percent, shrinking the file size and enriching video performance over both narrowband and broadband networks.

MPEG-4 already has its fans and promoters. PacketVideo is among the companies working with wireless carriers to roll out MPEG-4 video services for advanced mobile phones and handhelds. Another firm, Divx Networks, already supports MPEG-4 encoding and decoding with its Divx player. Dicas offers a free beta version of its MPEGable software to create and play MPEG-4 files.

MPEG-4 is also more interactive than its predecessors. Today, MPEG-2 supports electronic programming guides on cable TV, and lets DVD manufacturers create interactive menus. But MPEG-4 promises a much richer experience, similar to Macromedia Flash content. Envivio is among companies creating authoring tools that support rich interactive multimedia environments with MPEG-4.

Boosters say MPEG-4 improves audio over MP3 by a factor of one-third. Its support for up to five audio channels could allow for surround-sound quality audio. Popular MP3 files are actually a subset of the MPEG-1 codec. Dolby is among the MPEG-4 licensees that hope MP4 audio files proliferate as widely as MP3s have.

MPEG-1 audio, also known as Advanced Audio Coding, is subject to a one-time licensing fee. MPEG-4 audio licensees could be charged between 12 and 50 cents per MPEG-4 player and decoder, depending on the number of supported channels (to a $25,000 annual maximum). Proponents fear these fees, too, will be a deterrent.

An uncertain contest

Meanwhile, Apple, Microsoft, and RealNetworks are racing to offer better video and audio. Each touts its media format as being the most compact, supporting the easiest authoring, and delivering the best content quality.

Along with announcing MPEG-4 support, RealNetworks released its RealVideo 9 codec. The company says it's one-third more efficient than version 8 and can deliver better video quality over both low- and high-bandwidth networks. On Tuesday, Microsoft released more details about its next-generation codec "Corona," which will deliver high-definition video playback to PCs.

Better video and audio formats may not seem like major milestones, but they are crucial to both media and technology companies. Microsoft, like many firms, hopes to provide an attractive alternative to competing formats. Dominant formats give a company ties to media distribution, as well as the opportunity to push its technology beyond PCs to DVD players and emerging digital video playback devices like the TiVo digital video recorders.

MPEG-4 Industry Forum representatives say MPEG LA and patent holders may take weeks or months to settle on royalty schemes. They are considering alternative fee structures to address proponents' concerns.

For example, one plan would charge licensing only for certain commercial uses. Another possibility is waiving per-hour fees for usage that falls bellow a certain level.

"We are listening to all points of view," MPEG LA's Horn says. "We are trying to be fair. We are just trying to make [the licensing] work as money changes hands."

Their decisions will almost certainly affect the way we see and hear digital content in the near future.

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