H.264 Royalty-Free Until 2016
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MPEG LA holds the AVC Patent Portfolio License, which provides access to the essential patent rights for the AVC/H.264 (MPEG-4 Part 10) video coding standard. Their recent announcement means webmasters who are registered MPEG LA licensees will not have to pay to use H.264 video for the next six years. This is good news for Vimeo and YouTube. Both sites use H.264 encoding on their massive video collections because of its high performance and low bandwidth consumption.
Companies like Google and Apple have supported H.264's candidacy for the HTML5 <video> tag standard format because of the performance and because they can afford to pay royalties if they must. Smaller organizations like Mozilla and Opera have fought against H.264 in favor of Ogg Theora because many smaller companies might not be able to afford patent licensing fees. MPEG LA's new extension seems to negate those concerns, at least for the next six years.
The last patent in the H.264 portfolio doesn't expire until 2028, and there are a lot of patents that will still be active in the eleven year window between 2017 and 2028. MPEG LA has not said anything about what fees, if any, it might charge webmasters after the new royalty-free period is over. This announcement doesn't mean that the HTML5 video debate is over, but it might give people in the H.264 camp an advantage while the codec remains free for free video.
The H.264 camp might argue that MPEG LA has shown a commitment to waving royalties for free internet video. However, Ogg Theora supporters will probably point out concerns with that 11-year window when MPEG LA's royalty-free period might not be present. While the debate will probably continue, some web developers think the single standard concept is fundamentally flawed. Others disagree, like Adobe CTO Kevin Lynch, who recently defended Flash in comparison to HTML5, saying that HTML5's lack of a single standard video codec would send the internet "back to the Dark Ages" if HTML5 became ubiquitous.
Currently there is no indication that the WHATWG would consider reversing its decision to support both Ogg and H.264 in the HTML5 video tag. They might decide to wait another six years until they revisit the issue in light of the H.264 extension. The bulk of HTML5 development will be finished around the year 2022, so the WHATWG has plenty of time to decide.