MPEG-4 Becoming Louder, Clearer? - Page 2

Analysts: pricing remains a sticky issue

Even as Coding Technologies has begun deploying aacPlus and licensing libraries and reference source code on Mac OS X, Win32, Linux and multiple DSPs, analysts believe the MPEG-4 standards body still have mountains of hurdles to overcome to realistically pose a challenge to the proprietary encoding formats from Microsoft and RealNetworks.

"The biggest concern around MPEG right now is the pricing issue," Hoch warned, arguing that the proposal by patent holders in the MPEG-LA umbrella "makes it unaffordable to even use the standard."

That's still a big thing that has to be resolved. I expect that to be a key part of the discussions at this final stage," Hoch said.

The history of a pricing structure for the licensing of MPEG-4 has been filled with controversy. Immediately after RealNetworks announced it would support MPEG-4, the 18 patent holders within MPEG-LA set its licensing fees at 25 cents per encoders and decoders for personal use, with a $1 million cap. The terms included a two cents per hour fee that would be charged for all streaming.

The furor eventually subsided but there is lingering distrust among many key players, least of all RealNetworks. CEO Rob Glaser is on record as saying the licensing terms could put the technology on the path of becoming "irrelevant."

Yankee Group's Ryan Jones agrees the pricing issue remains a sticky one.

"They have reached agreements for smaller operators. I think there are reasonable pricing caps in place that encourages innovation. The royalty rates have been set to scale along with the size of the business but they still have to sort that out properly," Jones said.

Another headache for the standards body is the lack of digital rights management (DRM) capabilities to protect content delivered in MPEG-4. Without viable DRM software in place, Jones believes content producers would still narrow the choice down to Microsoft and RealNetworks for encoding because DRM tools are fitted within a single encoding platform.

"It is a big concern among many media companies, big and small," Jones said. "MPEG-4 is already at a disadvantage because of the installed base of media players from Microsoft and Real. That popularity is very difficult to overcome. The DRM hurdle is a huge one," he said. MPEG-4 allows content producers to use interfaces to accept third-party DRM software but because it is left so wide open, Jones believes it is a turn-off. "Content owners are going to Microsoft and Real because they want a single solution on a single platform. That is something MPEG-4 has to figure out."

Despite the pricing and DRM limitations, Jones believes MPEG-4 will become the de-facto standard on wireless platforms, adding it remains attractive because it solves many problems in the digital media delivery industry.

The standard continues to win support from a slew of big-name technology firms, including Texas Instruments, Envivio and even rival RealNetworks.

Envivio and Real have tweaked its partnership to develop a mobile media encoder for the wireless sector and IP video streaming play Sigma Designs has put its MPEG-4 decoder chips in broadband set-top boxes and consumer appliances.

The Milpitas, Calif.-based Sigma Designs, which markets MPEG decoding for streaming video, DVD playback and digital set-top, said a wide range of consumer appliances and set-top boxes are being rolled out based on its EM8470 or EM8500 series of MPEG-4 decoder chips.

"Digital entertainment features include MPEG-2 or MPEG-4 video-on-demand, hard disc storage for direct media download and playback, and full-featured Web browsing...MPEG-4 technology is quickly making its way into the next generation of DVD players, PVR appliances, IP video set-top boxes and digital cable set-top boxes," the company said, touting MPEG-4's compression efficiency as a key to deliver video products and services over bandwidth-limited networks.