What Chasm? Why Industry Loyalties Aren’t Important in the TV Business

The much-noted chasm between web-centric companies (Google, Netflix, Amazon, etc.)  and the legacy broadcast industry was thoroughly discussed at the recent U.S. NAB show. The narrative went something like this: The entertainment-content preparation business is splintered and wounded because of fights between these two industries.

The web-centric Alliance for Open Media (AOM)’s formal debut of the AV1 codec precipitated much of this discussion. One version of the story suggests that each industry builds and distributes entertainment content from their mutually-exclusive tool boxes. But this rings hollow when one considers that traditional TV-service providers are adopting IP workflows and distribution. So, if TV content distribution is becoming more unified, why the hand-wringing over the bifurcation of two industries that are taking similar technical paths?

Much of this comes from the story about the AOM formation, which was a reaction, in part, to concerns over royalty costs and the uncertain royalty bill for the MPEG- and ITU-based video standard HEVC. Some royalty reductions have recently occurred, but the picture remains murky with some IP owners still publicly mum on licensing terms for the widely-deployed standard. AOM’s story makes prominent the codec’s “royalty free” aspect (quote marks because it is not yet known whether the AOM has infringed, or will be accused of infringement, on other entities’ video-compression technologies) as a primary reason for its adoption. It’s an interesting story, but it is only a jumping-off point for discussing how these tools are developed and used.

Big stakes control and money may get all the attention, but the unsexy reality is that the content preparation tools are chosen when they deliver the best quality and efficiency—not to mention solving previously unsolved technical problems at a reasonable cost. Reasonable cost is a moving target with many factors (not just royalties) going into that calculation. If the tools don’t deliver on that basis, they won’t be used.

An example of this principle at work is the audio/speech codec Opus from the Xiph.org non-profit organization. Opus has the stated purpose of “supporting and developing free, open protocols and software.” My smart engineer friends tell me that they like Opus for its relatively high-fidelity output at a wide range of bit rates, making it suitable for music playback and for speech. The royalty free aspect is appreciated, but it doesn’t appear to be the primary reason why it is adopted. The most widely used audio compression standard in the world, for that matter, comes with a royalty bill, which hasn’t hampered its deployment.

Now, of course, there are powerful internet-centric companies like Google, Netflix and Amazon producing and and/or distributing their own content just like the Hollywood studios and TV networks. Some see this an accruement of control and power that will have a long ripple effect for companies that develop the tools—and the ripples won’t favor incumbent players. This may come to pass. Just like the incumbents, the newcomers get to decide which tools they want to use.

Despite the “us vs. them” narrative, it seems reasonable that industry alliances and loyalties won’t be the primary factors for choosing one tool or technology over another. In the case of compression technologies, flexibility, high-quality output, efficiency and wide industry support at reasonable costs will be those that endure—no matter which part of the industry they come from.