By Access Advance
With Meta and Alibaba’s recent joining as its newest licensees, bringing the market percentage of the social media market licensed to approximately 70%, and with thirteen new licensors since January 1, 2026, Access Advance’s Video Distribution Patent pool (the “VDP Pool”) is hitting its stride as the streaming industry’s solution for obtaining rights to modern video codec patents. The VDP Pool offers licensors an efficient path to seek a fair return on their substantial investment in modern video compression technology. It also represents a simplified, efficient and economical solution for potential licensees to clear a large percentage of patent risk related to the compression needed to deliver video to their consumers.
Access Advance expects continued success of the VDP Pool to produce a chain reaction. More licensors will join as they recognize the success of the VDP Pool signing licenses and want to participate in the royalty distribution. At the same time, more licensees will be attracted to the VDP Pool as its coverage of licensable patents for the HEVC, VVC, AV1 and VP9 codecs grows. This momentum will drive the virtuous circle of growth for the VDP Pool in the coming months and years.
This article highlights the key innovative features of the VDP pool and explains why these features are pro-competitive and why Access Advance believes the entire streaming industry should embrace the VDP Pool as the solution for video codec licensing.
The VDP Pool was designed with key innovative features that meet the needs of the streaming market
In late 2023, Access Advance (“Advance”) was approached by video distributors saying that they were concerned that the video distribution licensing approaches and platforms then being discussed and offered were oriented more to the past than to the present or future and failed to address the real, daily, business and operational needs of video distributors across the many different business models of the industry – whether streamers, social media companies, online video-driven sales, and others – and did not fairly balance the interest of both implementers and patent owners. They were concerned that, instead of providing a solution, these offerings would lead to many years of litigation and uncertainty for both implementers and patent owners, an inefficient result that would not only delay adoption of existing modern video codecs but the development of future video codecs as well.
Following extensive discussions with many stakeholders including both patent owners and implementers, Advance structured a pool license with these key features:
- The pool includes patents1 on each of the four modern video codecs currently used or contemplated for use by video distribution providers: HEVC, VVC, AV1, and VP9 – the modern video codecs (“MVCs”).
- Each licensee will pay royalties that will not vary based either on which codecs it uses or the proportions in which it uses those codecs.
- The amount of the royalty for access to all four MVCs depends on the size of the licensee’s streaming business as determined by one of three criteria: the average number of monthly active users, the average number of monthly video subscribers, and the semi-annual video streaming revenue. The use of three different measures of “size” ensures both that the license accommodates any licensee business model and that comparably-sized licensees are treated the same.
- Royalty rates are tiered, and these tiered rates effectively translate into the following ranges on a per-unit basis:
- a high of $0.0417 to a low of less than $0.0082 per subscriber per month
- a high of $0.00417 to a low of less than $0.00082 per active user per month
- a high of 0.5% to a low of less than 0.2% of a licensee’s streaming revenue from paid content
The structure of the VDP Pool is innovative and procompetitive, giving video providers the flexibility and business freedom to operate using any or all of the four modern video codecs
The core characteristic of any innovation is that it is different from what came before and different from what was then-currently available. And it is exactly the innovative features of the VDP Pool that make it the right solution for the video market at this time.
The traditional structure of patent pool licensing – including Advance’s device-oriented patent pools – is that a single pool licenses patents for a single codec, with the license limited to the field of use of that codec.
The VDP Pool is different.
A key procompetitive innovation is that the royalty fee at any tier is not a fee tied to any specific one of the four licensed codecs. Rather, it can be thought of as a fee for the right to practice the claims of any or all of the pool patents for each of the four licensed codecs. In essence, it is an entry fee licensees pay for the business and operational flexibility the pool provides.
Another key procompetitive innovation is that a license to use the essential claims in any of the patents is automatically created by the licensee’s use of those claims. The result is that a licensee:
- is licensed to the essential claims of the patents for the codec it uses, and
- is not licensed to the essential claims of patents for the codec(s) it does not use or that it stops using.
This operational flexibility is encoded in the DNA of the license which literally provides that “Licensing Administrator hereby grants to Licensee . . . a . . . []license under only the Practiced Claims of the Licensed Patents.”
Also as a result of this innovative approach:
- no licensee is “forced” to license anything it does not use, so by definition there is no ”bundling” or “tying”;
- no licensee is licensed to anything it does not use and therefore is not licensed to anything it does not need; and
- no licensee pays for anything it does not use.2
By offering a license to all four codecs at a single price, the program allows video distribution providers to determine in real-time which codecs to use and in what combination based purely on their own technical and business considerations. They need not worry about the licensing or royalty impact of those decisions, and are freed from the burden of negotiating multiple individual licenses, either bilaterally or with separate licensing programs, for each individual codec, or of paying additive royalties.
While this approach of empowering the implementer to choose what to use and when to use it is an innovation in pool patent licensing, it is routine in the economic lives of consumers.
One example is an amusement park: each customer pays a set fee for admission to the park, which gives them the right to board any and all rides.3 Some customers may ride every rollercoaster during their visit, some may ride only the carousel multiple times, but all customers pay the same to acquire the same right to choose what to do with their time in the park. No one is treated “unfairly.” All are paying for the right to enter, and what rides they choose is entirely a result of their own decisions.
Another obvious example is an all-buffet restaurant. A customer pays an entry fee – say $30 – for the right to be in the buffet room. The entry fee entitles the customer to choose what to eat, the equivalent of the operational freedom offered by the VDP Pool. After paying the $30 entry fee, customers eat what they want to eat, without being forced to eat anything they do not want to eat or paying for anything not eaten.
A third example of the broad acceptance of this approach is found in the video streaming market itself. The various forms of subscription pricing models – at every price point – fundamentally charge a fee for access, not consumption. It is a charge for the right to watch video content without regard to what content a subscriber or user watches, or whether in any particular month the subscriber or user watches any video at all.
Moreover, subscription-based services charge a meaningful additional fee – an upcharge – for the “premium” tiers of service, which often includes higher-resolution videos and sometimes includes other features, such as the number of simultaneous streams a subscriber’s household can watch. The upcharge similarly is a fee for access not consumption, i.e., the right to take advantage of the premium features, without regard to whether the user in fact takes advantage of them.
And all who subscribe to the same premium tier pay the same amount regardless of whether any particular subscriber uses one or some or all – or none – of the premium features. All are paying for access, the right to use any or all those features, and what features they actually use is a result of their own decisions. No one is treated “unfairly” because they decide to use more or fewer than other subscribers. And those various features are not unfairly “tied” or “bundled” simply because different users make different decisions about their use of the various features.
Under the structure of the VDP Pool the four licensed codecs are complements, not substitutes
Guidance from competition and IP authorities recognize that patented technologies can be substitutes for some purposes and complements for other purposes.4
From the perspective of a supply-side analysis, the technologies in the four MVCs can be seen as substitutes. This may be technically correct in theory:5 a video distributor can choose to use any one of the four codecs. Put another way, at any instant for any particular stream for any particular customer a video distributor theoretically could choose to stream in any one of the four codecs.
But that view is not correct from the perspective of a demand-side analysis because of the reality of streaming: the static “at any instant . . .” analysis is not the way streaming works in the real world. There, even the notion of choosing the codec in which to stream is, for many video providers in many particular instances, not quite right.
Most video content that will be provided to users online under any business model is encoded in multiple codecs and the network is programmed to decide what codec to use to provide particular content to a particular user for their particular hardware under particular network conditions at a particular time. Moreover, that “decision” may change even during the course of a particular stream to a particular customer, for example because of changing network conditions during the duration of the stream.
These operational realities mean that video distributors require (1) the ability to use whatever codec is best optimized at any particular time without negotiating multiple licenses for potential contingencies; and (2) the budgetary certainty of what their licenses will cost as their relative use of codecs varies over time.
This is exactly why the VDP Pool included innovative features designed to provide licensees with budgetary certainty and operational and business freedom to use whichever codec they need whenever they need it.
The innovative rate design – and the rates – of the VDP Pool are procompetitive and FRAND, giving video providers the flexibility and business freedom to operate using any or all of the four modern video codecs across different business models
The royalty rates are set in 6 tiers based on the size of a licensee’s streaming business under one of three metrics: average monthly active video users, average monthly video subscribers, or semi-annual streaming revenue. The use of three metrics ensures that streaming businesses of similar size fall in the same tier regardless of the business model. The rates for each tier are shown in this table.6
Viewing these rates on a per-user per-month basis, as shown below, it is clear that the maximum per-active-user rates of $0.00417 and per-subscriber rates of $0.0417 per month or less are FRAND and procompetitive. This is also true for the third metric, as highlighted by the fact that those rates are no more than 0.5% of a streaming providers revenue on paid content.
hese observations are confirmed by an in-depth analysis authored by the prominent economic consulting firm Criterion Economics who was commission by Access Advance to evaluate whether the VDP Pool offers licensing terms for MVCs that are fair, reasonable, and nondiscriminatory (FRAND).7 Criterion found that the VDP Pool’s royalty structure is economically modest to the point that the rates are far below any threshold that could plausibly distort downstream competition or inhibit adoption of MVCs. Their analysis shows that the royalties are so small relative to even the lowest-priced subscription offerings in global markets that the Advance VDP Pool’s royalties are highly unlikely to affect pricing decisions or competitive positioning in downstream markets.
Criterion also found that the VDP Pool further enhances efficiency by reducing transaction costs. By offering a single license covering multiple video standards at a constant royalty rate, the VDP Pool obviates repeated bilateral negotiations and removes licensing friction from video service providers’ codec selection decisions. This structure encourages timely adoption of superior technologies and allows video service providers to deploy their profit-maximizing mix of codecs as market conditions evolve.
Conclusion
The Access Advance VDP Pool’s current success and rapidly building momentum in the streaming marketplace reflects its innovative structure and rates that are FRAND, transparent, procompetitive, and – most importantly from an implementer’s commercial perspective – solve real-world challenges faced by video distribution providers.
- It includes a license providing the right to use any or all four of the MVCs at a single price that enables video distribution providers to use any or all codecs in any combination, and change the mix and proportions at will, with no change in price or in license terms.
- That price is, as Criterion notes, “economically modest”, in fact “de minimis relative to the incremental revenues and cost savings that MVCs generate”.
For video distribution providers making licensing decisions, the Advance VDP Pool is the right market-wide solution, as recognized by global streaming platforms including most recently Meta and Alibaba, as well as ByteDance, Kuaishou, NTT Docomo, Roku, Tencent, Youku and the 46 licensors who have joined the pool so far.
- Patents are independently evaluated for essentiality to each of the four codecs just as Advance requires in each of our other pools. ↩︎
- The net of each licensee’s monthly royalty payments is distributed only to licensors of the patents essential to the codec or codecs that the licensee used in that month. So, just as a licensee pays only for codecs it uses, a licensor receives revenue only from a licensee who used a codec that included that licensor’s patents; no licensor receives a distribution from payments by a licensee who did not use one of that licensor’s patents. ↩︎
- Note that under the “monthly active users” metric licensees pay only for users who are active in any particular month, meaning users that receive content encoded in at least one of the MVCs, and therefore do not pay based on any users who do not receive any content encoded in the MVCs. ↩︎
- See, e.g., Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to technology transfer agreements, European Commission, C(2026) 2482 final, 16 April 2026,at par. 279, found at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=PI_COM:C(2026)2482: The distinction between complementary and substitute technologies is not clear-cut in all cases, since technologies may be substitutes in part and complements in part. Where licensees are likely to demand both technologies due to efficiencies stemming from the integration of two technologies, the technologies are treated as complements, even if they are partly substitutable. In such cases, it is likely that, in the absence of the pool, licensees would want to licence both technologies due to the additional economic benefit of using both technologies as opposed to using only one of them. ↩︎
- Real world considerations may constrain the choice. ↩︎
- https://accessadvance.com/vdp-pool-royalty/ ↩︎
- A summary of the Criterion study, and a link to download the full text, are available at https://accessadvance.com/policy-advocacy/the-economics-of-video-compression-why-the-access-advance-video-distribution-patent-pool-is-fair-reasonable-and-nondiscriminatory/ ↩︎