It seems that wars and competitions over video formats will continue on as long as there are people interested in watching video. This kind of free-market competition usually does result in benefits for the consumer after all the carnage is removed from the battlefield — the big boys duke it out while those with the means adopt the early technology, paying for all of the research and development costs.

In the late 1970’s, the formats dueling for video tape supremacy were Sony’s Betamax and JVC’s VHS, both of which were quickly supplanting the Super 8 mm film format. While Sony’s Betamax arguably provided the higher quality, VHS eventually won with its ability to record more time on a single cassette. Betamax is now just a footnote in tech history. Sony learned from this defeat, and in the late 2000’s battle of high definition optical disc formats, they beat out HD-DVD by incorporating Blu-Ray players in their PlayStation 3.

We are now at the beginning salvos of the latest video format war – the video codec. For those who don’t deal with web video daily, this can be a very complicating subject. First, “codec” is a portmanteau, a combination of the words coder and decoder. There are many different codecs for both video and audio, but I will spare the gory details, and just say that most if all codecs are patented — and that’s where the war begins. But first, a little background on why this matters.

Currently, if you watch a video online, your web browser needs some sort of plugin to make it viewable. Most online video is played through Adobe’s Flash Player, but Microsoft’s Silverlight is also becoming widely adopted. The next generation of web-based video will not require plugins, because the standards for writing the code behind web pages, HTML5 (Hyper Text Markup Language – 5th update) has been updated to include a new tag for video. This not only simplifies the coding (which means pages will load faster), but it allows for video to be easily played across many types of devices, like iPads and other tablets. The codec that becomes the so-called “standard” for HTML5 could be very profitable in many ways for certain companies.

Patent Pending

The “standard” codec for web video had been thought by many observers to be H.264, which has been widely used since it was standardized in 2003. When you watch video on most Apple devices and HD video on YouTube, it is probably H.264 video. But there’s a cost to using this codec. The patent requires that royalty fees be collected from those who use this codec to create and distribute videos. Here’s where we find more information that I want to deal with in this article, so we will just say that the licensing fees are quite complicated. In May of 2010, Google officially announced their new open source, royalty-free video format called WebM, the codec Google acquired in their purchase of a company called On2 in 2009 for $133 million. Google has since been heavily promoting WebM for use with the HTML5 video tag. Remember, this allows for plugin-free video to be embedded in webpages. But the royalty freedom is a key part of WebM’s value proposition. When Google announced the new open source project, it said it was partnering with Mozilla, Opera, Google Chrome, Adobe, and others to proliferate the standard across the web. But some believe that the WebM’s codec may include parts covered by other patents. In February of 2011, it was reported that MPEG LA, the organization that maintains many motion video patent licenses, announced a call for patents essential to the VP8 video compression algorithm — the algorithm that is fundamental to Google’s WebM video format.

The web standards consortium (W3C), as well as browser companies like Opera and Mozilla (Firefox), would prefer a royalty-free codec as the “standard” for web video. The patents for H.264 are owned by a consortium of tech companies called MPEG LA. Apple and Microsoft have both contributed patents to MPEG LA, so they are part of the consortium and both support H.264. Apple is not likely to budge in their support, as they have a history of wanting to maintain control by keeping things as closed as possible. An open source video codec would not comport with that line of thinking whereas with H.264, it has some control. Apple has a lot already invested in getting companies to commit to H.264 so that it works well for transmitting video on their iPhones and iPads. A competing format could mess things up for Steve Jobs and company — and Jobs is, obviously, no fan of Google. Apple sued phone maker HTC over the Google Android operating system, as what many believe was an indirect shot at Google. After the iPad announcement in January, 2010, Steve Jobs had the following remarks at a town hall meeting:

“We did not enter the search business. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them… I want to go back to that other question first and say one more thing, this don’t be evil mantra: “It’s bullshit.”

Friends in High Places

But it appears that Google may have an even stronger ally – the United States Government.

According to the Wall Street Journal, the Justice Department is now investigating whether MPEG LA, or its members, is trying to “cripple an alternative format called VP8 that Google released last year—by creating legal uncertainty over whether users might violate patents by employing that technology…” This investigation into MPEG LA may be purely coincidental, but according to OpenSecrets.org, Google managers and employees were some of the strongest supporters of presidential candidate Barack Obama, donating around $803,000 to his campaign. CEO Eric Schmidt actively stumped for then-candidate, Obama and even served as an informal economic adviser during the campaign. After Obama was elected president, Schmidt and other Google executives forked over $25,000 apiece to help pay for the inaugural celebration, and Google executives soon found themselves assuming roles in the Obama administration.

Google also has close ties to the folks at the FCC and although no one at the White House or at Google will confirm it, it appears that Schmidt will be appointed very soon as the next US Commerce Secretary. The Business Insider reported on March 28th that it “is now seen by virtually every Washington insider as a done deal."

Browser Compatibility

Complicating this war further is the browser companies. They can choose to make their browser compliant with any codec they like. If MPEG LA is able to put together a patent on WebM, it could be especially problematic for small companies like Mozilla and Opera because Google is offering no indemnification for users of WebM. So if lawsuits over royalties occur, Google won’t be there to help. While Google has deep enough pockets to withstand a legal attack, smaller companies have to weigh their options carefully.

As in the previous format wars, there is arguably a higher quality offering in codecs. Many believe that the H.264 codec is superior in quality to the WebM (VP8) codec. So the only real value with the Google offering is royalty freedom. It may be that implementers decide that, since they have to pay anyway, they would be better off with the superior and more widely used H.264 license.

For many involved, the war is more about control versus cost. The victor of this format war may well determine the way in which we see video delivered for well into the future. And when companies like Google and Apple get as aggressive as they have been, you know there will be many battles before the dust finally clears.