November 16, 2022 / Posted By: Mark Nell, VP licensing, InterDigital

From the way we work, to how we connect with loved ones, to some much-needed downtime bingeing our favorite shows, there are few technologies that have had such an impact on our daily lives in recent years as video.

For so many of us, video has enabled a new daily routine of working from home and a seemingly never-ending stream of Zoom and Microsoft Teams calls. After years of change, it’s clear - we are now living and working in a video-first economy.

The fact that we have been able to pivot so quickly, particularly in the depths of the Covid pandemic, is in no small part thanks to a bedrock of innovation that has helped bring about a revolution in how we connect and consume content. Of course, this has not happened overnight.

Like other standardized technologies, this has been an effort taken over many years by innovators around the world from academia, industry and beyond. This effort has resulted in video technology, developed over multiple standards, which has vastly improved picture quality and bandwidth usage thanks to new advances in video compression technology.

Perhaps nothing reflects these changes more than the seismic shifts in the way we watch content; anywhere, anytime. In the 15 years since Netflix launched its trailblazing streaming service, we have seen a string of new entrants in the market such as Hulu and Amazon Prime Video.

More recently these trailblazers have been joined by a star-studded cast list of major content creators such as Disney, NBC, Paramount and Warner Discovery, which have all launched new or expanded platforms. All are betting big that streaming represents the future of content distribution.

According to data from Nielsen, streaming viewership passed cable in monthly watch time in July 2022 for the first time, accounting for 34.8% of total watch time in the month. In order to feed all of those eyeballs, a December 2021 report from Ampere Analysis revealed that subscription OTT services increased their investment in content by 20% in 2021 to nearly $50 billion, up by more than 50% from 2019.

This investment and the proliferation of streaming services is set to fuel massive growth for the industry. Rethink Research forecasts that the market for subscriber based streaming services will grow from 723 million subscribers this year to 1.81 billion in 2027 with revenues growing from $72.1 billion to $170.85 billion.

All the OTT players are fighting to get subscribers with some enjoying spectacular growth. Disney’s streaming service, Disney+, is forecast to hit between 215 million and 245 million subscribers by 2024, far in excess of the company’s own initial predictions.

But this is about more than just catching up on Squid Games or starting the latest Star Wars spinoff while enjoying movie theater picture quality. We need improved video technology, particularly more efficient codecs, to ensure that ever increasing volumes of data make the best use of available bandwidth.

Video accounts for more than 80% of all consumer internet traffic. But a large chunk of that is encoded using a standardized technology, AVC, the standard for which was finalized almost 20 years ago when Nokia handsets ruled the roost and “cord cutting” hadn’t entered the popular vernacular.

The reasons behind such a long cycle for codecs’ adoption are numerous. In the streaming market some companies have been reluctant to use more efficient codecs because end devices haven’t been able to support playback. That is starting to change, however, especially in the TV market where 4K televisions, which support HEVC, are rapidly gaining in popularity.

What is also clear is that more recent standards such as VVC can offer considerable efficiency gains. According to research from Analysys Mason, by taking advantage of the latest efficiency gains from improved codecs, Netflix’s total traffic is around 24% lower than it otherwise would be.

With the most recent codec, VVC, still in the early stages of adoption, the efficiency gains and improved picture quality should continue to benefit streamers and consumers alike. When you also consider that 5G cellular networks are still being rolled out, we are on the cusp of being able to tap into even more immersive content experiences both at work and during our down time.

For innovators in the video space like InterDigital this is all part of the innovation lifecycle. From our role pioneering the shift from analog to digital to our work on the latest video codecs and more immersive content, we play a crucial role in innovating in video and connected technologies with a heritage going back more than 50 years. We have also been at the heart of the standardization process for video technology including as a founder member of the standards organization MPEG.

As in other technologies such as cellular mobile, our technology provides fertile ground for a huge amount of economic value from the largest movie studios to start-up app developers to be created on top.

After all, to paraphrase a little, it’s the video-first economy, stupid.