Introduction

In this chapter the talk is not about a supposedly “big business” with MPEG standards, but about the business triggered by MPEG standards. When possible, the breadth and size of businesses for which MPEG standards have an enabling role will be identified.

Direct business generated by MPEG standards

In this section the talk is about the “primary business”, i.e. the business that relies directly on MPEG standards.

Sale of standards

Experts attending MPEG meetings draft standards. The copyright of the standards belongs to ISO and IEC who do business with MPEG standards by selling them. The sale of standards is their major source of revenues. The number of copies of MPEG standards is not known, but the revenue could easily be in the order of M$.

MPEG standards IPR

Hundreds of companies and organisations send experts to MPEG meetings. Some companies contribute technologies because their primary goal is that MPEG produce the standard(s) they need. Other companies do not have products or services that could benefit from MPEG standards but possess significant amount of IP. This is the case of universities who currently contribute ~1/4 of the experts attending MPEG meetings, but also the case of so-called Non-Performing Entities (NPE).

Columbia University raised the attention of many in the mid 1990’s when MPEG LA, the MPEG-2 patent pool administrator, put Columbia University in their list of holders of essential MPEG-2 patents. Today the MPEG LA website mentions at least 10 HEVC licensors who are Universities or research centres.

It is not easy to assess the total value of revenues from patents that are essential to practise MPEG standards, but it is probably in excess of 1 B$/year.

Integrated circuits for MPEG standards

The early days of MPEG (end of 1980’s) were beset by the problem of availability of integrated circuits implementing MPEG-1 Video. A VLSI subgroup (later renamed Implementation Studies Group) was set up to study the implementation impact of the adoption of particular technologies. The large market of MPEG-2 chip kicked off an important branch of the silicon industry.

In the context of the MPEG-4 standard, MPEG developed Part 9 Reference Hardware Description where some parts of the reference software are described by alternative blocks described in a Hardware Description Language (HDL) form. The fundamental objective of the reference HW description was the support of such mixed SW/HW standard description with appropriate platforms, e.g. a programmable board that can be plugged into a standard SW environment.

There is no public information on the size of the industry developing VLSI chips that implement MPEG standards.

Software for MPEG standards

Starting from MPEG-4, MPEG adopted the practice of specifying all MPEG standards in two languages: one natural (English) and the other in a computer language. The two specifications are both normative and if one specification is discovered not to be aligned with the other, MPEG has to decide which version should be the basis and align the other to the former.

Today the licence of the reference software is a BSD licence modified to indicate that use of the software may require the use of essential patents held by third parties. The licence was first adopted for the MPEG eXtensible Middleware (MXM) standard. The purpose of the reference software is to provide an alternative specification, it is not meant to be suitable for use in products, even though some reference software is of very high quality and performance.

There are several open source implementations of MPEG standards, such as Ffmpeg which is used in many commercial implementations.

There is of course a large number of proprietary implementations developed by software com­panies. However, there is no public information on the size of the industry developing software that implements MPEG standards.

Indirect business generated by MPEG standards

MPEG standards have created the conditions for the first mass-deployable digital video solutions and provided new and standard solutions for digital audio. Over the years, alternative proprietary solution have been offered to the market, but MPEG continues to be the reference source, especially for hardware-based devices.

The following provides publicly available information on the number of devices/users and/or the size of the business in 3 areas: Devices, Video Surveillance and Content. For each entry the web page where the information was found is provided.

Devices

• In 2017 the global laptop market size was valued at 102 B$ and is estimated to expand at a CAGR of 0.4% during the 2018-2025 period (Grand View Research)
• In 2018 global smartphone sales reached 522 B$, with 1.44 billion units and an average selling price (ASP) of 384 $. Smartphones, mobile phones and wearables account for 44% of the 1.2 T$ technical consumer goods (TCG) market (GfK)
• In 3Q18 36 million tablets were sold worldwide (IDC)
• In 2015 58 million digital cameras were sold worldwide (Statista)
• By 2022 In-Car Infotainment Market is expected to garner 34 B$, with a CAGR of 13.3% during the forecast period 2016 – 2022 (Allied Market Research)
• By 2024 the global capture and production equipment market is expected to generate revenues of ~38 B$, growing at a CAGR of ~4% in 2018-2024 (Arizton)
• In 1H18 the global market for television (TV) saw total sales of 45 B€ (~50 B$). A total of 238 million devices are expected to be sold in 2018 (GfK)
• In 2015 the global Set Top Box (STB) market size was estimated at 17 B$ and is anticipated to witness a significant growth over the 2018-2024 period (Grand View Research)
• In 2016 the global video conferencing market was valued at 5 B$ and is expected to expand at a CAGR of 7.9% from 2018 to 2026 to reach 10.5 B$ (Transparency Market Research)
• In 2017, the global Smart Commercial Drones market size was 1.4 B$ and it is expected to reach 18 B$ by the end of 2025, with a CAGR of 83.3% during 2018-2025 (MarketWatch).

Video surveillance

• In 2014 there were 245 million professionally installed video surveillance cameras active and operational globally, 20% of which are estimated to be network cameras and ~2% HD CCTV cameras (IHS)
• In 2017 the global video surveillance market generated a revenue of 32 B$ and is estimated to achieve 37 B$ in 2018 (BIS Research)
• The video surveillance market size is projected to grow at a CAGR of 16.14% during the 2018 to 2023 period and reach 77 B$ by 2023 (BIS Research)
• In 2018 the Video Surveillance market size is estimated to be 37 B$ to grow to 68 B$ by 2023, at a CAGR of 13.1% between 2018 and 2023 (MarketsandMarkets)

Content

• In 2018 revenues of games, films and music were 138 B$, 42 B$ and 19 B$, respectively (League of Professional esports)
• The In-flight Entertainment & Connectivity (IFEC) market is projected to grow from 5 B$ in 2018 to 7.65 B$ by 2023, at a CAGR of 8.72% from 2018 to 2023 (MarketsandMarkets).
• In 2018 global revenues from traditional pay-TV and OTT TV episodes and movies will reach 265 B$; up from 254 B$ in 2017 and 234 B$ in 2015 (Broadband TV News)
• In 2022 the global pay TV market including satellite, cable, and IPTV services is expected to generate 295 B$ in 2022 (Broadband TV News)
• In 2017 the global social media market was valued at 34 B$ (PRNewswire)
• By end-2018 the total TV subscriptions will reach 1.5 billion; up by 38% from 1 billion in 2015. In the same period SVOD subscriptions will reach 0.47 billion (Broadband TV News)
• In 2019 worldwide revenue from TV advertising will reach 177 B$ and would account for 34% of the global ad revenue in 2019, hence the second advertising medium in importance (Statista)
• In 2019 the Television Production market size in the US is 40 B$ and is expected to increase 3.7% in 2019 (IBISWorld)
• In 2018 the Enterprise Video market size is expected to be 13.5 B$ and grow to 29 B$ in 2023, at a CAGR of 7.9% during the 2018-2023 period (MarketsandMarkets)

Content transport

Television continues to have its own distribution infrastructure, i.e. terrestrial distribution, the cable and satellite networks. Advanced countries have digitised terrestrial distribution and cable distribution. The majority of satellite channels are now digital.

Table 9, from Cisco Visual Networking Index: Forecast and Trends, 2016–2021 White Paper, provides the amount of IP traffic in the period 2016-2021.

Table 9 –Evolution of IP traffic (Cisco)

Conclusions

The size of the economic value of products, services and applications enabled by MPEG standards is a good measure of their impacts.

The numbers reported above show that MPEG standards enable a variety of businesses worth more than 1 T$ per year. Of course MPEG is not the only provider of specifications for digital media systems, but in certain segments such as TV sets, mobile devices and PC, support of MPEG standards is a must.

According to Michelle Abraham – S&P Global Market Intelligence (personal communication), the value of the installed base of tablets, smartphones, STB, and digital TVs is 2.8 T$. And this is just the hardware part of the indirect business triggered by MPEG standards.