The State of Streaming Codecs 2026

Why It Matters

The emerging royalty structures turn codec selection into a financial decision, affecting profit margins and budgeting for all streaming services. Ignoring these costs could expose companies to legal risk and unexpected expense, making strategic licensing essential for 2026.

Key Takeaways

• Access Advance VDP pool adds royalty caps, de‑minimis waivers
• Nokia‑Amazon settlement proves content‑side patent enforcement
• Sisvel licenses ~50% of AV1 device market, challenging royalty‑free claim
• AV2 promises 20‑30% efficiency gains, but licensing remains uncertain
• Brazil mandates VVC/LCEVC for broadcast, impact likely local

Pulse Analysis

The 2025 codec landscape marked a turning point as licensing moved from a back‑office concern to a boardroom agenda. Access Advance’s Video Distribution Patent (VDP) pool introduced a hybrid royalty model—capped fees, de‑minimis exemptions, and offsets for double‑licensing—that forces large streamers to reserve cash for content‑side patents. The high‑profile Nokia‑Amazon settlement demonstrated that patent owners can pursue royalties on streamed content, not just on devices, raising compliance risk for any service that encodes with HEVC, H.265 or AV1. Consequently, finance teams now treat codec royalties as a predictable operating expense rather than an optional cost.

AV1’s trajectory accelerated in 2025, with Sisvel reporting that half of all finished‑product AV1 devices—TVs, set‑tops and consoles—are now covered by its patent pool. This milestone undermines the long‑standing narrative of AV1 as royalty‑free and forces adopters to factor licensing fees into their cost models. At the same time, the Alliance for Open Media unveiled AV2, delivering 20‑30 % bitrate reductions over AV1 and narrowing the efficiency gap with VVC. However, AV2’s patent landscape remains opaque, and early‑stage licensing strategies could mirror the complexities already seen with AV1.

Regional policy shifts add another layer of uncertainty. Brazil’s TV 3.0 decree designates VVC and its enhancement layer LCEVC as the national broadcast standard, creating a localized market that could spur hardware adoption but is unlikely to dictate global trends. Meanwhile, InterDigital’s acquisition of AI‑native compression startup Deep Render signals that future codecs will still be governed by traditional patent pools, meaning royalty considerations will persist even as AI‑native compression matures toward 2030. For executives planning 2026 deployments, the prudent path is to evaluate codec efficiency against the emerging royalty regimes and reserve capital for inevitable licensing obligations.