Commentary: H.264 Video—The Format of Convergence

Any Dissenters in the House?
Microsoft is one company that might offer a counterpoint to "H.264 uber alles." VC-1, Microsoft’s published specification for what was originally Windows Media 9, is an impressive technology with certain special technical strengths. VC-1 has some notable traction: VC-1 has been endorsed as a standard in the SMPTE organization, it has peer status with H.264 in both the Blu-ray and HD-DVD standards, and it is an option in the DVB-H mobile broadcast standard.

But VC-1 has a significant practical problem: Because it is so closely associated with Microsoft, many industry players have instinctively chosen not to support it or to demote it in priority. This means that companies in the consumer video ecosystem—including Google/YouTube, Adobe, Apple, Sony and others (particularly in Asia and Europe)—are unlikely to give VC-1 much support. Moreover, other than Microsoft-designed systems, most systems that do support VC-1 also support H.264, though the converse is not true. This makes H.264 a more universal common denominator.

In contrast, because H.264 is a standard created by a coalition of industry players (including some technical leaders from Microsoft, incidentally), it is considered vendor-neutral. I would expect that over the long haul, even Microsoft will find it in their best interest to give H.264 its full support, even if only as an alternative.

Emerging Opportunities
As a serial entrepreneur, I’m always on the lookout for product and service "holes" and opportunities. With respect to H.264, here are two significant market "holes" that we’re eager to see filled:
—Open-standard content protection (DRM as a term is over-used and misused) for H.264. Certain premium content will likely need to have controls on it for some time to come. This opportunity is one that needs to be addressed either by the open source community, by a standards body, or by commercial entities who have a strategic interest in making protection easily available. ISMA is one well-respected technical specification organization working in this area.
—Simple internet set-top boxes. It’s obvious that video delivered to homes ultimately needs to get to the TV, but, I think the market for $300-$500 internet set top boxes is extremely limited as is the market for PC-extension STBs. Some enterprising company or companies will make a fortune with a simple, plug-and-play, inexpensive (no more than $149), internet-connected set-top-box that supports web standards, navigation without a keyboard, and H.264. I’m betting that someone will launch such a device in time for the 2008 holiday season.

Conclusion: The Common Thread
H.264 is already supported in virtually every corner of the digital video universe. Now, with big internet players like Adobe, Google, and Apple behind it, H.264 is poised to become the format of convergence where all devices have access to an expanding universe of content available via physical media or high-speed networks. This will be a market-expanding transition leading to many exciting products and services in the near future.