When should you licence a third-party commercial codec?
Streaming platforms and video services have long relied on open-source codecs like x264, x265, SVT-AV1, libaom, and libvp9, all readily available in FFmpeg. For many users, these codecs offer sufficient quality, efficiency, and device compatibility at no cost. Yet, some companies choose to licence commercial codec implementations from vendors such as MainConcept, Beamr, and Visionular.
The reasons vary. Some companies need better compression efficiency or faster encoding. Others require optimised performance for specific hardware, enterprise support, or workflow integration. While open-source codecs are widely used, commercial alternatives can provide meaningful advantages, particularly for large-scale encoding, real-time applications, or premium content delivery.
This article examines when and why companies move beyond open-source options. It begins by outlining what is possible with open-source codecs, including their licencing implications for streaming publishers, software developers, and cloud-based encoding providers. It then presents insights from commercial codec vendors on who licences these solutions, their key benefits, pricing structures, and how demand is shifting for HEVC, AV1, and VVC.
For some streamers, open-source solutions meet all their needs. For others, commercial codecs deliver efficiency and optimisations that justify the cost. This article explores the factors that influence those decisions.
What You Get for Free with Open-Source Codecs
For streaming publishers, open-source codecs like x264, x265, SVT-AV1, libaom, and libvp9 provide a powerful, royalty-free way to encode and distribute video. If you’re running a streaming service—whether subscription-based or ad-supported—you can freely use these codecs to compress your video files before delivering them to viewers. Open-source licences, such as the GNU General Public Licence (GPL) and the BSD-style licences used by some codecs, allow unrestricted use for encoding and distribution.
But what if you’re developing video encoding applications? Here, licencing becomes more complex. Many open-source video codecs are distributed under the GPL, which requires that any software incorporating them must also be open source and provide its source code. This is a deterrent for most companies developing commercial products, and a strong reason to deploy third-party commercial encoders.
For cloud-based encoding services, the question is whether you are merely using open-source codecs internally or offering them as part of a larger service. If a cloud platform is simply running an open-source encoder on behalf of a customer, it typically remains compliant.
However, if the platform modifies and distributes the encoder itself, GPL restrictions may apply, potentially requiring them to provide source code. This is why many cloud providers either build their own encoders or licence commercial ones to avoid potential legal issues.
In short, streaming publishers can use open-source codecs freely, but application developers and cloud platforms must carefully navigate open-source licencing terms to stay compliant.
Who’s Buying Commercial Codecs?
While open-source codecs like x264, x265, and SVT-AV1 cover most needs, some companies still opt for commercial alternatives. But who actually buys them, and why?
The answer depends on the use case. According to Visionular VP of Product Krishna Rao Vijayanagar, the primary buyers of commercial codecs are video streaming platforms, UGC/social media apps, and hardware platform providers. “While system integrators are involved in the ecosystem, direct purchases typically come from streaming platforms themselves, who are looking to optimise their delivery costs at scale, while improving the end-user experience.”
Visionular VP of Product Krishna Rao Vijayanaga
MainConcept VP Strategy and Business Development Thomas Kramer sees a slightly different customer base, emphasising that many buyers are broadcasters and platform providers who build custom encoding workflows using FFmpeg. “Often these plugins offer more specialised features that they need to optimise their service. On codec level, such a feature could be efficient transcoding, like smart rendering, or improved encoding quality for specific types of content.”
MainConcept VP Strategy and Business Development Thomas Kramer
Beamr takes a broader view, noting that any company encoding large amounts of video may find value in a commercial codec, whether for compression efficiency, hardware optimisation, or support. “Some customers wish to enjoy the Beamr Content-Adaptive Bitrate solution for lowering bitrates without reducing quality,” says Beamr CTO Tamar Shoham. “Others simply need better performance, faster encoding, lower CPU consumption, or an optimised implementation for ARM [processors].”
Beamr CTO Tamar Shoham
Why Use a Commercial Codec?
What justifies paying for a commercial alternative if FFmpeg includes open-source implementations of all major codecs? Vendors highlight a few key reasons: higher efficiency, faster encoding, specialised optimisations, and enterprise support.
Visionular positions bitrate savings as its strongest advantage. Vijayanagar says, “Our implementations achieve 30–50% savings compared to other codec implementations. Using Conventional Neural Networks in the decision-making process, we can greatly increase compression efficiency while encoding efficiently and fast.”
For companies that prioritise cost efficiency and performance, Beamr’s Content-Adaptive Bitrate (CABR) solution is a strong selling point. The company’s approach integrates with NVIDIA’s AV1 NVENC encoder to reduce bandwidth while maintaining perceptual quality. Shoham adds, “We have customers who need better performance, faster encoding, lower CPU consumption, or a codec optimised for ARM. Others prefer a commercial codec for legal reasons, avoiding the complexities of open-source licencing.”
MainConcept highlights workflow optimisation as another advantage. “For publishers with specific format requirements, alternative codec plugins may be optimised to provide support for the full format, including production formats around AVC and HEVC 422/10-bit with MXF, distribution formats like HLS/DASH with muxing and packaging,” says Kramer. “Reducing the number of processing steps in your workflow through an alternative codec plugin can save a lot of time, resources, and money.”
In practical terms, commercial codecs appeal to companies that need greater control over encoding quality and speed. For instance, live streaming platforms often need ultra-fast, high-density encoding to support simultaneous live events. Visionular’s AI-driven optimisations promise real-time encoding improvements, while Beamr and MainConcept focus on encoding efficiency across CPU and GPU environments.
How Do Commercial Codecs Charge?
Cost is a key consideration for any company evaluating commercial encoding solutions. Unlike open-source codecs, which are freely available, commercial alternatives require licencing. The good news? Pricing models are typically usage-based, making costs predictable.
Beamr aligns pricing with measurable value. “Customers pay based on the minutes of processed video output,” says Shoham. “This makes it easy to calculate ROI by comparing encoding costs against benefits like reduced storage, improved quality, or faster processing times.”
Visionular’s pricing structure also includes custom optimisation services and enterprise support. “Our licencing model includes annual licencing based on usage volume, custom optimisation services, and SLAs,” Vijayanagar explains.
MainConcept takes a flexible approach, particularly for cloud-based encoding. “Publisher workflows are no longer server- or hardware-bound. Encoding technology is scaled based on project demand, so our customers rely on usage-based fees, typically per encoding time or per content minute,” says Kramer.
One of the hidden costs of open-source codecs is the technical expertise required to optimise and maintain them. Companies using x265 or SVT-AV1 at scale often need in-house engineers to tweak encoding settings, adjust bitrate targets, and optimise for different device profiles. This is where vendors argue their commercial solutions can reduce operational overhead.
Which Codecs Are Hot Right Now?
Codec adoption is always shifting, but HEVC, AV1, and VVC are the key players right now. “AV1 is seeing rapid adoption, especially from major streaming platforms seeking efficiency gains,” says Vijayanagar. “HEVC continues to be widely used in mobile and broadcast applications, while VVC is still mostly in trials.”
MainConcept takes a slightly different stance, saying HEVC remains the dominant choice today. “If we are talking about streaming publishers, the hottest codec right now is HEVC,” Kramer says. “Basically, every service is looking at improving the user experience or reducing traffic costs by adding this codec. It has wide support on consumer devices, making the switch from AVC relatively smooth.”
Beamr, meanwhile, observes that AVC, despite its age, remains widely used. “Despite AVC being about as far from ‘hot’ as a codec can get, it refuses to die or even give up its market hold,” Shoham notes. However, she believes AV1 hardware acceleration will help drive broader adoption.
What’s the Longer-Term Outlook for HEVC, AV1, and VVC?
Each vendor agrees that HEVC is entrenched, AV1 is gaining ground, and VVC is still waiting for hardware support.
“HEVC maintains stable demand, particularly in mobile and broadcast applications,” according to Vijayanagar. “AV1 demand is growing significantly, driven by streaming platforms. VVC interest is primarily exploratory.”
“HEVC is clearly on the rise and is in the process of adoption in most services,” Kramer says. “VVC is already gaining momentum, which is quite early for a codec that was standardised not so long ago. Its inclusion in next-gen TV standards will accelerate its adoption.”
“For AV1,” Shoham says, “while browser support is great, hardware-accelerated playback on TVs is still not where we would have hoped.”
What’s Slowing Down Codec Adoption?
The biggest challenge facing new codecs is hardware decoder support. Even the most efficient encoding won’t matter if devices can’t decode it efficiently.
Visionular’s Viyajanagar lists three key obstacles:
- Hardware decoder availability
- Initial implementation costs
- Technical expertise requirements
Beamr points to workflow complexity as another challenge. “Integration, calibration, and validation require significant effort, even when implementing new versions of existing codecs,” says Shoham.
MainConcept’s Kramer agrees, adding that missing chip integration is the largest roadblock. “Ultimately, missing integration in chips and consumer device adoption are the biggest obstacles for new codec deployments,” he says.
Final Thoughts
For most streaming platforms, open-source codecs remain a viable option. But when efficiency, performance, and enterprise support become priorities, commercial alternatives can provide real value. With AV1 adoption accelerating, HEVC maintaining its foothold, and VVC slowly gaining interest, the next few years will determine whether new codecs can overcome the hardware and infrastructure barriers that still slow deployment.
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