[COX] H.264 Patent Bomb Fizzles for Korean OTT/IPTV — But Ignoring It …

H.264 Codec / photo by gemini

Via LA (Via Licensing Alliance), which manages H.264 codec patents, recently unveiled a new royalty structure with fees increasing by as much as 45 times, sending shockwaves through the global OTT and IPTV industry. While major overseas streaming companies reacted with alarm, Korean firms face relatively limited immediate impact due to their smaller subscriber bases.

However, if companies continue operating without signing licensing agreements and later face litigation, unpaid royalties from previous years could be claimed retroactively. As subscriber numbers grow, royalty tiers also rise sharply. What looks like a dud today could become a real bomb later.

Via LA’s OTT streaming royalty system is divided into four tiers based on subscriber 규모. Services with fewer than 5 million subscribers pay an annual fee of $100,000, while services with 5–20 million subscribers pay $2.25 million annually. Platforms with 20 million–100 million subscribers pay $3.375 million, and those exceeding 100 million subscribers pay $4.5 million annually. Korea’s TVING (4.96 million MAU) and Wavve (2.54 million MAU) both currently fall into the under-5-million category.

The same applies to IPTV. Under the cable and satellite category, operators with 3–7.5 million subscribers are subject to an annual royalty of $2.5 million. KT Olleh TV, SK Btv, and LG U+ all fall within this range.

Even if the 45-fold increase becomes reality, the direct annual burden for Korean OTT firms would remain around $100,000, while IPTV operators would face roughly $2.5 million each.

Responses among IPTV providers vary significantly.

KT stated that H.264 royalties are divided into “product codec royalties” and “streaming royalties,” explaining that Genie TV currently only uses product codec royalties through its set-top-box-based service. The company added that H.264 licensing costs are already included in the set-top box hardware price.

Regarding mobile applications, KT explained that Genie TV Mobile functions as a companion app and therefore operates under the existing TV service license.

LG U+ said it is the only Korean IPTV provider that has already signed a licensing agreement. The company also noted that costs are primarily borne through set-top box licensing structures, limiting direct financial impact. SK Broadband stated that it only received a single email from a patent holder more than a decade ago and had no further discussions afterward.

Yet a critical structural issue remains.

Via LA’s licensing framework clearly separates Section 1 (codec manufacturing and sales) from Section 2 (streaming services). Under KT’s interpretation, codec use embedded within hardware is covered. However, streaming itself falls under Section 2 as an independent category. Even a companion app could become subject to Section 2 licensing the moment it streams H.264 content. Whether KT’s interpretation ultimately holds legal ground may require future judicial clarification.

OTT platforms are also showing different responses. TVING confirmed it has not signed a separate agreement, while Wavve stated it will observe how larger global companies respond before making a decision. Both are effectively taking a wait-and-see approach.

However, both companies remain unprofitable. As of 2025, TVING recorded an operating loss of approximately KRW 69.8 billion, while Wavve posted a KRW 12.1 billion loss. If retroactive royalty claims materialize, even annual royalties in the low six figures could accumulate into a substantial burden over several years. For companies already struggling to reduce losses, unexpected patent invoices would hardly be welcome.

Via LA told COXNEWS that “streaming services are subject to independent licensing agreements separate from device licenses such as set-top boxes.”

The organization added that “the licensing framework is designed to distribute reasonable royalties across the value chain,” and noted that it had already contacted unlicensed media companies during 2025 to offer opportunities to secure licenses under existing terms.

Via LA’s statement suggests Korean companies may already have received contact from the licensing body. Yet no Korean company has publicly confirmed ongoing negotiations.

Even if the current costs appear manageable, operating services for years without agreements could create major liabilities later. In the event of litigation, companies may not only face current fees but also retroactive claims for previously unpaid royalties. Subscriber growth could also rapidly escalate the royalty burden. Once TVING exceeds 5 million subscribers, its royalty tier would jump to $2.25 million annually.

Via LA’s official licensee list already includes LG U+, Samsung Electronics, LG Electronics, Humax, Netflix, and Google. The dividing line between licensed and unlicensed companies is becoming increasingly clear. It may be too early to assume this is merely a harmless dud.