This is an English translation of an interview conducted in Chinese. See here for the original transcript published by IPR Daily: Original Transcript in Chinese

IPR Daily interviews Dylan Zhou, Senior Vice President of Licensing at Access Advance:

As the video streaming industry accelerates amid the tug of war between a generational shift in technology and patent disputes, a solution that can balance the interests of patent owners and implementers has become a common expectation of the industry. On January 16, 2025, Access Advance announced the launch of the Video Distribution Patent Pool (VDP Pool), attempting to provide a unified framework for codec patent licensing in the field of streaming media. Half a year later, this highly anticipated patent pool welcomed its first group of participants in July and provided breakthrough answers to core issues such as rate design and regional adaptation. IPR Daily was fortunate to have another conversation with Dylan Zhou, Senior Vice President of Licensing at Access Advance, on July 17. We had an in-depth discussion regarding the interim results, industry impact, and future layout of the VDP Pool, and revealed how this project, aimed at solving the difficult issue of patent licensing in streaming media, has gone from blueprint to reality.

IPR Daily: I am pleased to have the opportunity to conduct this follow-up interview with you. It has been nearly six months since our last conversation. Could you please share the latest developments regarding the VDP Pool?

Dylan Zhou: Thank you. I am also very happy to have the opportunity to meet in Beijing and share the progress we have made in the past six months. We first announced the launch of the VDP Pool on January 16, so it’s been exactly six months since then. We are very pleased with the progress that we have made in the last six months. We just announced the first group of licensors and licensees who have joined our VDP Pool on July 1. The first group of licensors includes 31 companies. Many of them are very important companies in the field of video technology, such as ByteDance, Dolby, Kuaishou, JVCKenwood, MediaTek, NTT Docomo, and Tencent, etc. What was particularly interesting was that among them, ByteDance, Kuaishou, NTT Docomo, and Tencent have also joined the patent pool as licensees. Because the participation of licensees is such an important factor in the success of a patent pool, a patent pool with only licensors but no licensees is unsustainable. In terms of the degree of participation of both licensors and licensees, the current progress of the VDP Pool is in line with our expected goals when we first launched this initiative. As a patent pool administrator, our ultimate goal is to provide the market with a solution that is widely accepted by market participants, both licensors and licensees. There is an old Chinese saying that “a journey of a thousand miles begins with a single step.” The announcement of these initial licensors and licensees on July 1 is a very important milestone for us. It shows that we have made important and substantial progress. We are currently communicating with many other patent owners and implementers, and we expect to announce more licensors and licensees joining the pool soon.

IPR Daily: The launch of the VDP Pool is described as a response to the industry’s need for simplified codec licensing. Could you elaborate on the specific market challenges or technological trends that directly motivated the development of this initiative? For instance, is it linked to the growing patent litigation faced by streaming service providers or the slow adoption of next-generation codecs in the market?

Dylan Zhou: Yes, in recent years, the video streaming market has grown rapidly, and the use of video codec technologies is one of the key contributing factors to the growth of this industry. But at the same time, traditionally, content distributors have not assumed the obligation to pay royalties for these key technologies. With the rapid development of this industry, the problems caused by this have become more and more significant: On the one hand, patent holders believe that the booming development of streaming media companies has benefited significantly from the application of video codec technology. They believe that without the support of video codec technology, the large-scale development of the industry would be out of the question, so companies should pay reasonable fees for this. On the other hand, streaming media companies have not had a precedent for paying patent royalties, so it is difficult for them to accept such a demand. This has resulted in more and more litigation in recent years. For example, American companies such as Netflix, Disney, and Amazon have been involved in multiple lawsuits. Due to concerns about litigation, some streaming service providers have slowed down their adoption of next-generation video codec technology (such as VVC). In such an environment, patent owners and implementers who hope to promote the healthy development of this market strongly supported us in developing a creative solution. As the largest patent pool administrator in video codec patent pools, we have accumulated significant experience in the field of hardware patent pools, currently operating video codec patent pools covering about 80% of the patents. We are considered by the industry to be the preferred entity for launching a new solution that can balance the interests of both sides. We believe our solution will help minimize the streaming industry’s concerns about litigation and licensing issues and promote the deployment of next-generation technology and the healthy development of the industry.

IPR Daily: In a previous discussion, you mentioned that licensing uncertainty has hindered the adoption of emerging codecs such as VVC. We also noticed that the VDP Pool has disclosed its royalty structure this time. How does the VDP Pool intend to promote technological advancement and accelerate the adoption of new codecs through a well-designed royalty framework?

Dylan Zhou: We believe that in the long run, as the most advanced video compression standard, VVC will be the best choice for many streaming service providers as hardware support becomes more widespread. In this regard, a very important feature of the VDP Pool rate structure is that the rates are set according to the scale of the licensee’s streaming business and will not change because of which codecs are used or how many. This design may seem simple, but it actually incorporates a large number of complex practical considerations and is an innovative breakthrough of which we are deeply proud.

The patent pool license covers the four most widely used codecs: HEVC, VVC, VP9 and AV1. You can use all of them, some of them, or just one of them, and your rate will not change. This design is a significant breakthrough in promoting new technology adoption. In the process of streaming media service providers transitioning from existing technologies to VVC, they often need to go through a stage of using multiple codecs at the same time. If companies face higher licensing costs or greater licensing complexity due to technology combinations or upgrades, they will inevitably have concerns, potentially delaying the popularization of advanced technologies such as VVC.

Thus, the VDP Pool rate structure ensures that the licensing royalty rates will not become an obstacle for streaming service providers to transition to the codec that is the most advantageous from the technical perspective and most suitable for their business model. It allows them to freely choose according to their technical and business needs, without having to worry about the need to pay additional royalties for using new technologies or multiple technologies as they transition from one generation to another. And because all four are available in a single long-term license, they will not need to worry about negotiating new licenses, or renegotiating rates, as they change the mix of codecs and volume of each codec that they use.

IPR Daily: We understand that a regional difference is applied in the VDP Pool, although it no longer involves a direct fee reduction. Could you explain the royalty model for Region 2 in the VDP Pool and the rationale behind its design?

Dylan Zhou: Yes, the design of the VDP Pool takes into account regional differences through a tiered pricing model. The royalty fee that a licensee needs to pay is determined based on the tier level that corresponds to its scale in terms of its active users and subscribers. However, considering that subscription fees and advertising revenue per user in developed countries are much higher than those in developing countries, we put all the countries and territories globally into Region 1 and Region 2 categories, where Region 1 are mainly developed countries in Europe, America, Japan and Korea, while Region 2 are mainly developing countries. We calculate the number of active users and subscribers in Region 2 countries and territories as 50% of the actual number of users. This prevents companies from being classified into higher payment tiers due to the large number of users in developing countries. For example, if the active user threshold for a certain rate tier is 1 billion, when a company’s 1.5 billion users are all in Region 2, its user base will be calculated as 750 million, thus maintaining the current tier; if these 1.5 billion users are all in Region 1, they will be classified into a higher tier based on the actual number, and thus be subject to a higher licensing fee rate. It is very important to note that this regional difference depends on the location of the user, not the location of the streaming service provider. A Chinese streaming service provider and an American streaming service provider are treated the same. Both companies calculate their number of users in Region 2 at half the rate, and their number of users in Region 1 at the full rate. For example, users of an American company (such as Facebook) in Region 1 (such as USA and Canada) will be calculated based on the actual number, while its users in Region 2 (such as India) will be calculated at 50% of the actual number. In the same way, users of a Chinese company (such as ByteDance) in Region 1 (such as USA and Canada) will be calculated based on the actual number, whiles its users in Region 2 (such as China) will be calculated at 50% of the actual number. This way, the level of royalty paid by these companies is more closely aligned with their actual market position.

We believe that whether it is necessary to introduce regional differences depends on the actual market situation. Since regional differences in the streaming industry can be large and revenue levels vary significantly for both subscription-based and advertising-based models, we believe that the appropriate introduction of regional differences is very important for the wide acceptance of the VDP Pool.

IPR Daily: What is the purpose of introducing the “Royalty Adjustment Ladder” mechanism, and what strategic considerations informed its inclusion?

Dylan Zhou: Generally, when a patent pool launches in a completely new field, there will be relatively more uncertainties in the start-up phase of the patent pool. For example, in the start-up phase, implementers may be unwilling to join because not enough patent holders have joined, but they still need to pay the full royalty. Patent owners may be unwilling to join the patent pool because the patent pool has not received support from enough implementers. This creates a dilemma of “implementers wait and see — patent pool not attractive enough — patent owners hesitate — implementers wait and see even more.” To break this deadlock, we introduced a mechanism that scores each patent holder comprehensively according to various indicators such as the number of patents, enforcement history, and market influence, and adjusts the royalty in proportion when the patent pool has not attracted enough patent holders. This can effectively resolve the concerns of both sides and help the patent pool gain acceptance by implementers and patent holders more quickly. For implementers, the percentage of our royalty rates that will be charged is directly linked to the quality and quantity of patent owners actually included in the patent pool, avoiding the worry of “royalty not matching the value of the patents.” For patent owners, as more licensors join and the total score increases, the patent pool grows and its scale effect and attractiveness increase. This can attract more licensors with more high-quality patents, thus creating a positive cycle. Thanks to this design, our VDP Pool was able to attract many licensors and licensees in just six months. Our current adjustment coefficient has already grown to 74%, and we estimate that the rate adjustment coefficient will reach 100% by the end of the year. In other words, we expect that we will achieve our initial goal of attracting licensors by the end of the year and will charge the full royalty rates that we announced.

IPR Daily: It has been stated that “additional licensors will be announced shortly.” Could you provide insights into the types of industries or enterprises that Access Advance aims to engage in the next phase—for example, hardware manufacturers or regional streaming platforms?

Dylan Zhou: Yes, we are still negotiating with many patent owners and implementers around the world. We have made good progress and hope to announce some of those soon, including both hardware suppliers and streaming service providers. I would like to note that pure hardware manufacturers won’t be licensees of the VDP Pool. But if they have essential patents, they can join as licensors. In addition to ByteDance, Kuaishou, and Tencent, who have already joined the VDP Pool as both licensors and licensees, we are working to open discussions with other Chinese streaming service providers. Currently, the patent pool provides incentives for early licensees, including a 12.5% rate discount for companies that join the pool by the end of 2025. We hope that companies that have not yet engaged with us will respond positively and join the VDP Pool while the incentives are still available.

IPR Daily: We observed that many influential Chinese companies were included among the initial licensors and licensees—a phenomenon rarely seen in previous patent pool formations. What are your thoughts on this trend?

Dylan Zhou: The new VDP Pool is supported by many influential companies from all over the world. The 31 licensors include companies from China, Japan, South Korea, the United States, Canada, the United Kingdom, Germany, and the Netherlands. Of course, the participation of several influential Chinese companies, including ByteDance, Kuaishou, and Tencent, drew a lot of attention. We believe that their participation in a brand-new patent pool as licensors and licensees indicates that Chinese companies have become more holistic in their views on the protection of intellectual property rights and the need to pay for their use. Compared to their historical view, which tended to be more limited to a single perspective, their views are now more multi-dimensional and comprehensive with broad industry consideration. More importantly, it marks their transition from followers to leaders in SEP licensing. They actively participated in building the industry ecosystem. Together with other founding licensors and licensees from all over the world, they have provided valuable input on the design of the patent pool’s rate structure and licensing policy. As direct participants in market competition, they have a deep understanding of what the industry needs and the pain points in practice. Their input was critical in allowing the VDP Pool to launch a solution that truly meets market needs. Here, I would like to express my gratitude to the licensing and intellectual property teams of these Chinese companies. I admire their vision, professionalism, and cooperative spirit throughout the process—maintaining an open attitude to balance the interests of multiple parties, rather than sticking to their own positions. I believe that our successful experience will encourage more Chinese companies to participate actively in global collaborations in the field of intellectual property.

IPR Daily: What are the primary interests these companies seek when joining the pool, and how does Access Advance facilitate a balanced relationship between licensors and licensees throughout this process?

Dylan Zhou: The main interest of these companies is a reasonable solution that can balance the interests of patent owners and implementers. Whether a balance can be achieved depends very much on the formulation of the rate structure. In fact, implementers who are willing to look at this matter rationally know that if the patent pool rate is set too low and cannot attract patent owners to participate, it is useless and cannot solve any problems. On the other hand, patent owners who are willing to look at this matter rationally also understand that if the patent pool rate is set too high, implementers will not be willing to join, which could require establishing rates through litigation – not the optimal approach for obtaining licensing income needed to fund continued innovation. Initially, implementers and patent owners will typically disagree on what constitutes a reasonable rate. In the process of developing the VDP Pool over the past 18 months, our most important role as the patent pool administrator has been to serve as a communication bridge, listening to the views and interests of all parties, and conveying these to all participants through transparent and open communication methods, so that everyone can better understand the positions of other participants. Through this repeated process, everyone gradually approached a more reasonable middle ground and finally reached a rate structure that can be accepted by most patent owners and implementers.

Of course, in addition to setting the royalty at a reasonable level, there are other requirements. The diversity and complexity of the streaming media industry required us to propose brand-new solutions, rather than applying the traditional rate structure of patent pools. In this regard, as the patent pool administrator, we also needed to listen to the opinions of all parties, conduct extensive market research, and not be afraid to propose innovative solutions. We tried a variety of rate structure models, settling on the final rate structure after many adjustments and consultations. This process allowed us to ultimately develop a rate structure that meets the needs of streaming service providers in different regions and business models.

IPR Daily: Access Advance positions the VDP Pool as an “alternative to prevent market fragmentation.” Could you share Access Advance’s long-term vision for the VDP Pool and outline the future strategies that will be implemented to realize this objective?

Dylan Zhou: Yes, we do see that without a patent pool that is widely accepted, the streaming media licensing market will face the risk of fragmentation. In a fragmented licensing market, litigation will become the main way to solve problems, which is quite detrimental to the continuous innovation and market adoption of video codec technology. Based on this, our strategic vision is clear and specific: through continuous efforts, we will attract more licensors and licensees to join the VDP Pool and promote it to become the core solution for video codec patent licensing in the streaming media industry. We hope that through our efforts, we can provide the market with a solution that most patent holders and implementers can accept, and that will promote the healthy development of the entire ecosystem. We will continue to work hard to attract more patent holders to join the pool, and at the same time communicate and negotiate with more streaming media service providers to help them realize that joining the VDP patent pool is the best, most economical, and most efficient choice, both for overall market growth and for their own economic interests.