The Evolution of Codecs: From H.264 to AV1 and VVC — What Should Operators Choose?

Over the past decade, the video market has undergone a rapid shift from linear TV to flexible IPTV/OTT services, where image quality and delivery efficiency play a crucial role. 

But as 4K and 8K content grows in popularity, libraries expand, and CDN infrastructures face increasing load, operators need to find a balance between traffic costs, computational resources, and user experience. This is why the choice of next generation video codecs and appropriate bitrate reduction technologies are becoming a strategic rather than a purely technical matter.

Video codecs evolution through various encoding standards has highlighted several milestones: the established H.264/AVC, the more advanced HEVC/H.265, the open AV1, and the newest VVC/H.266. 

Each of the video encoding standards was created for specific market conditions, and trying to do an OTT codec comparison often leads to oversimplified conclusions. What’s more important to understand are the tasks operators need to solve today, including optimum 4k & 8k video compression — and what new challenges will arise in the next two to three years.

H.264: A Standard That Still Works

Despite its age, H.264 remains the dominant codec in the mass IPTV segment. The reasons are clear: affordable licensing, maximum compatibility with consumer devices, and low computational requirements. For operators working with SD/HD content, H.264 often remains the most economically justified choice.

However, the growing popularity of UHD content and the expansion of high-density traffic networks make H.264 increasingly inefficient. It requires a significantly higher bitrate to maintain acceptable video quality at low bandwidth, which increases CDN load, raises peak traffic consumption, and reduces service stability during periods of high user activity.

HEVC: A Compromise Between Quality and Accessibility

HEVC emerged as the industry’s logical response to the need for more compact HD and 4K streaming video compression. In practice, the codec reduces bitrate by approximately 40–50% compared to H.264 while preserving comparable image quality. For operators, this means the ability to deliver UHD content without dramatically increasing infrastructure costs.

But HEVC has two barriers. The first involves patent licensing for codecs, with patent pools and royalties remaining an obstacle for large-scale projects. The second is device compatibility issues and support, because although modern set-top boxes and Smart TVs support HEVC by default, budget devices and older models may still have limitations. As a result, operators often implement HEVC in hybrid encoding schemes, maintaining several profiles for different classes of devices.

AV1: A Bet on Openness and Traffic Efficiency

Royalty-free video codecs include AVI, which was also designed  independent of patent pools, making it especially attractive for large OTT platforms. AVI codec for IPTV offers an impressive boost in efficiency: a 25–30% reduction in bitrate compared with HEVC and nearly 50% compared with H.264. This advantage is particularly important for large 4K and 8K catalogs, where even a small percentage of traffic savings translates into significant financial impact.

The main challenge with AV1 is the high computational cost of encoding. For operators using their own transcoders or on-premise solutions, this may require server upgrades. However, the situation is changing quickly, and hardware support for AV1 is appearing in new SoC platforms for IPTV set-top boxes and in most recent Smart TV models. With increasing IPTV codec support, within the next two to three years AV1 is expected to become one of the most widely used codecs in OTT delivery.

VVC/H.266: The Future Standard for 8K and High-Volume IPTV

VVC can be seen as the evolutionary successor to HEVC — offering even higher IPTV video compression efficiency (up to 50% bitrate savings compared with HEVC) and scalability from mobile video to 8K streams. The codec was designed with new use cases in mind: VR content, networks with unstable bandwidth, adaptive bitrate streaming, and graphically rich scenes.

While the industry is understandably getting excited about VVC for streaming, the main obstacle to its adoption is the lack of wide hardware support and the unavoidable patent restrictions. Chipset manufacturers are introducing VVC cautiously, making it a technology of the future for most operators. However, it is already clear that for services focused on premium content, high ARPU, and long-term strategic planning, VVC will become a key element of the roadmap.

What Should IPTV/OTT Operators Choose Today?

Codec selection for IPTV is not a matter of trend but a critical component of service architecture and CDN traffic optimization. Operators with a large installed base of older devices should continue supporting H.264 while gradually expanding HEVC usage for HD/UHD content. For those investing in CDN scalability and long-term efficiency, migration from H.264 to AV1 is becoming the optimal direction, reducing infrastructure load and preparing the service for future market requirements.

If a company aims for a long product lifecycle and sees 8K content as a strategic opportunity, it’s sensible to include VVC in its streaming infrastructure upgrade and development roadmap. This will allow operators to prepare for the arrival of hardware supporting the new standard and build competitive advantages for the years ahead.

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