(Market Pulse) – A key HEVC video codecs royalty hike from $0.20 to $0.24 per unit is about to hit major OEMs in January, impacting companies like HP ($HPQ) and Dell ($DELL) who shipped a combined 25.17 million PCs in Q3 2025. Meanwhile, Synology is ending HEVC support to cut costs and boost efficiency. Investors should expect ripple effects across device pricing, licensing revenue, and user experience.
💰 The Bottom Line
- Winner: Patent pool licensors (Access Advance, VIA Licensing Alliance)
- Loser: PC OEMs ($HPQ, $DELL), professional users
- Key Figure: Royalty increase to $0.24/unit; HP sold 15M+ units, Dell 10M+ in Q3 2025
The Strategic Shift
With the licensing cost for HEVC video codecs rising by 20% in January, several OEMs are disabling codec hardware to manage costs. Synology has preemptively ended HEVC support on its storage hardware platforms, prioritizing efficiency and offloading codec processing to end-user devices. The move is designed to reduce corporate exposure to mounting royalties and streamline operational resource use in high-volume environments. The underlying aim is a margin defense: fewer licensing payments, less server-side processing, and better alignment with where codecs are natively supported (end-user hardware).
TSN Market Analysis: What This Means for Investors
The royalty increase represents material margin pressure for major PC vendors like $HPQ and $DELL who collectively deploy tens of millions of units globally. For every 1 million units shipped, the increase translates to an additional $40,000 in costs. With thin hardware margins, these costs will either be absorbed (hurting operating profit) or passed onto customers (potentially dampening demand). Licensing consortia like Access Advance and VIA Licensing Alliance stand to see healthy revenue growth from the new rates. Meanwhile, vendors offboarding codec support, like Synology, signal a broader industry workaround – expect further shifts in feature sets and potential competitive differentiation in how OEMs handle these added expenses.
The Consumer Cost
End users, especially professionals relying on HEVC for editing and broadcast workflows, are likely to experience disrupted workflows, with certain media features disabled on devices costing $800+—including “Pro” models. Consumer confusion and frustration will increase as laptop features regress or require new workarounds. Device prices may rise as OEMs seek to maintain margins, while access to video features shifts more to software-based or end-user device processing, potentially impacting performance.
Outlook for Q1 2026
Watch for PC OEMs’ Q1 2026 guidance to reflect either margin compression or price increases. Track whether licensing revenue for Access Advance and VIA rises on the back of higher royalty rates. Analysts should scrutinize feature shifts in upcoming PC and NAS product releases—continued codec support rollbacks could become a trend. For investors, monitor whether end-user backlash affects sales volume or brand sentiment for $HPQ, $DELL, and other hardware vendors exposed to these increased costs.
