MPEG-4 is about to integrate a new and revolutionary Codec that could be able to further increase the competitive advantage that the standard already has in relation to the competition.
The new format, called H.264, developed by a consortium that brings together different American and European realities, has the essential advantage of being able to substantially compress the movies without any loss of quality. Tests carried out using this type of Codec would have demonstrated the ability to transmit movies in digital quality equal to that of DVD with only 1 Mbps bandwidth. On average, a movie can be 33% smaller using H.264 compression
If the premises of H.264 are maintained, its adoption could mean for cable network operators but also for satellite transmissions the possibility of sending more data and therefore channels using the same band, consequently reducing costs.
The only limiting factor of H.264 is its imperfect compatibility with current standards and the need to have more powerful hardware available due to the superior complexity during coding compared to the old MPEG-2 and also MPEG-4.
These obstacles, however, do not seem to scare the consortium that manages the licensing rights of MPEG technologies. According to most observers, in fact, rewriting the software to make it work even with H.264 is not a particularly complex task and the power of the hardware currently on the market, in most cases, more than enough to handle even movies compressed with the new codec. By the end of the year, the codec could become an integral part of the standards that make up MPEG 4
The commercial prospects of H.264 are also affecting Microsoft, which has placed a representative on the committee that oversees its standardization.