A codec (coder-decoder) is the compression algorithm that shrinks raw video into a deliverable bitstream and reconstructs it on the device. The codec choice is one of the highest-leverage decisions in OTT: a newer codec delivers the same quality at a lower bitrate, directly cutting the dominant egress cost, but only on devices that can decode it.
That tension - efficiency versus device support - is why platforms run several codecs at once: H.264 for universal reach, HEVC and AV1 for efficiency on capable devices, with VVC emerging. Codecs also differ in licensing cost and encoding complexity, so codec strategy is as much a business and compatibility decision as a technical one.
