I'm making a service for indie filmmakers to self distribute films and this has been a big pickle. I was making an encoder for them to download using ffmpeg but then realized I may have wasted my time because of the licensing of h264. So the problem became: do I take the cost and encode their video or do I let them send the video prencoded for me. I had assumed that if they had encoding software that they have alread…
Whoever handles the video distribution (you or your customers) also needs to license the codec. This too is free or cheap. It could all change in the future, but who knows if that will happen.
Personally, I'd be more worried about other parts of the encoding chain. What format are you using? MP4 requires a license. What audio codec? Both AAC and MP3 require a license, and they're more expensive out of the gate. And what about decoding inputs? You need to license decoders for whatever input you accept.
[1] http://www.mpegla.com/main/programs/AVC/Documents/AVC_TermsS...