h265 has about 20% lower bitrate than h264 at a very similar perceptible quality, but encoding several variants (adaptive streaming) quickly becomes more taxing on the hardware, and support for decoding h264 in hardware is both more ubiquitous and less expensive. As a concrete example, the 2018 generation of Amazon Fire TV sticks supports h265 but gets really hot, so when an adaptive stream offers both h264 and h265, the Fire TV picks the former. We were experimenting with detecting Fire TV serverside to give it a h265-only HLS manifest (the cost savings on the CDN would be sweet), but ultimately decided against it - the device manufacturer probably had a legitimate reason, be it stability or longevity.
I don't quite understand the industry push for AV1. I appreciate that it's patent-unencumbered, but it makes very little sense from business perspective, as you still need to support h264 and/or h265 for devices that can't decode av1 in hardware (and let's agree that forcing software decoding for video should be criminal). So you add a third codec variant (across several quality tiers) to your stack, cost per minute (encode, storage) goes up, engineering/QA effort goes up... Where's the value? Hence my original question, is AV1 really that much better to justify all that?