But probably they aren't really 100% sure their patents will hold up against the scale of legal challenge that could be brought down by Google. Of course, they have 1700 of them so they could keep the legal trouble going indefinitely.

It would certainly be easier for them if the Google and the world continued to just cut them checks for ancient technology. But it will never be to their advantage to admit the extent to which they are bluffing and they probably don't even know themselves.

Video has been digitized and compressed for how many decades now?

Weren't patents supposed to expire at some point?