Well... yeah, that's the crux of it.

But the patented part is treating each channel separately; the actual compression algorithm isn't at issue (which, in Red's case, is JPEG2000).

That said, as soon as you get into colorspace conversions or color sampling conversions (like YUV, etc), you're baking in choices and dealing with quantization and roundoff errors. If you want the most pristine image possible for dealing with it in post, you want the raw photosite information. And if you want that, without deBayering (which introduces those same errors!), you get to pay Red a royalty check.

I don't make the rules, I'm just pointing out what the stakes are here. Yeah, it's pretty fundamental and obvious now, but at the time no one was selling a professional video camera with a single chip for that price. It was a different world.