When the ATSC standard was adopted in 1996 who could have foreseen that 10 years later the transition to digital broadcasting would be a driving force in the transformation of the entire media business? Multiplatform media consumption in the digital age is disrupting the TV and media industry.
In 1996, cable penetration was steadily eroding OTA audience numbers and DBS was virtually non-existent. HDTV was about offering a unique technology that would slow OTA broadcasting’s loss of viewers to cable. Remember, the ATSC DTV standard did not include QAM modulation specifications. The consumer Internet had just taken off with the introduction of Netscape and Windows 95. Mobile phones weren’t widely adopted by the masses. Pirating media was primarily limited to VHS recording and being analog, the quality was degraded. The music business was not very concerned about analog cassette copying of content.
Fast forward to 2006. Depending on whose data you cite, OTA viewership is less than 15 percent, while cable is dominant at more than 60 percent but experiencing churn to DBS. HDTV is finally taking off. For the first time DTV sales will surpass analog sales this year. With the establishment of a hard date, the long awaited NTSC shutdown is at hand.
The new digital age embraces multiplatform distribution. As pipes to the home get bigger, broadcasting quality content over the Internet (IPTV) becomes practical and profitable. Delivery of TV content to cell phones, PDAs and iPods is accelerating. Novel delivery methods, such as HDTV using broadband over power lines (BPL), are on the horizon.
Constant amid the disruption
Amid this transitional chaos, the media lifecycle remains constant. Very simply put, content must be created, assembled, distributed and consumed. This will never change. The television media lifecycle was once relatively straightforward: cameras or telecine sources, PCRs and MCRs, OTA transmission and a TV receiver. Today, with the digital communications revolution, each phase of the cycle has broadened, expanded and become exponentially more complex. The challenge is to make the creation/assembly/distribution process efficient for consumption on any consumer device.
With 100 channels or more available, and so many complaining that there is very little worth watching, compelling content is key. Storytelling must be adapted for the consumption device. The Super Bowl will always be a mass audience event. But a viewer may want to watch the pre-game show on a cell phone while riding on a train. Will anyone ever want to watch a movie on a 2.5in LCD screen? (Maybe on that same train!) Specialized content is now being produced for cell phone delivery as well as customized for emerging consumption devices.
Will cable and DBS subscriptions be replaced with an on-demand, pay-as-you-go content consumption business model? Personalized a la carte is a possibility. It may be less expensive and more lifestyle efficient for viewers to buy what they want the day after it is broadcast than pay a monthly fee for programming they will never consume. An emerging plethora of cable and DBS tiers and services increasingly allows viewers to select and pay for only what they want.
It’s all about $$$
Business models must be flexible, built on a solid long-term foundation, but be able to adapt to new revenue opportunities generated by new technologies, new distribution channels and location consumption preferences. Forward looking media companies and content providers see these as new revenue sources. However, care must be taken not to destroy existing, proven revenue streams in the process.
Is the business model evolving from free or subscription-based OTA cable and DBS to an a la carte, tiered, on-demand or pay-per-view value proposition? Where does local broadcasting fit in? Is there a role and business model for SD multicasting? Will the success of USDTV offering cable channels over the air be a function of the content mix? Time shifting, ad-skipping PVRs threaten broadcasting’s fundamental revenue stream. Thirty-second spot advertising has little choice but to remain agile and adapt to emerging new consumption platform formats and opportunities.
Commercials on demand, product placement (such as virtual billboards) and targeted advertising promises to increase return on ad dollars. Interactive DTV will usher in transactions over interactive TV (T-commerce).
Some media conglomerates have re-organized their ad sales groups. Using an integrated marketing strategy, advertising is sold in customized packages across all relevant platforms for a particular targeted demographic. This provides the advertiser with the capability to reach consumers with a consistently branded on target message.
Some would argue that IPTV has the inside track on interactivity and other potentially transactional media. The required applications and technology are already in place on the Internet. Meanwhile, OTA and DBS are trying to solve the back channel problem while cable systems, as a result of going into the Internet broadband business, are well on the way to interactivity.
X-platform media lifecycle
Disruptive transition is profoundly transforming the broadcast operations center infrastructure. In previous T2D newsletters, a four-layer model of a transitioned BOC has been discussed. The foundation is the physical layer, where “essence” exists in the real-time domain. However, file-based nonlinear production, content distribution and storage necessitate the integration of IT technologies and the development of media networks, application and security layers.
The multiplatform media lifecycle can be broken down into four phases:
A single NTSC production based process has given way to multiple format sources. Consider a news show that uses citizen journalists providing HDV, or Internet video, as well as professional SD 480i for an HD (720p or 1080i) news broadcast. Sophisticated graphics and animations as well as 5.1 surround sound are required for aesthetically compelling content. Set designs and show performances have escalated to the high production values of an immersive theatrical event.
The assembly of content elements for presentation and distribution is becoming increasingly complex. MPEG transport stream affiliate logo insertion in the compressed domain is technologically difficult. Commercial insertion requires digital splicing (DPI). An infrastructure that supports iTV, eTV, gaming, product placement, and targeted, personalized features requires new technology and production techniques. With production facilities and processes being spread across the country and around the world, new methods of distributed real time collaborative capabilities are being developed.
Distribution has expanded to include every conceivable delivery platform. Produce once and distribute everywhere is the mantra. This will require an agile BOC infrastructure where format conversions, compression, packetization and modulation occur as background processes, transparently conscious via infrastructure design of the distribution channel.
Networked home media has accustomed consumers to getting what they want, where they want, when they want it. Transparent transcoding of content format in the home network must be facilitated. The pampered consumer is not going to run conversion programs. And of course, “I” should be able to exercise my “fair use” rights to copy content. Creator’s rights must be protected across platforms in the digital home network.
The rate of acceleration is accelerating!
The rate of change of all aspects of the broadcast industry, business, content and technology, is changing at an increasing rate. In fact, the rate of acceleration of the transition is accelerating. A positive third derivative! The scope has expanded beyond solely TV. It may be a decade before the disruption stabilizes. How do broadcasters adapt?
Disruptive transition of this magnitude challenges broadcasters to insure that they are not backed into a corner. All potential revenue models must be anticipated. It is not a question of implementing IPTV, content download capability or targeted advertising, but how to engineer the infrastructure, production processes and distribution methodologies to optimize the efficiency of the media lifecycle, minimize cost and time, create the most compelling content and thereby derive maximum profit.
At the SBE BosCon event last fall, Mark Richter of the ATSC discussed the need for an ATSC Broadcast Lab similar to CableLabs. If supported by industry vendors and broadcasters, the lab would facilitate the development and testing of ATSC standards-based equipment and feature results in improved professional and consumer device compatibility and interoperability.
Over the next year this newsletter will discuss various aspects of the four phases of the multiplatform media lifecycle with respect to the four infrastructure layers. T2D will strive to bring the big picture into focus and shed light on how this affects the broadcast industry as technologies merge, platforms multiply and the audience is increasingly in control of a personalized media experience.