Digital television market filled with challenge, opportunity

The number of digital terrestrial television (DTT) subscribers worldwide is poised to jump from 36 million at the end of last year to 89 million in 2012, according to a recent report from ABI Research.

According to Michael Arden, author of the report, "Digital Terrestrial and Broadcasting Technologies: The Role of Digital Video in Over-the-Air TV Services," digital terrestrial television holds great promise for broadcasters, including the use of digital sub-channels for additional HD content streams.

In this country, digital television offers some unique opportunities as well, but they aren't without their challenges, Arden said.

HD Technology Update: A majority of early adopters of HD in the United States relied on reception of terrestrial HD transmission because there weren't many other programming sources around. In-Stat puts the number of HDTV owners receiving HD programming over the air at just less than 2 million in the United States, but does not see that number growing substantially now that HD programming is widely available on cable, satellite and IPTV. What do you believe the HD over-the-air audience size is in the United States today and what do you forecast it to be five years from now? What are your reasons?

Michael Arden: ABI hasn't measured the HD over-the-air market in the U.S. I would concur, however, with In-Stat's assertion that it will not grow because of the availability of HD on other video platforms. I might even suggest that it will decline over the next five years. Consumers will want to avoid having to switch from over-the-air signals to their cable/satellite/IPTV service as much as possible, and the digital antenna for receiving HD over-the-air is an item they would probably like to remove from the home.

HDTU: What DTT business models make sense today for U.S. broadcasters, particularly in regard to HD? How does the plethora of other video sources — all of the usual sources plus IPTV, the Web, cell phones and handheld devices — impact the business models for HD DTT?

Michael Arden: DTT will have a limited play in the U.S. Consumer demand is for a broad range of channels — something that DTT will not be able to offer. The market that will opt for DTT service will be underserved markets (either no cable connections or no telco TV service) where consumers will not want to pay for satellite service. We see a couple of DTT initiatives popping up in the U.S. — two of the more developed are in Colorado and Virginia.

One area where DTT might have a play is in partnering with mobile operators to provide broadcast mobile video using DVB-H. The problem here is that although the DVB-T standard for DTT is similar to DVB-H and can use the same equipment spares and leverage operation efficiencies, the U.S. DTT system is using ATSC, which does not create the same efficiencies; however, either the use of an ATSC-friendly mobile-video standard or the switch to DVB-T in the U.S. could create synergies between DTT and mobile video.

HDTU: Samsung recently demonstrated A-VSB transmission to receivers on the go in busses at the 2007 International CES as a way for broadcasters to control their own content when addressing the mobile TV market via their DTV signal. Is this or a similar approach viable for broadcasters, or is it too late, forcing broadcasters to play ball with third parties to reach mobile TV users?

Michael Arden: I think companies that are licensed for broader DTT services (as opposed to broadcasters) have a play. Broadcasters could also get into this market, although an individual broadcaster will not get the same traction as a DTT operator with 20 or 30 channel offerings. If a broadcaster can get its channel picked up on mobile handsets, however, it potentially helps to drive ad revenue — essentially, the argument that the broadcaster is reaching a broader segment of the market.

HDTU: How do you see the HD upgrade/rebuild market for local broadcasters in terms of approaches being taken?

Michael Arden: The move to digital by local broadcasters is allowing them to implement sub-channels on their spectrum. This allows them to provide a standard digital channel plus an HDTV channel plus potentially a specialty-programming channel. These local broadcasters can take advantage of digital video technology to produce their own content, adding value to their business and leveraging their importance with CATV operators that might otherwise ignore local-market programming interests.

HDTU: Some U.S. broadcasters are denying local cable systems the right to carry their HD channels because they are not receiving compensation for the HD programming while the cable operator is charging customers a premium for HD programming. How do you anticipate this retransmission issue will play out in the near and longer terms as local broadcasters increasingly roll out HD channels?

Michael Arden: Local broadcasters really only have leverage when it comes to local content, i.e. news, special-interest programs, etc. When it comes to retransmitting national primetime or daytime broadcasts, the cable operators can always play the card that they'll deal directly with NBC, ABC, CBS, Fox, etc. I think the local broadcasters are going to have to create compelling local content if they want to argue that they deserve some sort of royalty for HD content.

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