The future of DTV

By CRAIG BIRKMAIER
published

The future of digital television is changing, along with the climate, the global economy and global politics. According to Douglas Adams, the author of “The Hitchhiker's Guide to the Galaxy,” 42 is the answer to “life, the universe and everything.” It has been 42 years since I graduated from Nova High School, where I was infected by this thing we call television.

Perhaps the most significant change I have witnessed in all of these years is the pervasive — some might even say perverse — influence that the mass media has had on our culture. When TV came onto the scene, localism had real meaning. We shopped mostly in local mom-and-pop stores, ate in one-of-a-kind restaurants and drank beer from nearby breweries in local pubs. Actually, beer provides an excellent example of the changes that have taken place in our culture, in large measure through the mass appeal of television.

Prior to the Civil War, beer production and consumption was a local affair. After the Civil War, the production of beer became one of America's largest growth industries. In 1915, there were 1345 breweries producing 59.9 million barrels of beer each year. (See “A Concise History of America's Brewing Industry” in “Web links.”) Then prohibition turned off the taps.

It took decades to rebuild the industry after prohibition. By 1945, as the war ended and television was set to burst upon the scene, there were 468 breweries producing 86.6 million barrels per year. Thanks to TV, this picture changed dramatically.

An article on BeerHistory.com describes the role that television played in the consolidation of the U.S. beer industry: “With National Prohibition still fresh in memory, brewers were initially wary of peddling their beers on the air … But early apprehension was soon overtaken by the realization that television offered beer makers something tremendously valuable and unique: the ability to target the beer drinker right at the barstool. The American tavern, after all, was the first home of television. In Chicago, for example, taverns accounted for half of all sales of television sets in 1947. Had any tavern keeper initially doubted the revolutionary importance of TV to his trade, he was surely converted after the 1947 World Series. Telecasts of the seven games between the Dodgers and the Yankees made for standing-room-only crowds in taverns throughout New York City.”

Bud-wei-ser

By 1980, there were only 101 breweries in the United States producing 188.4 million barrels of beer each year. Three companies — Anheuser-Busch, Miller and Coors — dominated the American beer scene, and their TV advertising wars became famous. Miller built a franchise on “Great Taste … Less Filling.” Coors became legendary thanks to the movie “Smokey and the Bandit.” And Budweiser turned TV ads into content that was, and still is, more entertaining than most of the programs that it sponsors. (Do people really watch the Super Bowl for the game?)

But these huge national brands did something perverse to beer; they eliminated the content. Highly drinkable, but flavorful lagers gave way to light beers; ales all but disappeared.

Meanwhile TV helped homogenize the rest of our culture. National fast food and restaurant chains largely displaced the mom-and-pop operations. The same thing happened to retailers and grocery stores. So much for the rich cultural difference that gave each state and city its unique character.

Then, something interesting started to happen to TV and beer. In the 1980s, cable began to compete with over-the-air broadcasters. The big three television networks became the big four, and Time Warner led the rush to niche content by creating a range of cable TV channels focused on special interests and demographic groups. Consumers voted for program choice, and those ugly outdoor TV antennas started to disappear.

In 1995, the Budweiser frogs Super Bowl commercial became one of the most popular beer ads in history. (See “Web links.”)

At the same time cable TV began to take over the distribution of TV content, the U.S. craft beer industry experienced a rebirth with the growth of Anchor Steam and the launch of Sierra Nevada and The Boston Beer Company (Samuel Adams). A new generation of Americans discovered real beer, and the craft brewing industry began to grow.

Today, the craft beer segment is growing at an annual rate of 17 percent. The large breweries are barely growing at all. In 2007, there were 1420 craft breweries, 20 large noncraft breweries and 23 other noncraft breweries.

Miller and Coors merged and were then purchased by Canada's Molson, which was acquired by international conglomerate SAB. Recently, the stockholders of Anheuser-Busch approved the sale of the largest U.S. brewer to Belgium's In-Bev.

So long, and thanks for all the fish

The fourth book in the Hitchhikers Guide series, “So Long and Thanks for All the Fish,” set the stage for the 2005 movie remake of the BBC radio series. In the book, man is not the most intelligent creature on Earth. We rank third. Second are the dolphins, who try to warn us of the pending obliteration of Earth for a hyperspatial expressway. To fully understand this, watch the opening of the Hitchhiker's Guide movie on YouTube. (See “Web links.”)

For more than a decade, I have been warning the broadcast industry of the pending obliteration of its franchise at the hands of a real world hyperspatial expressway — the Internet. In the United States, about 10 billion videos are viewed monthly via the Internet. Every minute, 13 hours of content is uploaded to YouTube.

This has not been lost on the media conglomerates that provide the high-value content that has allowed over-the-air broadcasting to remain viable in a world dominated by the multichannel distribution oligopoly — cable and DBS. Virtually all prime-time TV content can now be accessed online, on demand. What's more, the commercial load in the online versions is substantially lower than that in the broadcast versions. Or viewers can buy commercial-free versions of these programs from iTunes or Amazon.

The real problem with over-the-air TV is that appointment TV is all but dead. Program adjacency, once the foundation of prime-time scheduling, is now meaningless in a world dominated by channel surfing and Web surfing. Broadcasters can still pull in large audiences for live events, but some of the most important content franchises are beginning to abandon broadcast TV in favor of cable, which uses the revenue from monthly subscriber fees to outbid the broadcast networks for high value content. The College Football Bowl Championship Series will move to ESPN in 2011.

Unfortunately, most broadcasters have done little to prepare themselves for the day that they move into third place in the content distribution chain behind the multichannel services and the Internet. If it makes you feel better, the multichannel services are not likely to survive the real DTV transition either.

On-demand and downloaded content via the Internet is where the future of DTV lies. Cable may remain in the game as a provider of broadband pipes, but it and the telcos will face new competition in this area. That competition may turn the TV white spaces into the next big digital broadcast medium.

The most important attribute of OTA broadcasting is that it is a wireless medium. In a world where wireless communications has all but eliminated the need for a wired telephones, one can see a large opportunity for a modernized wireless digital content delivery infrastructure. The mobile DTV standard, currently nearing finalization by the ATSC, offers a glimmer of hope to TV broadcasters. But there are many obstacles along this path to the future.

First and foremost is access to content. Simulcasting of the primary programming of a station is not likely to grow the audience, and there are many unanswered questions about the rights to carry this content in a mobile service. Live sports could be a significant mobile TV franchise, but the economics may not work out for delivery of this content as an advertiser supported free-to-air service. Broadcasters could focus on the creation of local content; however, economic viability is tenuous here as well.

The most promising aspect of the transition to Internet-based DTV is the opportunity for the craft of content creation to flourish once again, just as the craft of brewing has been revitalized in recent years. YouTube relies heavily upon content created by independent producers; you could call it the mom-and-pop video business. As we shift to search engines to find content of interest, the playing field will be leveled a bit in favor of independent producers, who are now being squeezed out by the big media conglomerates. This is already happening with music; video can't be too far behind.

My 42 years around television has been an incredible experience. With 30 consecutive NAB conventions under my belt, it's time to try something new. But retirement is not an option. So, I am embarking on a new career.

In January, The Swamphead Brewery will begin the production of high-quality craft beers in Gainesville, FL. As the head brewer, I look forward to the challenges of building a new business creating beers filled with compelling content.

For those who want to be part of the future of digital television, I suggest a similar path. To borrow a phrase from our mass media pop culture: It's the content, stupid!

Craig Birkmaier is a technology consultant at Pcube Labs.

I would like to share with you a quick story that many of you may already know.

A small group of innovators introduce a new technology that has the ability to entertain and engage people on a massive scale. Advertisers willing to risk money on this untested platform are hard to come by. Content owners are reluctant to embrace it for fear of alienating their existing audiences. And experts hail this new platform as signaling the demise of another.

As some of you may have guessed, this is not only the story of YouTube. The year is 1941, nearly 70 years ago, and CBS has just launched its new television network amidst cries that it means the death of radio.

From the printing press to the blog, from the record player to the iPod, and from the stage to the home theater, the way content has been produced, distributed and consumed in the world is constantly evolving.
— YouTube cofounder Chad Hurley
speaking at the MIPCOM Conference
in Cannes, France, Oct. 15, 2008

Web links

Send questions and comments to: craig.birkmaier@penton.com

CRAIG BIRKMAIER