[opendtv] Re: Let them eat cake (and ATSC while they're at it)

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Tue, 17 May 2005 08:12:46 -0400

At 2:25 PM -0400 5/16/05, John Shutt wrote:
>Yes, that is where the viewers are, but why?  It's a chicken-and-egg thing.
>Viewers have migrated to DBS and cable for two reasons:  Variety and
>consistent reception.
>Until OTA does something to address either or both of those issues, they
>will continue to lose OTA viewership.  Maintaining a 'challenging' digital
>standard doesn't address reception issues, and maintaining NTSC does not
>address reception or variety issues.

You are right on the money with respect to the current situation with 
multi-channel services versus the OTA service. I would go a step 
further and say that it was reception, not programming variety that 
started the long, slow decline in the broadcast audience. Once enough 
consumers were hooked to cable it was much easier to get them hooked 
on more content, and thing have been spiraling down ever since.


Many consumers have little love for any of the companies bringing TV 
into their homes. consumers are growing tired of the never ending 
rate increases, and having to pay for a bunch of stuff they do not 
watch. And many consumers, especially parents, are beginning to 
question the impact that some of the content available today is 
having on their families.

So while it is easy to dump on broadcasters for allowing their 
franchise to become less and less relevant, it would also be fair to 
say that there is a high level of disenchantment with the 
multi-channel services, and a growing awareness that a handful of 
companies are calling the shots with respect to what we see and what 
we pay, regardless of the delivery mechanism.

The stage is set for some fundamental changes in the way people consume media.

Yesterday the Supreme Court overturned laws in New York and Michigan 
that prohibit residents from shipping wine back into these states 
(typically when visiting out of state vineyards), or from buying wine 
from out of state vineyards and Internet distributors. The court 
ruled that it is anti-competitive to allow people to have wine 
shipped to them from in-state sources, while blocking out of state 
competition. The decision is being hailed as the most important 
development in the wine industry since the corkscrew.

Small vineyards will now have the opportunity to develop direct 
relationships with consumers throughout the country (unless a state 
bans all forms of alcohol shipment to consumers). While this channel 
may only account for a few percent of total wine sales, that may be 
all that is needed to allow small vineyards to not only survive, but 
to thrive.

What has this got to do with TV?

The media moguls are pulling out all of the stops to protect their 
walled gardens. They rely upon government regulations (and anti-trust 
exemptions) to protect their empire. To further explain, most of the 
major league sports franchises that provide television content 
operate under anti-trust exemptions, and there are still parallels in 
the way the music industry controls its talent base.

Imagine having a black-out of American Idol because not enough people 
in your market voted this week. Actually I kind of like this idea...

While there is certainly more content variety today than 30 years 
ago, the reality is that there is much more content being created 
than we get the opportunity to see. Small independent producers don't 
stand a chance with the current system because they cannot access 
broad distribution.

There are some bright spots. First VHS, and now DVD have provided a 
mechanism to go direct to the consumer. While this is good news for 
the small independent producer, it is not such good news for 
broadcasters and the multi-channel operators. Many consumers are 
waiting to get their favorite shows on DVD (without commercials), 
rather than watching them when broadcast, or paying a premium to a 
multi-channel service.

I cancelled HBO years ago because I did not like the influence it was 
having on my kids, who would often watch the same trash multiple 
times in a month. From time to time Cox cable would provide "free" 
HBO as a promotion, and this is how I first saw episodes of The 
Sapranos and Sex in The City. Now I can get entire seasons of these 
shows on DVD without having to subscribe to HBO.

The walled gardens have been breached, and the small gaps in these 
walls are going to continue to grow in size as alternative forms of 
distribution gain a foothold. The Internet may be the salvation of 
small vineyards that produce some of the best wine in the U.S. it may 
also do the same for independent media producers.

To focus on the wireless advantage for broadcasters misses the point, 
although I also believe it is critical to the future of broadcasting. 
The real issue is what will media distribution look like in a decade? 
The old - worn out - model of trying to get people to sit down at a 
specific time to watch a specific show is facing major challenges. 
People will arrange their schedules to view live events - especially 
sports - but they are less inclined to do so for generic 
entertainment that is pre-produced and viewable at ANY time. Tivo's 
and DVDs threaten the entire walled garden business model.

On the plus side, the ability to deliver TV broadcasts to portable 
and mobile receivers is an important advantage for SOME forms of 
content. Any live event coverage as well as news and weather will 
generate an audience among those who cannot park themselves in front 
of a fixed TV attached to an antenna. Feature length programming will 
be less of a draw because people on the move typically don't have the 
time to dedicate to watching a story, and DVD based car theater 
systems take care of the kids on long trips.

What is not being considered in this equation is all of the new 
services that a broadcasters could offer by delivering bits to things 
that move. Broadcasters could not exist without the support of local 
commerce - they now have the tools needed to significantly enhance 
local commerce in ways that are not possible by inserting commercials 
into television programming.

Likewise, many of these services will also be of value to fixed receivers.

And then there is the ability to deliver video as files instead of 
channels.  This puts the shoe on the other foot. Instead of building 
walls to control what consumers can see, consumers can build walls to 
control what they do and do not want to see, and use intelligent 
filters to search for content that may appeal to their interests.

The bottom line for broadcasters is simple. They need a reliable 
delivery system to reach both fixed and portable/mobile receivers 
with virtually anything that can be packaged as bits. Then they need 
to focus on serving the needs of consumers in their markets; not just 
the big niches that they serve today with popular TV programming, but 
the little niches that can be served profitably with a system that 
delivers bits to local cache, whether it is in the home, a portable 
device, or a vehicle.

>Why have most of our HD viewers migrated to Cable?  More HD content.  What
>is the one thing that a broadcaster can offer that cable or DBS cannot?
>Delivery of programming without wires.

I take exception to the characterization that HD viewers are 
migrating to cable. They were ALREADY there. This is just logical. 
Like most new technologies, HD started out as a premium niche. The 
folks who were early adopters were already cable subscribers for the 
most part. And it is logical that the multi-channel systems are 
responding to the needs of their most affluent subscribers with more 
HD content - much of which is not stuffed full of ads.

>We can deliver HD to Comcast's cable head end with a direct feed, just as we
>currently deliver NTSC via a direct feed.  We could, given the proper tools,
>deliver multiple SD and an HD over the air.  The HD delivered to cable could
>have a higher bitrate than the HD delivered over the air.  The multiple SD
>delivered could be aimed at the DVB-H users as well as those few holdouts
>that willingly spend $2,000 on an HD display yet refuse to shell out the $50
>per month for HD content.

You could also deliver PBS programming direct to consumers via 
broadband. There is NO reason why a local broadcasters cannot use 
EVERY channel of distribution to reach ANY potential consumer in 
their markets. What is critical is to make all of this seamless, with 
proper branding so that the consumer knows who they are getting the 
content from regardless of the pipe that is being used. And all of 
the opportunities for cross promotion are there too.

>In my opinion, broadcasters need to remember that their one advantage in
>this world is wireless delivery, and make sure that advantage remains
>viable.  Currently, it is not with ATSC.

I just finished my June column for BE yesterday. The subject is 
delivering video via broadband. This can be as mundane as using 
broadband pipes for back haul,  and as adventurous as the stiff I 
outlined above. The title of that column is "Close to the Edge."

The REAL advantage of broadcasters is that they are local...close to 
the customer. This is an advantage they has rarely been exploited.

One radio station in our market (an FM talker with Rush and other 
conservative shows) went wall-to-wall with local news and weather 
coverage during the hurricanes last fall. They won awards for their 
coverage, but the biggest reward was that just about everyone in town 
tuned in and some stuck around, propelling them to the top of the 
local rating books. And even more important, when the power lines and 
cables came down, they were still there serving battery operated 
portable radios.

The future of broadcasting is intrinsically related to the ability to 
serve the needs of local markets. This is why I am so frustrated with 
Doug and Bert, who seem to think that the ability to receive 
out-of-market signals is a major benefit.

Reaching people on the move is certainly an important part of the 
equation, but it is just one component. Reaching local markets via 
cable, DBS, and the Internet will be equally important, and 
broadcasters are well positioned - close to the edge - to become an 
important source of bits.


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