The owner of Antennas Direct turned a hobby into a $10 million-a-year business supplying TV antennas to the steadily increasing number of consumers who are dropping cable for free over-the-air TV. He's bullish on OTA and can't understand why the FCC now wants "to kill it in the crib."
Why TV Antennas Are Sexy Again
Richard Schneider is no broadcaster, but he may be the most ardent champion of over-the-air TV in the country.
And it shouldn’t come as a surprise. He makes and sells TV antennas. For broadcasters, the ability to beam TV directly to viewers without wires is an edge. For Schneider, it’s everything.
Seven years ago, his hobby of building TV antennas “spun out of control” and into a business. Today, he says, his St. Louis-based Antennas Direct, has $10 million in annual revenue and is growing fast, thanks to America’s rediscovery of over-the-air broadcasting and what a bargain it is.
In this interview with TVNewsCheck, Schneider explains why the TV antenna is the “hottest selling device” for digital video and wonders why the FCC is bent on “committing infanticide” by taking spectrum away from broadcasters.
An edited transcript:
How are sales going?
It’s actually accelerating. In fact, November was the best month in the history of our company. We topped the amount of units shipped in June of 2009 running up to the digital transition.
How many units do you expect to sell this year?
We will probably be just around the half-million mark. We started online, but now sell mostly through retailers, including big box stories like Best Buy and CostCo.
That’s a lot of antennas.
My goal when I started this was to sell maybe 20 units a month so I could pay for my home theatre hobby. It would be a self-funding hobby and my wife wouldn’t find out how much I was spending on an HDTV projector.
And what do you think is going to happen next year?
We have some other large nationally known retailers that are evaluating our products. If even a percentage of those come through, we think we can grow another 30% for next year.
That’s another 150,000 units.
What’s the overall market for antennas?
We think the antenna market is anywhere from about four-and-a-half million to six million units a year and we believe that’s growing around 20%-25% percent annually. In dollars, we estimate the market to be roughly $250 million in annual sales in the U.S. We’ll do around $10 million.
And you think that that will continue.
Yes, because here’s where our opportunity is: 80% of the population doesn’t even know you can get over-the-air HDTV. You tell people and they look at you like you’re crazy: “You’re saying I can actually get free HDTV from an antenna?” It’s shocking to a lot of people. So we see this as a great opportunity. Our biggest obstacle isn’t other antenna manufacturers. It’s the fact that most people aren’t even aware that this is an option.
Who is the biggest player in this space?
Well, probably in terms of unit volume, I would say Audiovox . It sells under the names of RCA and Terk. They have a fairly good selection of indoor antennas.
Are there places where antennas are selling faster than the average?
Areas where there’s lots of multicasting are helping to drive a lot of the sales. That’s mostly large markets on the coasts, Los Angeles and the Northeast. As much as I hate to say this, HDTV is secondary to multicasting in driving sales. And in these areas, you can not only get a lot from your market, but potentially from neighboring markets.
What can you tell me about the people buying these antennas?
There’s a perception that it’s the elderly or the indigent that are buying them. But we’re seeing quite a big growth over the last 18 months among younger people, meaning people in their 20s or 30s. They’re using it as a supplement to pay TV or, more frequently lately, as a supplement to broadband.
What they call over-the-top TV?
Yes. We were actually nervous when the Hulu service started, thinking, oh, this is going to be another kind of competitor for us. But what’s funny is, as soon as that service started coming into its own, our phone lines started ringing with a decidedly younger group of people saying, hey, I have decided to cancel my pay television, I am getting what I want from Hulu or Netflix in terms of premium content and I want to get my local live content from an antenna. We noticed this about 18 months ago. People see digital TV as a new technology, a new service. It’s really now becoming a viable supplement to the broadband offerings. It’s given people the rationale they need to cancel pay television.
Let’s talk about the technology a little. Is there anything really new in this space or are we just marketing different sizes for different places?
Antenna design has been a lost art. There really hadn’t been much done in over-the-air antenna design in 35 years. But what we now have is new testing and simulation tools and analytic devices that didn’t exist even three years ago. So we can actually now run through thousands and thousands of iterations of geometries fairly quickly, a process that would have taken months, if not years, 25 years ago. A lot of this has come out of the defense industry.
So, there have been a lot of advancements. We have been able to make antennas much smaller than before and much more reliable, more resistant to interference and much more efficient than something that might have come out five or 10 years ago.
They’ve also been herding stations into the upper VHF and UHF bands. That has made our job a lot easier because when you’re designing antennas for a narrower set of frequencies, you can make them more effective and more powerful and also have better luck in rejecting interference.
What about the VHF band? Is there anything that can be done to improve performance there?
We came up with a new antenna for high V called the ClearStream5. It’s a loop in front of a wire reflector tuned for chs. 7-13. We have had fairly good results with that. Low V is actually a lost cause. We do have a couple of antennas for low V, but there are so many obstacles on the low V band that there’s really nothing we as an antenna manufacturer can really do to overcome that.
As a matter a fact, we’re developing some new amplifiers with filters that actually block out low V and we’re finding we get much better noise performance and overload resistance. We’re thinking of maybe extending that not just to all the amplifiers, but maybe even to the antennas themselves, filtering out anything below ch. 7. We’re finding that we’re delivering a lot less interference and garbage to the tuner by doing that.
What do you think of the FCC chairman’s push to shift 40% of TV spectrum to wireless broadband?
The FCC is about 180 degrees from what is going on in the marketplace. We’re kind of baffled at why they’re committing infanticide. The digital transition was one of the most successful initiatives undertaken by the government and now they’re going to kill it in the crib.
They are completely out of step with the realities of the marketplace. We visited the FCC and we were met with a lot of skepticism when we explained how popular over-the-air was. We invited them to come out to our warehouse and see all of the shipments that are leaving the dock. One staffer mentioned, “Well, I don’t watch over the air” and his peer group doesn’t either, implying no one in the country does, as if they’re representative of the country.
Do you think TV stations do enough to promote over-the-air TV?
No, I really don’t. A handful do get it, but I think there’s a number of them that don’t realize what percentage of their viewership actually does get their signal over the air. That number has been undercounted for years. We have gone to some stations, partnered with them and have handed out antennas to their viewers. Their station managers were surprised at the turnouts that they have gotten. Sometimes thousands and thousands of people have shown up for a chance to get 100 antennas. It’s opened up some eyes among station managers: “Wow, I didn’t realize that this many people weren’t getting our signal over the air.”
You know that broadcasters now have an incentive not to drive viewers to antennas because they get a share of the cable money through retransmission consent.
Yes, we’re aware of that and so we’re not trashing the cable providers. But there is an inexorable movement away from pay television to broadband. This shift is happening regardless of whether we promote over the air or not and some stations do appreciate having a good percentage of their viewers — a healthy percentage of their viewers — over the air. It gives them a little bit better contract position when carriage fee disputes go on.
How would you like to sum this up?
What we’re trying to do is overcome the perception that over the air is in a state of decline. People are surprised that antenna sales have accelerated since the digital transition. The irony is that in the broadband age the hottest selling device for digital video is a TV antenna. I don’t know what it takes to get the word out: the best picture quality now is over the air.