NextGen TV Looks To Non-Core For Rev Growth

The new IP-based ATSC 3.0 — or NextGen TV — digital TV standard lets broadcasters transmit better video and audio quality than the current ATSC 1.0, including the ultra-high-definition 4K HDR format, and also deliver TV to mobile devices. But meaningful revenue growth from NextGenTV is likely to come from launching completely different services than traditional linear programming, according to experts speaking at TVNewsCheck’s TV2025 virtual conference this week.

Rick Ducey

Rick Ducey, managing director of BIA Advisory Services, forecasts a modest compound annual growth rate of 3.8% for broadcast revenues over the next decade if broadcasters “stick to their knitting” and continue what they’re delivering today, a primary feed supplemented by some multicast “diginet” channels. He said the diginets business has matured, and today accounts for only $400 million to $500 million in total revenues across the industry.

BIA’s projected CAGR rises to 5.5% if broadcasters use NextGen TV to launch some “advanced TV” services including addressable advertising and OTT programming. But it jumps all the way to 8% if broadcasters tap into “non-core” businesses like datacasting or pay TV services, said Ducey, speaking on the panel “NextGen TV: Ready for Primetime?” moderated by this reporter.

Ducey said that broadcasters need to think of 3.0 as an “entirely new platform,” much as digital giants like Google, Facebook and Amazon are platfoms that support many other businesses. He notes that when Facebook first launched, no one expected it would turn out to be a major platform for media companies.

“By 2030, up to a third of broadcasters’ revenues could come from businesses that don’t exist yet,” Ducey said. “They’re sort of disruptive innovations. Things that broadcasters don’t know what the market is, don’t know who the customers are, might not entirely know what the service is [yet].”

BitPath, a joint venture formed by the giant station owners Sinclair Broadcast Group and Nexstar Media Group, is already chasing those non-core revenues. It is launching 3.0 markets and hiring expertise from the wireless and internet industries to build a nationwide data broadcasting network that will generate revenues in two ways. One is by making capacity available on a lease, purchase or ongoing service basis to third parties that want to deliver data. The other is by developing its own data services, where BitPath would own the entire value chain.

John Hane

“To do that, you really need a different set of tools and a different approach than you need in the traditional over-the-air business,” said BitPath president John Hane. “You need a nationwide network, you need capacity and backup capacity in every market, you need certain standardized APIs, service standards, sales approaches and technical approaches.”

Given the pace of the early rollout, which has been hampered by the COVID-19 pandemic, meaningful revenues aren’t likely to come until the second half of 2023, Hane said. Scale is the issue. So far, BitPath has launched 3.0 stations in eight markets, including top 40 markets Las Vegas, Pittsburgh, Nashville, Salt Lake City and Portland, Ore.

Eight more markets should light up by year-end, including Raleigh, Tampa, Columbus, Seattle, Denver and San Antonio. But the venture needs many more 3.0 markets on-air to be viable as a national platform. Hane said over 90% national coverage and at least two stations in each market is the goal, in order to provide redundancy for enterprise customers.

“The more reach and the more depth that we have in each particular market, the more opportunities that are available to us,” Hane said. “As you get away from essentially nationwide coverage, as you get to markets where you only really have one station, and you can’t provide backup or redundancy, then a lot of the opportunities sort of disappear.”

As BitPath builds up to its desired scale, it can still do early applications on a “one-off basis” in different markets, Hane said. It is working on data applications for both the energy and automotive industries that it plans to test next year.

“Those can be done,” Hane said. “If you want really widespread adoption, an automaker isn’t going to incorporate ATSC 3.0 for 50% market coverage. Or if there’s only one station in each market, they’re not going to put mission-critical services on that station if there’s no backup. So there are things we can do, and there are some things we intend to bring to market next year, but you really want to see a large, significant nationwide deployment to go as far as we can really push this.”

The Importance And Value Of SFNs

One way to significantly improve both coverage and capacity in a market is by employing single-frequency network (SFN) architectures, where instead of a single “big-stick” multiple transmitters are placed throughout a DMA. With ATSC 3.0’s flexible modulation/coding schemes, SFNs could be used to deliver a robust, lower data rate service to mobile devices or indoor TVs throughout a market. Or they could deliver a much higher data rate service, such as 4K HDR programming, to a narrow coverage area around a single transmitter.

Erik Langner

Broadcasters are interested in both use-cases for 3.0, said Erik Langner, president of Public Media Group (PMG), a technology infrastructure company launched last year in order to build SFNs across the country. PMG plans to finance and develop the SFNs in major markets and then allow 3.0 broadcasters to use them on a leased basis, saving local stations from supplying the capital investment to build the SFNs themselves.

“The fundamental premise is that to generate the revenue and the services that 3.0 makes possible, you have to be able to reach as many devices and people as possible,” Langner said.

PMG was formed by Public Media Venture Group (PMVG), a coalition of 31 noncommercial broadcasters with 117 stations, and Cleveland-based Osborn Engineering with investors including clean-energy company BioStar Renewables and investment firm Four Pines Ventures, among others. It is already building a large SFN in San Francisco and has formed an alliance with American Tower to give it access to the tower giant’s 40,000-plus towers across the U.S. Its plan is to build “high-power, high-tower” SFNs consisting of four to eight transmitters in a market with antennas mounted at a minimum height of 300 to 500 feet, with up to eight stations in a market sharing the SFN platform.

“Because that’s a relatively light footprint compared to 5G, we strongly believe that the broadcasters will be far more efficient in terms of what they charge per gigabit than what the 5G providers are able to do,” Langner said. “We think there’s tremendous opportunity, whether for BiTpath or other broadcasters who want to get into the data distribution space.”

Early interest in PMG’s SFN network have come from the utility, public safety and education sectors. Langer said that PMG’s early engineering work in San Francisco and other markets has shown significant gains in the population reached by a 3.0 signal using SFN transmitters compared to a single stick. PMG is using a height of 1.5 meters above ground as the relevant height for reception on indoor TVs and mobile devices, unlike the 10-meter height generally used by the FCC that reflects a roof-mounted antenna.

“Just for example, in Los Angeles and San Francisco we’re seeing over 2 million POP [people] increases,” Langer said. “And in Dallas and in Boston, which we just completed, we’re seeing a 70% increase in Dallas on deep in-home penetration, and in Boston that number is 100%.”

The Promise Of Data Delivery

Besides more robust reception, one of 3.0’s core strengths is its ability to combine data delivered over a broadband connection with data delivered over-the-air. Edge Networks is exploiting both pipes with its new pay-TV service, Evoca, which it launched in Boise, Idaho, last month. Evoca is using the 3.0 capacity of two low-power stations in Boise, along with consumer’s existing broadband connections, to deliver more than 40 channels of live programming and VOD content.

Pitched as a lower-cost alternative to cable and satellite services and a more reliable option than virtual MVPDs that rely solely on internet delivery, Evoca will go after pay-TV customers in second- and third-tier markets like Boise that have become “TV deserts” due to consolidation and smaller operators exiting the cable space.

Todd Achilles

“Folks in those communities don’t have a whole lot of options,” said Edge Networks CEO Todd Achilles. “We’ve looked at 3.0 and using it to provide a conditional access streaming service that we can deliver over the air. We’re totally focused on the home, and when we look at the opportunity, we see 50 million-plus TV households across the country that are in sort of similar situations as the consumers in Boise.”

Evoca’s service uses a $100 receiver box, called “Scout,” which comes bundled with an indoor antenna. Consumers connect it to their broadband connection, via either Wi-Fi or Ethernet cable, and to their TV using HDMI. For $49 a month, subscribers get a mix of linear channels in 720p and 1080p HD featuring cable networks like Hallmark Channel and The Weather Channel, along with VOD content like CuriosityStream and Crackle; they can also use the Scout receiver to tune to broadcast networks’ 3.0 programming though they aren’t part of the Evoca service. Evoca also launched a full-time 4K channel from Dutch programmer Insight TV last week.

Achilles’ won’t disclose exactly how many customers Evoca has to date, but said that its initial launch in Boise was over-subscribed with a number of prospective customers on a waiting list. He admits that building up Evoca’s channel lineup is challenging given the bandwidth constraints of over-the-air spectrum — “you’re obviously limited by the physics” — but says that 3.0’s IP-based architecture helps to provide a workaround.

“We purposely built a converged hybrid architecture, so there’s a portion of the channels that are delivered into the consumer’s home that come over the air, and there’s another portion that are delivered over the internet connection into the box,” Achilles said. “And we blend those two things together and do it in a way where we just abstract that underlying delivery for the end user, so they just see the channels up on the TV and the guide.”

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