The Three Disparate Visions Of ATSC 3.0

At ATSC’s annual conference in Washington this week, media researchers Magid and SmithGeiger outlined results of consumer surveys that suggest that the American public can’t wait to get their hands on 3.0-enabled TV sets so that they can enjoy many of the same features in over-the-air broadcasting as they have come to expect from cable, satellite and the OTT streaming services.

Yes, young and old, the surveys say, want DVR functionality (record, pause, rewind, fast forward, commercial skip), access to programs on demand, customizable home screens and, of course, better pictures and sound.

In other words, folks want it all.

I am always a little skeptical of such surveys. People don’t always know what they want or, when it gets down to it, what they are willing to pay for. This is especially true when they are asked to evaluate things that are only being described to them.

But I found these surveys a bit of an eye opener.

Until Wednesday, I had been thinking about 3.0 in terms of the revenue potential it had for broadcasters. If broadcasters could offer targeted and interactive advertising, for instance, they could greatly enhanced the value of broadcast inventory. They could, perhaps, get spot growing at a double-digit clip again.

But so-called advanced advertising has no consumer appeal.

In fact, I may actually be discouraged from buying a new set if I knew that it will allow broadcasters to track all my viewing and then use that data to target advertising at me. One of broadcasting’s most charming qualities has been that you could watch it without it watching you.

So, I get it now. If 3.0 is going to settle into American living rooms, broadcasters had better come up with features and services that will induce the viewing public to buy new 3.0-enabled TVs.

I am happy to report the station groups working together to develop the 3.0 business under the Pearl banner already get it. In fact, it was Pearl that commissioned the Magid survey to give it deeper insight into what consumers want.

At the conference, Pearl Managing Director Anne Schelle introduced the presentations of the survey results by Bill Hague of Magid and Seth Geiger of SmithGeiger. Verance, a 3.0 technology supplier, commissioned the SmithGeiger survey.

After the presentation, I asked Schelle what Pearl’s takeaway was and she said it was the the need to focus initially on developing a “modernized UI [user interface] for the consumers of OTA” — that is, consumer-friendly features along the lines suggested by the research — DVR functionality and the like.

In a follow-up interview, Schelle told me that the idea is to bring the elegance of the Comcast state-of-the-art Xfinity consumer interface to broadcasting.

Of course, an interface at that level would require that the 3.0 sets be connected to the internet. But at the more basic level, unconnected 3.0 sets could provide viewers with a searchable program guide so that they can at least sort through what’s on and get an little info on the shows.

So, we now have a broadcasting business with three visions for how 3.0 goes forward.

First, the Pearl group, which includes Cox, Scripps, Graham, Hearst, Meredith, Nexstar, Raycom and Tegna, is focused on the living room. It likes targeted advertising and sees sets with rich cable-like interfaces as a critical stepping stone to that. A better analogy may be a Trojan horse. Get ’em to buy smart, connected 3.0 sets for the bells and whistles and then cash in with the targeted advertising and perhaps pay on-demand programs.

Second, 3.0 innovator Sinclair has a “mobile-first” strategy, which entails getting 3.0 receive chips in smartphones and tablets so that it can bring the mobile audience back to broadcasting.

At the conference, Sinclair’s 3.0 point man Mark Aitken offered to seed the market by giving away “millions” of chips to any manufacturer that agreed to put them into its mobile devices. He said he has already had a conversation with one manufacturer about the offer. (Sinclair has a previously announced deal with Saankhya Labs to make the chips.)

Sinclair also diverges from Pearl in that it is more eager to exploit datacasting — that business of distributing data to the Internet of Things for all comers. Through its pending acquisition of Tribune and a partnership with Nexstar, Sinclair will have a national platform to deliver the data for its customers.

I haven’t seen much evidence of demand for such a service, but Sinclair assures me it’s there. The example it keeps citing is sending data to connected and self-driving cars.

On a conference call with analysts two weeks ago, Nexstar CEO Perry Sook, in talking about Nexstar’s involvement with Sinclair, conceded that the business is iffy.

“[I]f we build the infrastructure, the ideas will come,” he said. “[T]here are multiple uses and multiple profit-making opportunities that we will investigate, but the market will really tell us what those are. We’re just trying to put the for-lease sign in the yard and see who might show up at the end of the day.”

So, you have Pearl and Sinclair going in two directions at the outset. Maybe that’s OK. Between them, they will explore the most promising business opportunities. If one strategy proves better than the other, the other can change course.

Finally, the third is the Big Four broadcast networks’ vision of 3.0 — which is no vision at all.

I keep hearing that the networks will come around, but they haven’t yet and 3.0 has been in development for six years. I have yet to hear any network fully articulate its objections. But from what I hear it’s because they see themselves primarily as producers and distributors of top-shelf programming rather than as broadcasters.

They are wondering why they would want to do anything that would expand FREE over-the-air broadcasting. The more they collect in carriage fees from cable, satellite and the OTT streaming services and from consumers in the form of on-demand program fees, the less inclined they are to give it away for free.

The problem is, in the minds of most consumers, ABC, CBS, NBC and Fox are broadcasting. Without their full-throated support for 3.0, it’s difficult for me to see how 3.0 will win the acceptance of consumers and the consumer electronics manufacturers that are attuned to them.

P.S. The Magid survey found a lot of interest across all age groups in broadcasters providing a skinny bundle of broadcast and cable channels “at a lower price”  than cable.

That’s significant, and I know some 3.0 proponents are excited about offering pay TV (and audio) services. But the window is closing fast. Several well-heeled companies like DirecTV, Sony and Dish are offering skinny bundles via OTT, and more are on the way. You’ve got to ask what an OTA incarnation would bring that would allow it to crack the market in three or four years.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.