Posted: By Andy Marken 12.31.18
The industry has been tinkering with advanced TV options for the past few years; but at CES 2019, the industry is making firm promises to deliver what “everyone” has been waiting for and it’s going to be good—no, great.
You already know what the promises are:
4K HDR TV
4K everywhere video streams
TV set manufacturers have been promoting 4K UHD viewing since 2012 with less than spectacular success. Sales have shown modest growth, even though screen prices have come down year after year. It’s not unlike when HD was unveiled at CES years ago.
Everyone went gaga over watching Kevin Costner in Waterworld on the new sets. Watching the water spray off the hulls as the catamaran skimmed over the water was breathtaking.
The problem was:
The difference between SD and HD wasn’t that spectacular to the untrained eyes of consumers and salespeople were not trained to educate shoppers about the differences. Often there weren’t even side by side demos in stores. And, to top it all off, the early HD TVs were expensive and the only way to get the benefits of the HD-Ready screens was to add an HD box because the early screens were only “ready.”
At first, most of the content sent to the sets was still SD (networks and cable service providers were slow in upgrading systems). So, the alternative was to enjoy HD movies on Blu-ray DVDs. Studios liked the idea because it’s more difficult to pirate and share movies from the discs; and disc producers liked it because the richer, more visually exciting content kept the dwindling list of suppliers marginally profitable.
While there are a few people who still prefer to own their disc-based films, demand has dwindled significantly with Internet streaming.
It wasn’t until 2014 when Netflix began streaming 4K content that subscribers could see at a glance what they were missing with their appointment TV channels. The difference between HD and 4K is immediately apparent (and preferred).
As a result, nearly everyone in the M&E industry is producing in 4K HDR (some in 8K to futureproof their content) and nearly every theatre around the globe shows the entertainment the way it is produced.
Streaming 4K HDR?
Netflix has “encouraged” other OTT services to stream 4K content to compete and people are willing to pay for it.
The other source?
The 4K streaming video from the International Space Station stimulated a lot of people to upgrade their TV sets to bigger, richer 4K HDR flat panels.
Sporting events have been early adopters of 4K HDR streaming and fans around the globe (especially during the FIFA world cup) enjoy the dazzling rich, vibrant content.
The 2018 PyeongChang Winter Olympics also delivered a major boost to 4H HDR sets.
But local stations and networks have been slow to upgrade systems so, much of the appointment TV (as our friend Ted loves to point out) is still delivered to the 4K HDR TV set in “slightly better” HD quality.
So why are people around the globe who cut, shaved, or never had cable moving to OTT delivery?
There are several reasons:
- Consumers are reducing or eliminating their giant cable bill for a “customized” set of content. On average, most people have three or four OTT services – at a greatly reduced price.
- Millennials and younger expect to watch what they want to watch when they want to watch it and depending on the services they contract with, they are increasingly learning they can also enjoy their content not just in the living room but anywhere
- Gen Z/A individuals have been using smartphones for everything since their early days and it is the screen (4K-capable) they increasingly prefer for their content.
While content producers were first told people would only watch 3 to 10 minutes of content on the smaller screens, the viewing time has increased rapidly. Today, watching a full-length movie or an hour-long TV segment on a smartphone is common.
The major problem of long-term viewing of content on handheld devices has been slow downloading and streaming service interruptions.
To minimize and/or eliminate the problem, members of FAANG (Facebook, Apple, Amazon, Netflix, Google – YouTube), BAT (Baidu, Alibaba, TenCent) and other leading global IP-based streaming services were early adopters of bandwidth-conserving H.265 encoding and the ATSC 3.0 broadcast and Internet standard.
Consumers have become accustomed to paying for quality streaming services, so they can have the convenience of what/when/where and screen they want free of advertising.
YouTube management thought they could quickly add to their coffers by offering YouTube Red to their 2B subscribers – most of which are heavy smartphone users. It seemed like a fast, easy way to add to their profits.
The test failed.
YouTube’s president Susan Wojcicki quickly realized that free means free, even if folks have to watch a few ads.
While Facebook struggles with issues on a variety of fronts, they are determined to make Facebook Watch the place content owners/distributors want their visual stories to be seen on, but they continue to be a “work in progress.”
By the end of 2019, content services and advertisers will begin to get past the privacy and personal data loss challenges that governmental agencies are leveling against Facebook as users (heavily weighted to 18-34 years of age) continue to ignore such “minor” issues and remain steady users of Facebook and Instagram.
The most intriguing addition to the ad-supported content front will be when Amazon Prime also offers a series of AVOD (advertising based video on demand) channels. Because Bezos is expanding his advertising and content inventory as rapidly as possible, we expect to see a robust library of “free” channels added late in 2019 that will be available to Prime (and sub-Prime) Amazon customers.
By mid-year, cable company overlords will become more flexible in their bundle offerings – 5,10, etc. channels – with a combination of TV set and mobile viewing that will entice many to return to the fold. While most customers aren’t happy with the cable guy, they are less unhappy than dealing with the phone guy.
2019 will see a rapid transition from appointment TV advertising to OTT as marketers become more comfortable with the ability to truly target ads to specific people rather than broad demographics.
CMOs (chief marketing officers) are understanding the value of their ability to buy highly detailed viewer data that makes OTT advertising more like digital than traditional television.
Increased demand for OTT content on mobile devices, which is driving up bandwidth demands has kicked off a global race by telco equipment and service providers to be the first to deliver 5G service.
The good thing for service providers is that the consumer is far from tech-savvy and believes the labels. So, if the smartphone says 5G and the telcos tell them they are delivering 5G E service – albeit at a higher cost, they believe it!
Your appointment TV is still, for the most part, delivered in HD--even if you made the move to a 4K HDR set. It’s not the set manufacturer’s fault; the networks simply haven’t made the necessary hardware/software investments that are needed to deliver the content.
With the promise that 5G will solve all of our industry problems (smart cities, autonomous cars, IoT, smart health and smart homes), people are excited about taking advantage of the high-speed broadband/wireless service as soon as it’s available in their town.
The problem is that instant 5G service takes budget commitments – time, money, equipment – and it doesn’t just come simply because of a label on a device, but that hasn’t stopped AT&T from swapping out the old 4G LTE labels on their phones for 5G E labels.
The marketing logic is the “E” stands for evolutionary, but you can be certain at the retail level when people are weighing the cost of the new service contract, consumers will be told the E stands for enhanced or enriched.
And besides, it will be possible to have faster, better service this year if you’re in the right spot … and don’t move.
For more widespread and consistent 5G performance, it will require years (estimates come in at around five years) of major investments that will be passed along to customers.
Of course, it’s understandable for AT&T (and others) to sell the sizzle rather than the actual steak because:
- They will charge more for their 5G service.
- They have content service to sell, folks (the Warner, Turner film vault, HBO streaming services) – all with their “slightly” more expensive unlimited data plans.
The challenge for wireless consumers (especially in the U.S.) is that they are already paying more for their 4G service than people in most other countries, even though their service is still “a work in progress.”
At least when Verizon’s CEO Hans Vestverg (formerly with infrastructure supplier Ericsson) made his keynote presentation at CES in January, he only addressed tomorrow’s benefits and the potential that 5G has for delivering to people around the globe.
The switch to 5G means more than just faster speeds on your smartphone.
5G offers lower latency and theoretically better peak data rates, so more data can be consistently transmitted. Consistency will be increasingly important as streaming content grows to the point that, according to Cisco, video will consume 80 percent of the wireless bandwidth.
5G spectrum bandwidth is only now being sold to providers around the globe. We are only installing first-generation transmission and reception gear, the infrastructure has to be built out not just in a few spot cities but around the country and around the globe. According to Ericsson, this could easily take more than five years--even in the most industrialized countries.
Without consistent, reliable service, the big question is will you place the lives of your family in the “hands” of an autonomous vehicle? That, according to most transportation experts, will be more likely by 2040 – 2050.
Until then, we’ll stick with a Level 3/Level 4 – a conditionally or highly autonomous vehicle with periodic “hands-free” operation and strong reliance on voice command. It’s easier to holler at the car than try and find the right button or switch when we’re panicking.
Most of the technologies hyped as “only made possible by 5G” (i.e., smart cars and connected cities) probably don’t actually need 5G networks to thrive, even though there will be benefits.
Sure, as long as we stick around Silicon Valley and the other Silicon hotspots around the country as well as major cities and Beltway areas, we will get 5G service faster and better, but the key will be consistent reliability for things like driving between Silicon Valley and Tahoe or LA.
There are rural areas across the country and around the globe where consistent 2G service is still wishful thinking.
As Karl Bode, Motherboard writer, recently wrote, “The average consumer doesn’t really care about beating other countries to 5G, they just want less-expensive connections capable of streaming Netflix.”
Perhaps it would be better for service providers to get most of the infrastructure built and do a phased roll-out of improved wireless speed along with more reasonable pricing.
Trials in more than 150 North American cities will be completed by the end of Q1 and 300-400 by mid-year.
First-generation 5G smartphones will be available to consumers in the second quarter of 2019. All major and minor smartphone manufacturers will be delivering 4K streaming-ready devices by Q4, providing a boost in device sales. Phone manufacturers and service providers have been needing a boost because smartphone sales have decreased by more than five percent this past year, compared to 2017 sales.
Qualcomm is scheduled to introduce more powerful and more battery efficient second-generation Snapdragon 5G and antenna chips in late-2019.
The exception to the above will be Apple, which is waiting to introduce the 5G iPhone in 2020 with more advanced processors and antenna systems.
But between now and then, we can expect to see a significant uptick in sales of:
- 4K HDR TV sets at very reasonable prices as every OTT service (AVOD and SVOD) begins to deliver over 50 percent of their content in 4K
- Rapid roll-out and availability of 5G-Ready Android smartphones
As for widespread availability of 5G service and semi-competitive data plans, those won’t begin until after CES 2020.