The market for 4K Ultra HD (UHD) TV services is ramping up, and most industry-watchers think it presents an effective way for cable operators to differentiate their service offering from the competition, increase subscriber satisfaction and drive new revenue.
Yet, operators will need to weigh DOCSIS investments, STB and content licensing costs against the potential gains in revenue and improved brand image. 4K represents a four-time increase in resolution from standard HD, and an eight-times larger bandwidth requirement to deliver, which is only partially addressed by compression technologies like HEVC.
Television manufacturers were among the first in the industry to begin supporting UHD. Unfortunately, the flood of UHD televisions on the market has created a cart-before-the-horse problem. There are plenty of UHD TVs available, with penetration ramping up, but minimal UHD content.
To address this issue, other dimensions of UHD other than resolution, such as High Dynamic Range (HDR), High Frame Rate (HFR), Wide Color Gamut (WCG) and Next Generation Audio (NGA), are coming to the fore as attributes that make 4K content more attractive to support, with HDR likely being the first aspect out of the gate.
Market Penetration for 4K TVs Increases
There’s no doubt that TV sets are not the issue hamstringing the 4K market. 4K TV household penetration in the United States will reach 34 percent in 2019, according to the latest information from the IHS TV Sets Intelligence Service.
The survey showed that 4KTV set prices have fallen significantly, leading to increasing consumer adoption and household penetration. By the end of 2017, most 50”-plus TVs worldwide will feature 4K resolution, according to the firm.
With its comparatively strong economy and consumer penchant for large-screen TVs, the US will lead the way. But 4KTV household penetration in the European Union is expected to reach a healthy 25 percent in 2019. As outliers, Switzerland is expected to reach 32 percent penetration in 2019, followed closely by the United Kingdom at 31 percent.
Growing availability of Ultra HD content from Internet and pay-TV providers will likely support this trend.
While Japan is a developed premium TV market, only 14 percent of all households are expected to have a 4K TV in 2019, because most households already have relatively new TVs. Domestic TV demand swelled to more than twice its normal level between 2009 and 2011, when the Japanese Government ran an eco-points subsidy program for energy-efficient products and there was a nationwide analogue TV switch-off.
“With the Japanese consumer preference for smaller TV screens, it will be more difficult for 4K TV to expand its household penetration in the country, even though UHD broadcasts are set to begin in 2018, in the run up to the Tokyo Olympic Games in 2020,” said Hisakazu Torii, senior director of consumer device research for IHS.
Unlike Japan consumer adoption of 4K TVs in China is expected to be relatively high, with household penetration reaching 24 percent in 2019. In other emerging countries, where many households either have smaller LCD TVs or CRT TVs, 4K penetration will be lower: 11 percent in Russia, 8 percent in Brazil and 2 percent in India.
Differentiating with HDR
Even though the TV sets may be there, the operator business case for supporting 4K content is nebulous at best at the moment, largely because the distinction between 4K and HD is indiscernible unless the screen is 60”-plus and unless the viewer is seated in the “sweet spot”—a certain distance from the screen that allows 4K content resolution to be apparent to the naked eye. Otherwise, the benefits are minimal for the average viewer.
And that means that there will be less willingness to pay a premium for a 4K content feed. Most 4K TV purchases will be made for the “why not” reason—4K support going forward may not affect the price of the television so why not choose a flat-panel that includes it?
"For both flat-panel purchasers and the subgroup of 4K TV purchasers, 44 percent made the purchase after seeing the product for a good price, so the major purchase motivator for flat-panel and 4K TVs was not substantially different," said Barbara Kraus, director of research at Parks Associates.
She added, "More consumers value other attributes, including smart-TV capability, built-in Wi-Fi and high-resolution audio, over 4K picture quality,” Kraus said. "Content availability remains a key inhibitor to 4K adoption. We expect to see lower cost 4K TV technologies presented at CES 2016, along with 4K Blu-ray players and media, as well as OLED and HDR, to drive new growth in this market."
Recognizing this, HDR, HFR, WCG and NGA will all be included in Phase 2 or the UHD specification, which will lend other attributes to the content that effect obvious improvements to content quality. HDR, which improves contrast and makes content much more lifelike, is likely to be the first feature out of the gate.
“Adding an HDR standard to the UHD specification will greatly enhance the Ultra HD viewing experience, enabling consumers to enjoy sharper video imagery,” said Thierry Fautier, vice president of video strategy at Harmonic and president of the Ultra HD Forum. “HDR will have a dramatic impact on 4K. Both consumers and content creators have responded positively to the idea of enhancing dynamic range, based on the dramatic improvement in color and brightness that it provides, and we are seeing a strong demand for solutions supporting this feature.”
Once an HDR standard is added to the UHD specification, it is expected that there will be a significant increase in UHD content deployments globally, he added: “Many video content and service providers are waiting for Phase 2 to announce plans for an UHD service because they want to provide customers with more than just an improvement in resolution over HD and are waiting for backwards compatibility issues to be resolved.”
It should be noted that HDR can be implemented outside of UHD content as well.
“Although there are not as many pixels, the improved visual perception with better luminance and colorspace is a real opportunity,” said Philippe Stransky, SVP and chief architect at NAGRA. “It provides a clear differentiation in the visual quality without the impact on bandwidth that 4K is imposing. A good proof of the value of HD HDR is provided by the simple fact that many HDR demos at shows like IBC and NAB where initially done on HD screens, not 4K, and the audience did not care nor realize this was the case.”
Despite its benefits in making the case for UHD content distribution, implementing HDR into the operator distribution chain is not without challenges. For one, HDR requires new coding and decoding rules to support the extended color space and luminance dynamic. This is described in various solutions that are all candidates as a standard for HDR. Unfortunately, these solutions are not compatible between themselves and need to be implemented as a complete chain from production to display.
“The consequence for the content producers is that there is a risk of increased technical complexity, at risk of losing the HDR information along the chain,” said Stransky. “Also, one shall not forget that there are still plenty of SDR (standard dynamic range) devices in use. Some artists are of the opinion that the content needs to be produced differently for HDR and SDR.”
For operators and broadcasters, there is also increased complexity because of the legacy UHD TVs that are already in the market. The question is about backward compatibility of HDR content displayed on SDR TVs: is this possible? Should one simulcast both formats? Do we need to manage the lifecycle of SDR and HDR content in parallel, similar to the lifecycle of SD and HD content in parallel?
So, there is a risk that HDR content will be difficult to monetize differently than SDR.
It is also unclear if the current 4K STBs can be upgraded to support HDR, Stransky noted. Some vendors claim that it is the case. In reality, it will really depend on which standards will be adopted.
“Operators will probably discover on the spot whether the devices that they have deployed are really suited for HDR,” he said.
And that means that pay-TV providers are likely to wait until these challenges shake out before making any real investments.
“From a deployment perspective, MSOs should wait until the standardization of UHD Phase 2 before deploying services,” said Fautier. “This will ensure they have a system that can support HDR while providing compatibility with existing SDR UHD TV sets. We expect there will be more clarity on this situation in 2016, followed by commercial deployments of UHD Phase 2 in 2017.”
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