While technology innovation has long fueled video product and service launches at the annual Consumer Electronic Show (CES), creating a solid business case for all parties determines whether these offerings shine on for years or burn brightly and quickly fade away.
That’s the case with 4K—aka ultra-HD—TV, which provides a better picture resolution through markedly more pixels. The technology is sound and it’s supported in TVs from top CE vendors with set prices coming down. 4K resolution promises to make programming, including the Winter Olympics next month (according to Comcast), a better quality viewing experience.
With programming commitments announced at CES from OTT service providers Netflix and Amazon, and an app-in-progress that lets Comcast deliver content to its X1 customers with Samsung 4K TVs, it’s clear that the ultra HD movement has progressed beyond the TV sets that were on display at last year’s CES.
It’s show me the money time because just seeing may not be believing for ecosystem members such as broadcasters who could be saddled with expenses in delivering 4K programming without the ability to have advertisers pay a higher rate for spots in the higher-end, higher-resolution format.
It has been suggested that new, pay-extra, 4K “service tiers” will fuel the business case for ultra HD. But given the failings of 3D TV programming efforts to date, it’s unclear whether consumers are willing to foot the bill for an improvement in picture resolution on the heels of many buying 1080 dpi high-definition sets to replace SD or 720 dpi HD units for their residences.
The Bottom Line
It’s crucial to determine which members of the TV ecosystems pay and which ultimately profit. Let’s take a quick look at who stands to gain and how.
CE Device Makers. After underwhelming returns pushing 3D big screens, a 4K picture could fuel high-end TV purchases, for those in the market and willing to pay a premium. Partnering with media giants as Samsung has with Comcast and Amazon with Sony advances the movement. Result: GAIN.
Harnessing the 4K momentum and pushing the technology out more broadly means discounting ultra HD sets to make them as cool to have as they are to walk buy in a retail chain or shopping club store. The result may mean a revenue LOSS but an important traction GAIN. The same holds true for other CE devices such as cameras for producers and hobbyists among others.
Pay-TV Service Providers. If they can convince consumers to pay extra by means of a special service tier or something along the lines of current monthly HD service charges, it’s a sizable win. These same subscribers, however, may be tired of extra expenses now that they are paying regional sports network (RSN) and broadcast TV fees.
But first comes programming in this push and pull situation. Quantity of channels in 4K needs to become at least a medium-term competitive differentiator as the HD channel count race was. Result: TBD.
Infrastructure Providers. This is a broad group of companies in the video ecosystems that make products necessary for the successful delivery of programming in any format. Video processing innovator Elemental Technologies stands out claiming it will help some of its broadcaster customers (NBC-owner Comcast announced plans at CES) to deliver 4K Winter Olympics programming from Socchi, Russia in a matter of weeks. Result: GAIN.
OTT Services. Among the biggest drivers of 4K, and always in search for differentiation from traditional pay-TV service providers, Netflix has committed to shooting all new original programming in 4K, with Amazon partnering with four large movie houses to provide 4K content.
Sony (which also includes a movie studio in addition to TV manufacturing) itself announced at CES the trial of its own OTT offering, which you can bet will be include 4K TV programming.
The added value for customers is clear in terms of a more magnetic viewing experience, but who foots the bill? Rising prices for OTT services is essentially the last thing customers want to see given that lower prices won many consumers to these alternative offerings to begin with. Result: TBD.
Broadcasters. If new tiers result in advertisers paying more for commercials of any type to offset the expense of delivering 4K TV, or if content prices can be passed to distributors to recoup via monthly fees, the result is GAIN. Otherwise, new cameras and infrastructure costs would likely result in a LOSS. Those broadcasters with cable/media conglomerate parents should see a GAIN.
A large mitigating factor for many broadcasters which is a first focus now is finding a way to keep Aereo from continuing to tear away at their long-time business model of compensation for re-use of over-the-air programming signals. Streaming innovator Aereo, which announced this week it has scored $34 million in new investments, is delivering this content via the web to its subscribers in top TV markets and continues to be in broadcasters’ cross hairs. Result: LOSS.
Sports Leagues. Called the proving grounds for 4K TV by one industry insider, live sporting events such as the Olympics, the NFL, sports tournaments are one of the keys to success with of ultra HD. They played a starring role in making the SD to HD migration a success.
The proliferation of affordable, big-screen HD sets for home and commercial (entertainment facility) use seems to be hurting attendance at actual contests. That pain and near blackouts of first round NFL playoff contests forced corporate America to by seats to ensure their ads and messages are seen in home markets (on TV). The net result here is a GAIN. But progress comes at a cost – the much-discussed fan experience.Result: LOSS.
Movie Studios. Avatar helped drive the 3D movement, for a bit. But a dearth of 3D programming and a rollout described as botched by many has stakeholders moving away from or de-emphasizing 3D undertakings. ESPN shut down its pioneering 7x24 3D channel last month. Actions speak louder than words.
If the Motion Picture Association of America (MPAA) seriously committed to delivering a large quantity and steady flow of movies in 4K and could find a way for “cinema-plexes” to affordable and the gear they need to show them, this could be a powerful driver. Consumers will want more than live sports in 4K. Will consumers’ eat the increased production costs? End result: TBD.
Consumers. Ah yes, the consumer. The top question here is whether or not consumers are willing to pay anything whatsoever for 4K TV. The way things are shaping up and with not-so-distant history in mind, the consumer ends up paying at least part of the freight for advancements and enhancements in TV picture quality.
How much freight consumers are presented with depends largely on the combined efforts of TV ecosystem players to build a solid business case that includes bottom line benefits for all stakeholders.
Without a compelling case for consumers to join the above-mentioned groups and migrate to 4K TV, the traction-to-trend forward progress required to achieve more than niche adoption might still be stuck in discussion mode at next year’s CES show.
For 4K to be a picture of health, the TV ecosystem needs to bring a business case into focus.
RESULT: TBD. Stay tuned.
VP of Content
Antivirus software is not enough. Apex Technology Services used its decades of IT and cybersecurity
experience to create budget-friendly network security packages every company needs.
Please take a moment to fill out your information so we can contact you directly regarding your request.
iGaming is one of the fastest growing industries on the internet. For those who may not be aware, iGaming refers to online casinos, online slots, poke…
It is easy to get lost in all the new phone releases when multiple happen yearly. Consequently, most new functions go unnoticed because people do not …
Embarking on the journey to bring a new product into the marketplace is an exhilarating adventure that blends the thrill of innovation with the meticu…
MySQL on AWS is the deployment of the MySQL database system on Amazon Web Services (AWS) cloud platform. MySQL is one of the most popular open-source …
Responsive images are a fundamental component in responsive web design. They adapt to the size of the user's screen, delivering the best user experien…