WTF is ATSC 3.0?
This article won’t attempt to address the technical side of ATSC 3.0, which is more for the hardcore broadcast engineers. Nor will it try to fathom why ATSC 3.0 skips over ATSC 2.0 to replace the current ATSC 1.0 standard.
ATSC 3.0 is just for traditional, old-school TV -- the type that’s beamed from broadcast towers. In most cases, these are local stations that have affiliate relationships with national broadcast networks like FOX, CBS, ABC, NBC and PBS. ATSC 3.0 is not relevant for cable networks like ESPN, Comedy Central or AMC.
Why broadcasters like ATSC 3.0 – Extending today’s business
Television is the perfect medium for pushing a one-to-many message, which has always been TV’s greatest appeal to advertisers. In the digital age, this strength has also come to be seen as a weakness, especially as more advertisers grow concerned with the perception of advertising ‘waste.’
Digital media offers better targeting and a more personalized experience, although on smaller screens that mitigate its effectiveness. Internet publishers have long had the power to push unique content experiences to a certain person or group of people. This flexibility and precision are the medium’s greatest strengths.
ATSC 3.0 evens the playing field by granting similar powers to TV stations, giving them the opportunity to grow revenue with new ad products that can compete on a more equal footing against digital media offerings. The new standard allows stations to convert their one-to-many broadcast TV signals into over-the-air IPTV hubs for delivering targeted, near-personalized content experiences. TV stations on ATSC 3.0 will be able to offer digital-like audience targeting – for example, by demographics, neighborhoods, or even cherry-picked individual households.
By more carefully targeting ads, a station could argue its inventory is worth more to advertisers because it can focus the right audience and eliminate wasted impressions. Audi, for example, could run ads for its entry-level A3 line in neighborhoods populated by young professionals while simultaneously show ads for its luxury A6 cars to areas with affluent empty nesters.
ATSC 3.0-enabled interactive ad units could also give TV ads the opportunity to get attribution credit for consumer actions, which is challenging today for any ads that do not have a direct response component. For example, TV stations are rightfully frustrated when a pizza franchisor runs dozens of spots to create awareness, but the last action before ordering is credited to the search engine the consumer used to find the local outlet’s phone number.
ATSC 3.0 can also help stations draw all kinds of business insights on who’s watching their content on what device and for how long. For the first time, stations would have data to help them develop better programming, understand which content is most popular, and refine the effectiveness of advertising products. They could even sell this data to advertisers, as many online publishers do now.
Why broadcasters like ATSC 3.0 – The gamble on tomorrow
While generating new ad products and data are relatively obvious uses for ATSC 3.0- TV stations might be able to enter different, even more lucrative businesses – bandwidth leasing and datacasting.
ATSC 3.0 improves signal compression, helping stations use the broadcast spectrum more efficiently. This matters because the proliferation of connected mobile devices is starting to cause traffic jams on the “digital superhighway,” which are only going to get worse. Cisco estimates that three-fourths of the world’s mobile data traffic will be video by 2019. Companies from Akamai to Netflix are looking for ways to increase bandwidth. To satisfy this demand, stations on ATSC 3.0 could sub-lease spectrum capacity, especially if the FCC’s net neutrality rules are repealed.
But the biggest potential may come from datacasting to the Internet of Things (IoT). Datacasting would be a new and incremental use of the spectrum – essentially found money for broadcasting companies.
To understand the datacasting opportunity, consider the information needs of the IoT, which will be 100% incremental to an internet backbone straining under the weight of its current load.
Today, every home has a number of devices exchanging data over the internet. That number is only going to grow. Forecasts show that by 2020 there will be 30 billion IoT devices that will need internet access for basic functionality and product updates.
McKinsey estimates that the global market for IoT home devices – including items like smart appliances and home security and energy management systems - could be worth $3.9 to $11.1 trillion by 2025. ATSC 3.0-enabled broadcasters have a shot at grabbing a share of this market by providing datacasting services to companies that have sold consumer products that require constant or occasional internet connections .
While datacasting may look like a mammoth opportunity, it’s impossible to predict its future returns today. The business model and revenue potential are still unknowns. It’s conceivable that it could become the most lucrative part of the broadcasting business since it would likely require little additional labor and zero programming costs.
Why consumers will like ATSC 3.0 – or will they?
The consumer value proposition for ATSC 3.0 is not as clear as it is for broadcasters. What’s in it for the average viewer? It’s fair to say that nobody’s ever purchased a new TV because he or she wanted better ads.
Viewing local broadcast programming, including news and sports, on mobile devices sounds like a great ‘Nice To Have’ but it’s not really unique. Smartphone users are already accustomed to an on-the-go ‘TV watching experience.’ In fact, access to local broadcasters isn’t really an innovation since many stations already offer branded OTT apps.
Many ATSC 3.0 proponents point to Ultra HD picture quality. While it’s technically true that ATSC 3.0 will push more pixels, it’s unlikely that most will notice a difference in their viewing experience. Broadcasters are planning to focus on delivering 1080p HDR rather than true 4K. Ultimately, the leap in quality will be nowhere as dramatic as the transition was from SD to HD.
Emergency alerts can be delivered to targeted areas with ATSC 3.0. For example, people in the path of a tornado can receive ‘Amber Alert’-style messages based on their location with updates, evacuation paths, and shelter recommendations. The system can even turn TVs on to alert people in their sleep, which in actuality falls somewhere between being a strong benefit and completely creepy.
While all of these are incremental improvements in the TV experience, none of them are likely to prompt quick and enthusiastic consumer adoption on the scale of iPhones or HDTVs. So far, the hardware companies agree. At this writing, no major manufacturers sell ATSC 3.0-compatible sets in the U.S. and those that are available run more than $3,000.
While it’s realistic to expect the costs of ATSC 3.0-compatible TVs to decline as more become available, mass consumer acceptance is still questionable.
When will it happen?
The transition to ATSC 3.0 will not happen overnight. It is going to take time. For each broadcaster that wants it, they have to change hardware, software and business models. That’s happening across multiple broadcast groups. When you add the FCC rules to the mix, you quickly realize there is a lot of technical complexity that broadcasters need to work together to solve. (Side note: Wireless carriers are pushing for 5G adoption on a similar timeframe.)
There are a lot of factors influencing the adoption of ATSC 3.0. It’s going to be an interesting few years ahead.
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