Last week, more than 65,000 broadcasters, vendors and creators gathered at the 2023 NAB Show in Las Vegas. NAB, or the National Association of Broadcasters, celebrated its 100th anniversary as the local broadcast industry moves into a new era of streaming television and new opportunities.
This was the 10th NAB Show I've attended since 2012. The industry has changed dramatically. Advancements in cloud and cellular technology, the explosion of the “creator” community, and the consumer behavior and expectations that emerged from the pandemic were very evident at the 2023 NAB show.
When I entered the broadcast industry 11 years ago, the gap between what was considered “broadcast quality” and everything else was enormous. The cost of cameras, lighting, servers, monitors and everything else was 10 to 20 times what you would expect them to cost in the consumer world. Over the past 10 years, the emergence of the “creator” community has ignited the market for prosumer equipment. At the same time, prosumer equipment has become broadcast quality. Many YouTube creators shoot and edit in 4K, something many broadcasters still don't. Creators are pushing the envelope on video production from both creative and technical perspectives. They are evolving much faster than the broadcast industry, and the software and hardware are evolving with them.
Blackmagic Design, the great disrupter in the broadcast hardware market, introduced 4K and 6K studio cameras for under $2,500 and television production switchers for under $3,000. The creator and house of worship communities are driving prices down and quality up in the equipment and software markets. According to the FCC, at the end of 2022, there were 15,377 licensed radio stations and 1,758 licensed television stations. Compare those numbers to podcasters, video creators, houses of worship, and public, educational, and government (PEG) entities creating streaming video, and you can see the larger market opportunity.
Why does it matter to newspapers?
The newspaper industry has dabbled in video over the years. The gap in technology and talent between broadcast and everyone else has closed immensely. At the same time, consumer expectations have shifted since the pandemic to timely and authentic rather than glitzy and high production value; examples include American Idol finals being shot on smartphones and ring lights and late-night hosts broadcasting from their homes. The game has changed.
The year of FAST
It was evident at NAB that this is the year of FAST or free ad-supported streaming television channels. The concept of FAST has quickly gained momentum since Pluto TV first launched in 2013. The platform and concept were legitimized when Viacom purchased it for $340 million in 2019.
The FAST market was fueled by consumer behavior moving to streaming during the pandemic, accelerating the cable cord-cutting trend. PlutoTV, Tubi TV (owned by FOX), Xumo (owned by Comcast), FreeVee (owned by Amazon) and LocalNow (owned by The Weather Group) are among the big names in the free cable alternative.
The concept behind FAST is linear television, which we know as local broadcast television with channel guides and commercial breaks. It is very different from AVOD or ad-supported video-on-demand, a single show or video with a pre-roll and a mid-roll that you might see on a website or YouTube. When video is packaged and delivered as a linear stream, monetization and engagement increase exponentially compared to VOD.
Several years ago, creating a FAST channel was difficult without buying a $100,000 broadcast playout server and encoding equipment. This year, there were several vendors on display who create FAST channels for local broadcasters, digital-only content owners and creators with enough content. At the same time, many monetization providers were there to take advantage of the FAST gold rush.
How big is FAST? In 2022, FAST US ad revenue was estimated to be $4B, growing to $9B by 2026. It was estimated to be $0 in 2018 and is now as big or larger than the entire newspaper industry.
Why does this matter?
Streaming or FAST delivery of content is the consumer norm. Local broadcasters are embracing it; however, they cannot stream their over-the-air channel because the networks (ABC, NBC, CBS and FOX) own the license rights. Additionally, the networks are now going direct to consumers with Peacock, Paramount Plus, Disney Plus and FOX Now, and in some respects, competing with local broadcasters. The content value of broadcasters has been dramatically reduced in the streaming world.
This poses a tremendous opportunity for newspaper and radio publishers who want to take advantage of this consumer shift and jump into the FAST world. At the same time, there are many opportunities to sell advertising into FAST channels, even if you don't produce your own channel.
I said earlier that the value of an FCC license is shrinking concerning content distribution as the world moves to streaming. As media executives, you should be aware of ATSC 3.0, also known as “Next Gen TV,” which has been developing for the past 10 years as the next-generation standard for broadcast delivery. Its benefits include 4K and HDR broadcast video, immersive audio like Dolby AC-3 and Atmos, addressable or targeted advertising, emergency alert systems with rich media and datacasting.
The ATSC 3.0 initiative was being pushed forward by some of the largest broadcast groups, including Cox Media Group, Graham Media Group, Hearst Television, Gray Television, Sinclair, Nexstar, Scripps and Tegna, which collaborated, unlike any other industry initiative before or since. Coordination with the vendor community was instrumental as hardware and software companies created new standards and workflows. This was done without the FCC mandating a switchover date from ATSC 1.0 to ATSC 3.0, as they did from NTSC to ATSC in 2009. You may recall that when you got a $50 converter box from the government. As a result of no FCC mandate to end the life of ATSC 1.0, the transition, which officially started in 2020 when Las Vegas stations launched the first permanent ATSC 3.0 market, has stalled. It would be an understatement to say it's a heavy lift to transition a market. Many smaller markets and smaller broadcast groups have adopted a wait-and-see position as the cost is significant without a clear return on investment.
Currently, 60% of U.S. homes in 68 markets have access to an ATSC 3.0 signal. If you're curious, you can enter your ZIP code to see if you have access at AntennaWeb.org. Also, there are 6 million televisions currently capable of receiving the signal out of the 121 million TV homes, with 12 million televisions shipping this year and 24 million shipping next year.
As the ATSC 3.0 national rollout stalled, the broadcast industry asked the FCC to help with the transition by mandating a switchover date, as it had with NTSC to ATSC, and help with the consumer transition, i.e., the dongles to make all televisions backward compatible. The industry’s request was partially answered when the FCC last Monday announced the “Future of TV” initiative, which agreed to put together a public-private working group to identify a roadmap for the transition that is consumer-friendly to leave no citizen without access to a broadcast signal.
Why does this matter?
Unless you’re in a senior or engineering role in the local broadcast industry, you likely have never heard of ATSC 3.0. It was once the hottest topic in the TV industry, and the 2019 NAB Show could have been called the Year of ATSC 3.0. When the specifications were first drafted in 2013, 4K and HDR video, immersive audio and addressable ads were considered huge differentiators or OTT killers. As you're probably sick of hearing, COVID accelerated streaming video adoption by three to five years. What was once considered a big win for the local broadcast industry and ATSC 3.0 is now table stakes. And to benefit, it requires new televisions or adapters, which are out of the box for streaming TV.
With its incremental video benefits diminished a bit, local broadcasters are looking at B2B revenue initiatives like datacasting, which is delivering large amounts of data at once for updating Internet of Things (IoT) applications and other similar use cases.
E.W. Scripps's CEO, Adam Symson, made an interesting statement about how they look at the ATSC 3.0 opportunity. Remember that Symson was once the chief digital officer over both the newspaper and broadcast groups before the newspaper group was sold to the Journal Media Group in 2015. He saw firsthand what happened in the newspaper industry. He said they would like to use ATSC 3.0 for “innovation and entrepreneurial” opportunities to fund local journalism. In other words, once thought of as a way to increase broadcast advertising revenue primarily through addressable or targetable ads, it is now being viewed as a means to an end, that being to support the 4th estate.
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