NEXTGEN TV at Virtual CES 2021 Finds it Difficult to Find the Spotlight

(Virtual) CES 2021 was far quieter than past events. Not only did the “reimagined” virtual event not have the spectacle of booths/suites/events and demos, nor the backdrop of Las Vegas, nor the nearly 180K attendees, but there were simply fewer exhibitors—reportedly less than 2000, compared to over 4000 in 2020. In fact, quite a few companies leading up to the event tentatively discussed CES plans only to have them to never materialize or take on a much smaller scale. There were the ubiquitous new product announcements and updates, but the spotlight that typically shines bright on Vegas in January was far weaker in the virtual setting, making it harder to reach a wider audience.

This posed a challenge for Pearl TV, a business organization comprised of U.S. broadcast companies, which was hoping to more broadly introduce NEXTGEN TV (ATSC 3.0) to the U.S. market. NEXTGEN TV is currently on air in 24 U.S. cities. Even though 15 additional cities are planned through summer of 2021 (resulting just under 100 cities on-air worldwide) and the NEXTGEN TV logo and branding being approved in late 2019. , NEXTGEN TV is still unknown to most households. While some TV manufacturers like LG are strong supporters, and despite what attention CES 2021 did generate, NEXTGEN TV failed to outshine OTT, which still captured most of the headlines this month; i.e., Netflix topped 200 million subscriptions, NBCUniversal’s Peacock eclipsed 33 million, and Disney Plus in just over a year reached 86.8 million subscriptions. With the current industry trends, does this mean ATSC 3.0 is dead on arrival?

Comparing the rollout of ATSC 3.0 to 1.0 isn’t fair for several reasons. The rollout of ATSC 1.0 included well-defined mandates from the FCC which ensured the transition was accomplished as comprehensively as possible. This included tuner mandates for TVs over 25” and $40 converter box coupons from January 2008 to March 2009 (up to 2 per U.S. address) that exceeded US$1 billion. In contrast with ATSC 3.0 broadcasts, 1.0 will remain on air as a simulcast, so there is no requirement to upgrade to continue receiving OTA signals. The market conditions in 2008/2009 were also markedly different—the term “cord-nevers” didn’t exist yet, and Netflix had only recently launched its streaming service (2007). For these reasons, Pearl TV and the assembled panel highlighted (but didn’t focus on) evolutionary video features like 4K, HDR, and Dolby Audio; instead, the focus was on the true next generation features of ATSC 3.0: interactivity and datacasting.

With ATSC 3.0, broadcasters can introduce interactive features like supplementary information (e.g., weather forecasts, sports statistics, background history, etc.), VOD, addressable advertising, and interactive overlays for voting and calls to action (e.g., click for information or click to purchase goods). Some of these features will require a data return channel, which isn’t a hurdle since most ATSC 3.0 TVs will offer network connectivity (the ZapperBox, a NEXTGEN TV STB, also includes Wi-Fi and Ethernet connectivity). In Detroit, there is an open test track for the automotive industry to test proofs-of-concept for datacasting, which could serve as a low-cost, long distance data transmission channel. There are further datacasting opportunities within other markets, such as education.    

Larger marketing campaigns and promotions are expected in the summer to early fall for many markets, but the adoption of ATSC 3.0 in the home will take time. Early tuner STBs like the ZapperBox are available for preorder at $250, a significantly higher price than the subsidized ATSC 1.0 converter boxes. In addition, the inclusion of ATSC 3.0 tuners within TVs will continue with a phased approach, trickling down to lower-tier TVs over time. This extended timeline will give the industry a runway for working on these next generation features, as well as provide a ramp-up period for consumer education.  

4K and HDR provide another content source for consumers to use their newer TVs, but the value added is not the same as the shift from standard to high definition. In fact, the video gaming base has generated more excitement and demand for 4K and high screen refresh rates than typical video households. While the interactive features and certainly datacasting is even more nascent than ATSC 3.0 viewing in households, these elements will need to drive the standard forward if NEXTGEN TV is to succeed and become relevant beyond supporting a comparatively small OTA viewing base. With these features, NEXTGEN TV will be able to capitalize on the ongoing trends in the advertising and video markets while playing a role in the development and rollout of other industries like connected and autonomous transportation, smart cities, and localized content and services.

Within the home, there is already movement on the CTV advertising front, with companies like Samsung, Vizio, and Roku running their own advertising platforms on connected CE devices. There are also companies like Samba TV which, through the use of ACR (automatic content recognition), help smart TV manufacturers, OTT services, and connected platforms identify content displayed on the TV in order to generate better user profile, feeding into targeted experiences, applications, and advertising. For broadcasters, NEXTGEN TV is a facilitator, bringing more functionality direct to the end users. At minimum, NEXTGEN TV will help bring apps to the affiliate networks more efficiently (i.e., one app with different labels). While this could take the place of apps targeted to different connected TV platforms, the largest opportunities will still rest with CTV OTA broadcasts, so they shouldn’t be removed from consideration. This does, however, give broadcasters some additional leverage.

For CTV companies, the new features offered by NEXTGEN TV will have to be balanced with their internal initiatives and efforts. Consumers, for example, will not want to see advertisements from both the NEXTGEN TV feed and CTV platform. While this potentially creates some competition, it does more to engender new opportunities for CTV manufacturers to better serve as a content aggregator or hub, in much the same way pay TV operators are trying to position themselves.

Ultimately, NEXTGEN TV needs to look beyond the TV component alone, because viewership of OTA broadcasts—regardless of the enhanced features—is not expected to appreciably increase among U.S. households, especially in light of accelerated trends toward OTT/DTC. It is worth restating that broadcasters will need to extract as much value as possible through datacasting, be it through supporting a fleet of vehicles, bringing content to stadiums, providing digital updates, etc., in order to maximize the potential of the technology and for NEXTGEN TV to be viewed as a success.