The End of Analog

Today is June 12, 2009 (“formerly” February 17, 2009) and with it comes the end of analog over-the-air broadcasts in the United States of America. This “historic” day doesn’t mean the end of all analog video, mind you, since there are still analog cable viewers, but the digital transition might mean more in the US than some might presume.

 

Such a notion might seem hard to swallow, especially considering the short and limited run by USDTV from 2004 to 2007. While this was a pay digital terrestrial TV (DTT) service operating in a very limited geographic area, this case nonetheless remains a shining example of the American perspective on terrestrial television – it’s just not as popular here in the US. But before we cement this view as fixed, perhaps we should look overseas.

 

While our headlines are talking about the end of an “era” the digital transition in other regions has been ongoing for years. In fact the US isn’t even the first country to finish the transition, as several Western European countries have already reached this point – if you’re wondering the nod for “First honors” goes to the Netherlands who completed their ASO in December 2006. Terrestrial television even has branding, e.g. Freeview in the UK and New Zealand, not to mention pay services like Mediaset Premium in Italy, Boxer in Sweden, Digitenne in the Netherlands, among others. So why is the US market different?

 

One could rightfully argue there are more terrestrial channels available overseas, but if this is the only reason, then my initial thought might start to pick up some steam here. With the ASO many terrestrial viewers are starting to discover more content/channels available over the DTT medium than analog. Again one might scoff at this morsel and point to USDTV (who offered more channels) and claim this still sets the precedent for US terrestrial. But lest we forget this was a pay service intended to slot under basic cable as a low cost provider, whereas DTT in its current incarnation is still “free.” The next counterargument might be, but will Americans be willing to give up their 100’s of channels? 

 

First of all, let me put this question forward: when you ask someone about their favorite currently aired TV programs, do they spend five to ten minutes reading down a mental list of 50 to 100 TV shows? I haven’t found that person yet. The thing is we only have so much time in a day to watch television and in many cases this is truncated by work, obligations, social engagements, school, cooking/eating, let alone sleep. Did I mention the difficulty in keeping track of dozens of convoluted stories over several seasons? “So that guy broke out of prison, got lost on an island for 24 hours but was saved by a guy named “McDreamy” and is now singing on a talent show?” What!?

 

When we do identify favorite shows and presuming they are episodic this takes up a recurring time slot on a daily or weekly basis. How many channels do we actually need? Sure we can record content for later viewing, but time is still finite and simply recording everything means people aren’t watching “prime time” content anymore – which means less money to the broadcasters. In other words why pay for advertising (or as much) if viewers are going to just fast forward over them. As much as we would like to ignore the truth, we as Americans, still embrace overindulgence. But there are several factors coming into play that could shift these tendencies and if you’re hurt over the “overindulgence” thing just think about our expanding waistlines and gas guzzling SUVs (granted maybe on the way out with CAFE and all).

 

As I intimated earlier the expanded channel lineup is the first facet. Next up is our increasing penchant for on-demand content and online video. As home networks grow and devices come to increasingly support and interact with content beyond the LAN, the opportunities to supplement the content not present OTA grows in kind. BT Vision is a prime example of this hybridization between OTA and premium content delivered through two mediums in one cohesive and flexible package. Another thing to consider is the economy.

 

As consumers become more price sensitive this could lead to deeper ruminations on things like, “do I really watch all of these channels?” and if the answer is no, then consumers might begin looking for alternative means to get the content they need most or consume most often. I’m not implying these are permanent paradigm shifts, but these signal opportunities for new services and ways of targeting consumers and it might hint at a “new” and significant competitive front for the pay-TV operators. This is likely one of the reasons Hulu isn’t in every box, much like the way Netflix seems to be moving. It is likely Hulu has shunned the “boxes” because it is owned by NBC Universal, News Corporation/Fox, and ABC/Disney. Why should the pay-TV operators pay these broadcasters for the content if it is freely available to the TV via the Internet? So Hulu is still mostly a PC centric viewing channel. But these models will change and evolve and the pay-TV operators will need to address yet another competitive front beyond the battles amongst themselves. 

 

While DTT may never pick up steam in the US the possibility still remains. Oh, and if you’ve seen the 60 million coupon figure bandied about, the truth is of the 60,221,183 coupons requested (as of June 10, 2009), 59,035,953 coupons were mailed, and only 30,914,078 of those were redeemed - 22,209,869 have expired. That leaves 5,912,006 still active (they expire in 90 days) and with total remaining available funds at $320,123,444, that leaves room for roughly 8 million more coupons. Information care of the NTIA (www.dtv2009.gov/Stats.aspx).