Sunday, March 30, 2008

11 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 11 months until the current "hard" date (2/17/09) on which analog broadcasting is currently scheduled to cease. This is the 24rd of 35 planned monthly recaps of developments affecting the various players (laid out in my first few posts) in this story, meaning that we have gone just over two-thirds of the distance that remained when I started this blog in March of 2006. Despite the name of this blog I do cover some stories (like the growth of HD) that are not directly transition-related (but strike me as being of interest to transition-watchers). That said, here's some of what happened (or was commented on) between 2/18 and 3/17. As is usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TWICEand TVPredictions.com.

THE PUBLIC - Up until a month ago, I was thinking that the one-year mark would probably be the signal for the media to kick things into high gear in regards to public-education campaigns. I seem to have been a bit premature there. As I mentioned last time, I only saw one story in my local paper on Feb 17th, and nothing since, and nothing on the news shows I've been watching (and I haven't seen any more of those DTV Answers spots lately). Under the existing FCC plan, escalating alerts are supposed to kick in April 1st (two spots and two text crawls on the screen every six hours) and October 1st (three spots and three crawls). However, the FCC has now given stations more flexibility in allocating those spots, allowing them to put them in less-valuable and therefore less-watched timeslots, and skip altogether the most popular programs (where there would be the best chance of the message getting through). Brilliant! Meanwhile, there are new Neilsen findings that place the number of U.S. homes that are not ready for the switch at 13 million (with another six million homes having a secondary TV set that will be affected).

Not everyone is worried about the overall situation, 'tho. One person not particularly concerned is Gary Shapiro of the CEA, who is expecting those who are cut off on The Day to calmly go about doing whatever they have to do to get their service back. Well, we can hope. Is this a case of dangerous complacency that seriously underestimates the potential for chaos, or a rare example of common sense?

Just because I'm not seeing them doesn't mean that there aren't efforts underway, of course. PBS's PSAs hit the air in March, using two of the "This Old House" team to help explain things. I just saw one for the first time on Sunday, March 23rd, possiby because I'm watching less PBS these days, and I'll go further into the reasons why in the BROADCASTING section below.

As far as HD awareness goes, here's something to think about. I've written a number of times about the fact that only about half of HDTV owners are watching actual HD programming. Well, it could be worse, as a new report reveals that only 5% of European HDTV owners are watching (two German HD channels recently shut down for lack of interest).

GOVERNMENT - A couple of months ago I mentioned the idea of testing out the transition in certain areas before the overall switchover, but that it had not gotten the support of FCC Chairman Kevin Martin. It seems from this article that he's coming around on it, but the plan as described here seems to rely on having individual households volunteer to take part. Somehow it just doesn't seem to me that such households are where the potential problems lie.

Meanwhile, the main transition-related government effort (the converter-box coupon program) continued to roll along. Coupons are being issued and you can see what they look like here. The coupons must be redeemed within 90 days, which is bad news for those who've received them and were planning to use them to buy EchoStar's $39.99 (free after applying the coupon) box, as that box has been delayed until June or July. As to how things are going for the program in general, it may be worth noting (you decide how much to read into this, if anything) that the official in charge is leaving for the second time since November..

Last time I wrote about the objections cable channels have to the FCC mandate for post-transition dual carriage (mandating that cable companies ease the transition for analog cable customers by continuing to carry an analog version of must-carry broadcast stations unless the provider goes all-digital and eliminates analog cable service completely). The main objection is in regards to the bandwidth limitations this would cause, especially with smaller operators. Now we are hearing from those smaller operators, as the organization that represents them (the American Cable Association) is asking for a blanket exemption for systems that serve no more than 5,000 customers, or who have less than 522 MHz of capacity. Interestingly, they are asking to transmit those stations in analog-only, rather than digital-only (which would seem more efficient), although admittedly that does address the needs of their analog customers. As mentioned before, the major carriers (as represented by the National Cable & Telecommunications Association) are strongly in support of their smaller siblings. For more on the challenges facing smaller providers, see the PROGRAM PROVIDERS section below.

In less directly transition-related news, Chairman Martin continued to be embroiled in various disputes, including those over the a la carte issue, ownership caps, satellite carriage of local stations and other matters. All this and a congressional probe, too!

Tune in next time for some results from the ongoing auction of the old broadcast analog spectrum.

BROADCASTING -Another fairly slow news month in this area. There was the usual handful of new local HD newscasts, bringing the total up to around 80 - here's an example. I keep expecting this trickle to turn into a flood at some point, but there are still some impediments to rapid conversion, such as cost. The WWE HD story took a twist, as their Friday night Smackdown show will be moving to MyNetworkTV - fans should hope that the HD signals can be seen (the Boston MNTV affiliate does not have its HD station in the Comcast HD lineup, and its OTA signal is said to be weak).

There will be some new HD coming in the area of sports . There'll be no more "Fox Widescreen" in baseball, their 2008 MLB games will be all-HD. And the last two teams not to have any of their local games broadcast in HD have joined the club.

But not everything is going in that direction. I mentioned last time that the PBS HD Channel would be going away sometime in the fall. Here in Boston, we're not waiting that long and the HD signal for WGBH has now changed to a simulcast of their regular analog schedule. The upside is that Bostonians are finally able to see the HD version of The NewsHour with Jim Lehrer (which has not yet been added to the PBS HD Channel schedule). The downside is that is that I didn't see one single other show in HD for several weeks (until a couple of days ago, when an HD Antiques Roadshow came on). Part of this may be because of pledge month (something I've been spared the last few years as a PBS HD Channel viewer) and part because of the station supposedly lacks the ability to record HD for later playback. Supposedly this will be very different by the fall, but for the moment it's a huge loss in the amount of quality HD programming available. For what it's worth, the NewsHour is way ahead of the NBC Nightly News in the amount of non-studio HD footage. Another item of concern to HD fans - a recent survey revealed that 55 percent of local broadcasters have plans to multicast.

PROGRAM PROVIDERS - As it has been since DirecTV put up that satellite last fall, the big story here continues to be everyone else's attempts to stay competitive with DirecTV's HD offerings. Various providers continued to add large chunks of channels (where adding two or three would have been big news not long ago) to various areas - here's a few examples. But beyond today's channel adds (which generally seem to be raising the channel counts from the 20s to the 30s) lies the struggle to revamp systems for the day when many more channels than that will be required to stay competitive.

How to go about it? If you're another satellite company (like Dish), you can follow DirecTV's playbook and put up a new bird. That is in fact what they did, but things didn't go so well and this is expected to cause delays in the implementation of their "100 Channels, 100 Markets" strategy. For cable, there are a number of options short of an expensive system rebuild. One way is to adopt SDV (that's short for Switched Digital Video, a technology that sends only requested channels down the wire, instead of the current standard, which is to send you every channel, even if you can only watch one and record a couple of others), as Mediacom is doing, but there's a catch - CableCARD users can't currently see these channels (as this post concerning Time Warner's conversion of three channels to SDV points out). Or you can go the "all (or almost all) digital" route and pare analog channels down to the minimum required by the FCC after the transition. This may be what Comcast has in mind when they say they have the capacity for 150 channels, at least if you give credence to this "friend of an insider" post in the Comcast Boston thread over at AVS Forum. Another indicator of their intention to go in that direction is their reported interest in a cheap DTA (Digital Terminal Adapter) that will take the form of a small dongle rather than the set-top box that has often been cited as one of the reasons that analog cable customers resist going digital. Three other companies recently detailed their reasons for going all-digital during a panel on the subject at the National Cable Television Cooperative’s Winter Educational Conference. It's also possible to achieve more modest gains by using the improved bandwidth management of 256 QAM as well as the improved compression of MPEG4, as Bresnan Communications will be doing. Not modest at all is Cox's goal of 80 channels by year's end, but I haven't been able to find a source that tells me which of these methods they plan to use. No matter what people are doing, it's important to note that they're aiming at a moving target, as DirecTV put up a new satellite just after the 17th (so more on that next time).

Whichever method or methods is chosen, there's one group that needs all the help it can get - small cable operators. Between the regulatory demands described above and the need to compete in the marketplace for advanced services, many smaller systems find themselves without the necessary bandwidth or customer base (to spread out the cost of needed upgrades). A good Multichannel News overview of the struggles many of them face can be seen here. One hopeful sign - Comcast and Motorola are teaming up to develop and support a package that will enable small operators to go all-digital for less.

Usually when we cover two providers (such as Comcast and Dish) in connection with legal matters, we're talking about them suing each other, but this one's a little different. It seems that both Comcast and Dish have something in common this time, as NFL Network has added a suit against Dish to its long-running action against Comcast. Both actions stem from both companies' desire to place the network in a specialty extra-cost tier, while the network wants to be seen by as many people as possible. Also having tier troubles with Dish is the VOOM suite of channels. You'd think the fact that the VOOM satellite is now owned by EchoStar would mean that VOOM could catch a break, but business is business. Also giving EchoStar the business is TiVo, who are threatening them with a contempt action over their non-compliance with a court order regarding EchoStar's patent-infringing DVRs.

As usual, we'll end this section with a few miscellaneous notes. There are reports that Comcast may be gearing up to expand the rollout of its version of the TiVo service outside New England in the near future, while Cox will be launching its own TiVo service in New England. That should be good news for TiVo, whose stand-alone business has suffered at least in part from their failure to embrace HD earlier (if there'd been an HD TiVo available to DirecTV customers during the time the two companies were working together, they might still be working together). Another benefit of DirecTV's proactive approach to HD is reflected in the bottom line - subscribers are up (much more than Dish) and turnover is down. They also report that more than half their customers now subscribe to either HD and/or their DVR service (but will someone please break those two figures out?), and that their VOD service (which will require a broadband connection) will launch in the second quarter. This must make Liberty Media's John Malone pleased, as the FCC has just approved (after more than a year) Liberty's proposed takeover of DirecTV. Cablevision is also seeing HD subscriber growth, having just passed the million mark. Meanwhile, Verizon's latest FiOS promotion (the one with the free 19" Sharp HDTV) has been so successful that customers are experiencing serious delays in delivery of the sets, with delays also reported in delivery of HD set-top boxes. They've also set up an arrangement with Jordan's Furniture in Massachusetts, creating a "lifestyle alcove" in their stores (starting with Reading) where Jordan's customers can sample Verizon's wares and Jordan's furniture at the same time. There'll be many more potential customers in that area, as they plan to bring FiOS to 30 new Massachusetts communities as part of a $200 million investment. But while they are building a mighty ring around the Boston area, they seem to have little interest in going into Boston itself or its immediate surroundings (such as my own town of Watertown). Finally, in non-traditional provider news, Vudu has a new 1TB (that's 1024 GB) box, but its $999 price tag hardly helps its competitive posture against Apple TV. And hulu.com (featuring a huge video library including a few HD trailers, though you'll have to have either a Pentium 4.3GHz or Mac Intel Core Duo 1.83GHz processor or better to see the HD) is out of beta.

HD NETWORKS - Wow, I thought it was quiet last month. This time I have very little to report. Nothing launched in the 2/18-3/17 period. ESPNEWS HD supposedly launched on March 30th, but I've been unable to track down any carriage announcements as of that date (there were short simulcasts on ESPN and ESPN2 on launch date) - supposedly DirecTV will be carrying it at some point in April. You can see what it will look like here (thanks to Engadget HD for pointing me to this). It's beginning to look as though the original DirecTV expansion swept up nearly everyone who had any interest in going HD in the near future, and it may be awhile before the late adopters get on board en masse. What's left that you think would make a good HD channel? My own "most wanteds" would be Sundance Channel, IFC and Turner Classic Movies (who I believe would do business very differently from the other Turner HD channels).

Meanwhile, the main ESPN HD channel continued to expand HD by using it for MLB spring training games. Something else is imminent; HGTV and Food Network are following the PBS HD example and moving their HD channels from a separate all-HD schedule to a simulcast of their SD channels, starting March 31st. Lets hope they won't lose as much HD content (at least in the short run) as some of the PBS member stations have.

MANUFACTURERS - I predicted last time that this section would be getting a lot shorter now that the HDM (high-def media) format war is over, but there's a fair amount of mopping up to report on, at least this time. Various players continued to head for the exits, as Samsung killed their dual-format player, Universal announced that it would end HD DVD support with Atonement on March 18th (link via Format War Central), retailers quickly moved to limit or eliminate players and disks (thank to Engadget HD for the link) and Netflix started switching HD DVD titles to DVD in members' queues (as well as making it impossible to re-enable HD DVD in members' profiles once they disable it). Some retailers went so far as to offer trade-ins, although most of these were foreign. Of special note was Circuit City's very quiet willingness to offer credit for players up to 90 days old (alas, I made my own purchase too early to qualify).

One benefit of this (for those who planned to keep using their players, or even pick one up cheap) was the various fire sales going on. In late February, Amazon had Toshiba's HD-A3 for $82 (inexplicably, it's now back up to the list price of $149.95). In a parting gift to the format's fans, Microsoft lowered the price of its Xbox HD DVD add-on to $49.99. But most HD DVD fans already have their equipment, so the most relevant sales were that of disks, such as Best Buy's 30% off sale, or Discovery Channels' 70% discount on the box set of its acclaimed Planet Earth series. And it looks like people were buying, as HD DVD disc sales racked up several of the best weeks they've had in awhile. Something else of benefit to loyalists - in contrast to other producers, Joe Kane Productions continues to offer HD DVD diehards calibration help with a new format-neutral product (and buyers of an earlier HD DVD product will be able to upgrade to either the HD DVD or Blu-ray versions of the new one). And of course, Warner still has a few titles scheduled through May.

Naturally, Toshiba is among those moving on, but not without some damage, a billion dollars worth of damage, to be precise. An interesting fact is that they will not be jumping on the Blu-ray train in the immediate future, preferring to focus on improving their upconverting DVD players to the point where you supposedly won't be able to tell regular DVDs from HD DVDs (so why did they bother with HD DVD at all?). They also want to be a player in the movie download business.

While downloads may be a future problem, for the moment Blu-ray has the HDM market sewn up. Many of the Blu-ray titles Paramount pulled when they switched to HD DVD are back in stock on Amazon, retailers are ramping up their Blu-ray presense (here's an example) and so is NetFlix. It's even possible that Microsoft may be thinking of adding a Blu-ray drive for the Xbox, although this early report was later denied. One negative - lack of competition has done exactly what HD DVD diehards predicted it would and raised player prices.

But looking ahead, Blu-ray will have two major challenges. As mentioned above, downloads are a future problem - studio execs don't see this happening for a long time, and a recent study shows that only 5.7 million U.S. homes even have the broadband available to stream HD (which would indicate that those lacking that ability would find transfer times for later viewing unacceptable as well). So for the moment, Format War 2.0 is primarily a matter between Blu-ray and DVD. How's that one going? The people who've provided the HD DVD vs. Blu-ray figures that have been referenced here numerous times have just started compiling Blu-ray vs. DVD figures, and I'll be taking a look at those starting next time. In the meantime, we note than a new analyst reports predicts a tripling of Blu-ray sales in 2008, that Sony will release full 2.0-compliant players and over 100 titles this year and that those recently-raised hardware prices will be coming back down later this year. Also, the Digital Entertainment Group (whose membership encompasses both the hardware and software sides of the equation) will be stepping up its Blu-ray promo activities. All in all, Blu-ray appears to be getting ready for this new battle.

There are a few other pieces of hardware news to pass along. While Blu-ray (not to mention OLED) is on the march, another major Sony product line (Trinitron TVs and monitors) is finally dead, after having been killed in Japan and the U.S. previously (there were still limited amounts being made for other markets). That's just part of the declining sales picture for CRTs, and I have to say I was surprised to find out that they were just recently overtaken by LCDs on a worldwide basis - I assumed that was old news. Another technology losing ground to LCD (but not in nearly as much trouble) is plasma - Pioneer's acclaimed Kuro line will have both plasma and LCD models come fall (the linked article also references Pioneer's ending of in-house plasma production, but that's really just an outsourcing story, and I'm not reading too much into that at the moment). Still another product line that people have wondered about is TiVo's stand-alone DVR (we've gone into their current problems above), but this isn't stopping them from going ahead with plans to implement tru2way (formerly known as CableCARD 2.0 so as to better access providers' advanced interactive features. And I'm always interested to hear stories about HDTV's planned successor Super Hi-Vision (as Japanese broadcaster NHK is now referring to it) - the latest news concerns the BBC's plans to use it to broadcast parts of the 2012 Olympics on large screens (this is not a technology that makes a big impact on smaller screens) placed in public areas across Britain.

But it's important to remember that the advance of technology is always reliant on the ability and willingness of people to spend money. So the question is, will the current economic uncertainties slow things down, and by how much? I'll close with two possibly-relevant data points - flat-panel inventories rose markedly in January (on a year-to-year basis), and Japanese manufacturers are already planning to focus on smaller screen sizes as a result of slowing sales.

That's all for now!

4 Comments:

At 7:11 PM, Anonymous Cymon said...

Bob,
I added a new post to http://cymonsplace.blogspot.com regarding the workshop held yesterday at FCC headquarters. The workshop was DTV Television Consumer Education Workshop Focusing on Low Income Consumers you can view the workshop at http://www.fcc.gov/realaudio/workshops.html and click on the April 1, 2008 item. The important message...lots of work to do.
Cymon

 
At 3:49 PM, Blogger Ben said...

I know about 2 dozen low income senior citizens who don't even have the $10-15 to spare that they have to pay for the converter box after the coupon. They have Medical Assistance on top of Medicare to help pay for their prescriptions and medical bills. I had to shell out $20 out of my summer vacation money stash to help my Grandmother with the transition (She has 2 analog TVs and no cable/satellite, she had Dish Network but the bill had went too high for her income). If I didn't have an internet connection, she probably wouldn't have gotten the coupon cards. If you are like my elderly friend across the street, Mrs. Mary, who is on a severely low income and has nobody that can assist her, you will end up probably losing one of your only 2 main sources of entertainment that you have.
Ben

 
At 1:03 AM, Blogger Bob Colby said...

Cymon - thanks, I'll mention that workshop in the next update!

Ben - Good points. And if that's not bad enough, nursing home residents don't qualify for the coupons because nursing homes don't fit the governments definition of a "household"!

 
At 9:21 PM, Blogger caltel said...

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