*Adjunct Professor and Senior Research Scientist, University of Louisiana at Lafayette, Department of Communications and Cecil J. Picard Center for Child Development and Lifelong Learning.
Introduction
On June 12, 2009, full power television stations in the United States completed the transition to digital terrestrial broadcasting—the biggest change in television standards since the introduction of electronic television in 1945. Seven years later, older tube televisions have virtually left the stores and new methods of program delivery have entered the market.
Background
U.S. commercial television began in 1941 when the Federal Communications Commission (FCC) established a broadcasting standard. Home video is a combination of delivery, recording, and display systems and over the years has resulted in several battles over standards and compatibility issues.
Delivery
Television stations licensed in 1941 were crude, with low resolution pictures even compared to the 525-line, analog standard recently replaced. World War II stopped nearly all development, and only six stations were still broadcasting after the war.
The FCC completely revised the transmission system after the war with the introduction of electronic encoding. Yet, post-war confusion led to more delays as the FCC was inundated with new applications, and it was clear that the original very high frequency (VHF) band would not provide enough space.
Initially, television was broadcast in black-andwhite. In 1953, color was added to the existing (luminance) signal. This meant that color television transmissions were still compatible with black-and-white televisions. This ability to be compatible with previous technology is called reverse compatibility and can be a major advantage in the adoption of a new technology.
After granting 107 licenses with 700 more to process, the FCC initiated a freeze on television applications in 1948 (Whitehouse, 1986). Thus, from 1948 to 1952, there were only about 100 stations on the air nationally.
A second compatibility issue developed in 1952 when the freeze ended and the FCC formally accepted a plan to add ultra-high-frequency (UHF) television. Like VHF, UHF stations used six megahertz of bandwidth and encoded video using amplitude modulation (AM) and audio in frequency modulation (FM). However, because UHF transmitted on a higher frequency, existing television sets needed a second tuner for UHF, and new antennas were often needed. Since there were only 12 or 13 stops on a VHF dial each one clicked into place while the UHF dial had to be tuned more carefully.
UHF stations complained they were given a second-class status that was almost impossible to overcome as people were reluctant to spend the extra money and effort to get a fully compatible television. It was not until 1965 that the FCC issued a final all-channel receiver law, forcing television manufacturers to include a second tuner for UHF channels. Still, it would be many years more before UHF achieved near parody with VHF television.
A combination of factors, including the public’s interest in television, the FCC freeze on new stations, and the introduction of UHF television, created a market to augment television delivery. As discussed in Chapter 7, cable television’s introduction in 1949 brought video into homes as a replacement for personal antennas and simply relayed over-the-air broadcast stations. In the 1970s, cable introduced a variety of new channels and expanded home video capability. An analysis of FCC data reveals that a total of 105 national and regional programming networks started operation prior to 1992. The Cable Television Consumer Protection and Competition Act of 1992 stimulated growth in multichannel services. From 1996 to 2014, the number of satellite-delivered programming networks increased from 145 to more than 900 (NCTA, 2015). Direct broadcast satelites (DBS) began to make serious inroads following the 1992 Cable Act and still exist today in the U.S. as DirecTV and DISH Network.
Recording
At first, television programs had to be either live or on film. In 1956, Ampex developed videotape technology that allowed recording of programs on magnitized tape. These first videotape recorders were about the size of a double home refrigerator, used two inch wide videotape, and noisy vacuum systems held the tape in place. An hour long tape could weigh 30 pounds.
In 1977, a practical home system was introduced placing ½ inch wide tape in easy to handle plastic cases, enabling home video cassette recorders or VCRs. There were two competing standards: Sony’s Betamax; and JVC’s VHS. By 1982, a full-blown price and technology war existed, and by 1986, 40% of U.S. homes had VCRs. Video distributers reluctantly distributed content in both formats until VHS eventually won the standard with the most homes, and Betamax owners were left with incompatible machines. VHS had the advantage of longer recording time as well as lower prices for equipment and tape.
VCRs gave consumers new power for on-demand programming through video rental stores or over-the-air recording. VCR penetration quickly grew from 10% in 1984 to 79% 10 years later. In 2006, the FCC estimated that 90% of television households had at least one VCR (FCC, 2006). However, VCRs were susceptible to damage by temperature, dirt, overuse, magnetic fields, and physical shock.
In the 1980s, RCA and MCA/Phillips introduced videodisc formats. Both were based on disks the size of the long play (LP) audio disks—although the MCA/Phillips system used an optical recording system similar to today’s digital versatile disc (DVDs). Despite the higher quality signal, the discs were never widely accepted in the consumer market.
In 1997, the smaller DVDs (based on audio compact discs) were introduced as a mass storage device for all digital content. Bits are recorded in optical format within the plastic disc. Unlike earlier attempts to record video on CDs (called VCDs), the DVD had more than enough capacity to store an entire motion picture in analog television quality plus multiple language tracks and bonus content. DVDs were disadvantaged by the lack of recording capability. However, they were smaller, lighter, and more durable than VHS tapes. In the end, video and game distribution were the major use for DVDs.
The introduction of high-definition television resulted in yet another format battle. In 2001, the Bluray format, supported by Sony, Hitachi, Pioneer, and six others, competed against the HD-DVD format supported by Toshiba, NEC, and Microsoft (HDDVD.org, 2003). Unlike the Beta/VHS battle, there were significant differences between these formats. For example, Blu-ray could hold significantly more content (50 GB compared to 30 GB for HD-DVD and 9 GB for standard DVDs). The initial cost for the players was around $500, but fell dramatically into the $250 range as the format war continued (Ault, 2008).
Both groups created exclusive deals with major film studios. Warner Brothers delivered a surprising blow at the 2008 Consumer Electronics Show by switching from HD-DVD to Sony’s Blu-ray. Other studios, unhappy with multiple formats, soon followed suit. While Toshiba initially vowed to continue to fight, the company gave up within a month. Since 2003, consumers have shifted from VCR to DVD and Blu-ray with the industry earning billions of dollars on the top 100 DVDs alone (see Figure 16.1). 2007 marked an explosive growth with more than $6 billion in consumer spending on the top 100 DVD titles alone. Blu-ray formatted discs pushed the format to another high in 2015 at over $5 billion. However, consumer spending on the top 100 titles fell to $2.6 billion in 2015 (The-numbers.com, 2016).
The digital video recorder (DVR) was introduced in 1999. The heart of a DVR is a high-capacity hard drive capable of recording hours of high definition video. Since it is a nonlinear medium, the DVR is able to record and playback at the same time. This gives the system the apparent ability to pause (even rewind) live television. Today, DVRs serve as a platform to provide on-demand programming and share content throughout the home while recording multiple programs at the same time.
Consumer Spending on Top 100 DVD and Blu-ray Discs ($Billions)
Source: Calculated from http://www.the-numbers.com
Display
The television set has become a fixture in American homes. By 1975, televisions were in 95% of U.S. homes, and 66% viewed them as a “necessity” (Taylor, 2010). The television “set” was appropriately named because it included tuner(s) to interpret the incoming signals and a monitor to display the picture. Tuners have changed over the years to accommodate needs of consumers (e.g., UHF, VHF, cable-ready). Sub-processors later added interpreted signals for closed captioning, automatic color correction, and the V-chip (parental control).
The first type of television monitor was the cathode ray tube (CRT). The rectangular screen area of a CRT is covered with lines of phosphors that correspond to the picture elements (pixels) in the image. Color monitors use three streams of electrons, one for each color channel (red, blue, and green). The phosphors glow when struck by a stream of electrons sent from the back of the set. The greater the stream, the brighter the phosphor glows. The glowing phosphors combine to form an image.
The first U.S. color television standard was set by the National Television Standards Committee (NTSC), which called for 525 lines of video resolution with interlaced scanning. Interlacing means that the odd numbered video lines are transmitted first, and then the display transmits the even numbered lines. The whole process of sending one complete picture takes one-thirtieth of a second (30 frames of video per second). Interlaced lines ensured even brightness of the screen and a better feeling of motion (Hartwig, 2000).
As the digital market has grown, consumers have more choices than ever when they select a new television. While most digital sets will at least attempt to produce a picture for all incoming signals, some will be better able to do it than others. The Consumer Electronics Association (CEA) suggests five steps in the decision process (CEA, 2007):
1) Select the right size.
2) Choose an aspect ratio.
3) Select your image quality.
4) Pick a display style.
5) Get the right connection.
New sets are larger than ever, and it is easy to buy too large or too small. Even with a high-definition set, if you sit too close, you see too much grain. If you sit too far away, you lose picture resolution. The rule of thumb is to measure the distance from the picture to the seat. Divide that distance by three. The result is the smallest screen size for the room. Divide the distance by two and the result is the largest screen size for the room (see Figure 16.2).
The two aspects of format that should concern the buyer the most are lines of resolution and aspect ratio. CEA has established four quality levels for lines of resolution:
• Standard definition uses 480 lines interlaced. It is most like analog television (525 lines), but contains the circuitry to convert higher-quality images down to the lower-resolution screen.
• Enhanced definition sets use 480p or higher. The image more smoothly presents high-definition content because of the progressive scan; it meets the quality of standard DVDs.
• High-definition pictures are at resolutions of 720p up to 1080p. They can display HD content and Blu-ray DVDs at full resolution.
• Ultra High Definition: Discussed in the next section, UHD requires 16 × 9 aspect ratio with a resolution of at least 2160p.
Aspect ratio is the relationship of screen width to the height. Standard definition sets have an aspect ratio of 4:3 or four inches wide for every three inches tall. The widescreen format is 16:9. Most televisions will attempt to fill the screen with the picture, but the wrong image for the screen distorts or produces a “letterbox” effect with black bars at the top and bottom of the screen.
In addition, picture size is a measure of the diagonal distance, and wider screens have proportionally longer diagonals. For example, a 55-inch diagonal set with a 4:3 aspect ratio has 1,452 square inches of picture space. The same 55-inch set with a 16:9 aspect ratio has only 1,296 square inches of picture space. Thus, it is misleading to compare the diagonal picture size on sets with different aspect ratios.
The major display styles are CRT, plasma, LCD, and LED. Although CRT screens tend to be smaller, for years they remained the most affordable choice for a bright picture and a wide viewing angle. LCD (liquid crystal display), LED (light-emitting diode), and plasma are flat screen technologies. LCD displays tend to have a brighter image but a narrower viewing angle. LCDs have two sub-standards: LED and OLED which are variations on how the LCDs create the light necessary to produce a picture. Plasmas have a wider viewing angle but the shiny screens more easily reflect images from the room.
Higher quality displays create video frames that bridge the motion between existing video frames. From an original 60 hertz frame rate, the system will create additional video frames to make the motion smoother and reduce perceived flicker. These sets are then marketed as 120 or 240 hertz sets. For presentation of motion pictures shot at 24 frames per second, the display can adapt to that frame rate or double it to 48 hertz—reducing flicker or a “video-like” image. Many current high definition sets add algorithms to guess at missing pixels between lower definition content and the higher resolution screen.
Recent Developments
It has now been almost a decade since the transitions to digital broadcasting, and analog formats such as VCRs have all but disappeared. In addition, consumers have fully embraced digital delivery. Both the industry and consumers are getting used to digital delivery and starting to explore options.
Monitor Development
The term “television set” refers to the combination of the monitor and the tuner. As consumers become ever more dependent on cable box, Internet, DVD, or other devices, what they are really purchasing is the monitor (screen). Monitor sales are growing more dependent on adaptable connections and image quality.
Choosing the Correct Size Television
Selecting the right size set for a room is easy using this simple calculation: 1. Measure distance from TV to sitting position. 2. Divide by 2 and then by 3 to get ideal screen size range. The resulting numbers will be the ideal screen sizes. Example: Distance =8 feet (or 96 inches), 96 / 2 = 48” set, 96 / 3 = 32” set, and Ideal set is 32” to 48”.
Source: Technology Futures, Inc.
Yet another iteration of high definition monitors with improved picture quality has reached the market in the form of 4K televisions, with an even higher resolution format known as 8K on the horizon. The “4K” refers to the number of pixels across the screen—actually 3840 up from 1920 for current 1080 HDTV (Pino, 2016). These new monitors do not provide the immediate increase in quality some would like. First, they will require programming available at that quality. So far, there are limited programs available due to heavy bandwidth needed to deliver the increased quality.
The second issue is the ability to see the additional resolution. In a current living room seating arrangement, viewers may be too far from the screen to see the additional pixels. At a ten feet from the monitor, the rule of thumb guide in Figure 16.2 above suggests an HDTV screen between 40” and 60 inches diagonally. However, Carton (2016) suggests the full benefit of a 4K monitors may not be seen at that distance (see Figure 16.3)—especially at a monitor size possible in most the home. Suggestion: sit closer for a more immersive experience (Pino, 2016).
Viewing Distance where Resolution Becomes Noticeable
Source: CarltonBale.com
The line between Internet delivery and on demand programming began to blur as multi-channel program providers integrated broadband Internet delivery. Streaming to DVR was used to expand on-demand capacity. At the same time, companies including Hulu, Amazon, Google, and Netflix, expanded onto the home video screen through new interface boxes (Roku), built-in applications, and video game consoles.
The most adaptable connection monitor is the Smart TV—a monitor with the intelligence needed to run apps. Like cell phone apps, the monitor can be used to instantly upgrade to new delivery sources or a customized experience for a source. As of early 2016, smart TVs had entered 20% of U.S. households, and 56% had at least one television connected to the Internet through some means (Baumgartner, 2015).
Consumers are getting an increased amount of content through steaming and other pay services (See Figure 16.4). Pay channels are producing more content than ever before (Littleton, 2015). Julie Piepen-kotter from FX Network Research found that the number of original, scripted programs (not including news, non-scripted reality, and game shows) nearly doubled from 211 in 2009 to 409 in 2015. This trend is led by a 484% increase in new scripted shows on basic cable since 2002. In 2015 Broadcast networks produced 147 new scripted programs compared to 181 on basic cable, 44 on streaming media, and 37 on pay cable.
Increases in Original Scripted Programing 2013-2015 by Source
Source: http://variety.com/author/cynthia-littleton/
As consumers were faced with new equipment choices, companies had to actively compete for a place in the home. Traditional cable television reached a penetration high of 71% in February 2001 but dropped to 56% in 2015 (TVB, 2015). The more significant trend may be growth in cord cutters and cord nevers—those that have chosen to forgo cable and satellite delivery. Pew Research Center indicates that 15% of Americans have abandoned cable and satellite delivered television while broadband Internet has plateaued as some consumers choose to receive content via cell networks or not at all (Pew, 2015). In addition, 9% have never subscribed to cable or satellite services. Those without service indicate that the cost is too high (71%), they can access content online or over the air (64%) and/or they do not watch TV often (46%).
Current Status
Home television is changing. More customers are exploring options outside of the traditional video channels. As a percentage of U.S. households, television households are currently down to 95.2% from a high of 98.9% in 2011. The Leichtman Research Group has been reporting on a continuing loss of pay television subscribers since 2014. For example, “the thirteen largest pay providers in the U.S.—representing about 95% of the market—lost about 190,000 net video subscribers in 3Q 2015, compared to a loss of about 155,000 subscribers in 3Q 2014” (Leichtman, 2015).
The number of factors affecting home television prices and options are increasing. The screen size and resolution are the chief cause of price differences with 23 inch models ranging in price from $150 to $500 while 65 inch sets range from $700 to $5000 (Consumer Reports, 2015). Other factors that affect price include style factors such as the thickness of the television, energy usage, and technology such as smart televisions or double depth pixels. These factors will probably continue to drive the price for the home consumer.
Home television consumers are facing a variety of choice for program delivery. Currently, almost any device that touches video to the screen could be a delivery system such as DVRs, DVDs, game counsels, multimedia devices, and computers. New services offering subscription video on demand include, CBS, Netflix, HBO, Google, and Amazon with a cost ranging from $8 to $12 per month.
Consumers have embraced the variety (See Figure 16.5). It is interesting that the top video subscription service in 2015 was Internet streaming followed by DBS, and finally a cable company. In fact, out of these top ten pay television services, only five are traditional cable companies. The impact of program diversity has already been felt as all but three of the top 25 cable networks saw their audience decline from 2014 to 2015 by an average of 12% with seven of those networks experiencing a 20% drop in primetime viewership (Paul et al., 2015)
Top Ten Video Subscription Services by Subscribers (millions)
Source: SNL Kagan and Company via NCTA.com
Redbox provides kiosk-based DVD rentals in 36,140 locations (2014) in the United States and Canada. Unfortunately, it has been feeling the pressure of competition. A 2012 joint venture with Verizon to provide streaming services ended in October of 2014. The number of kiosks dropped dramatically in 2015 as the company eliminated unprofitable locations in the United States and ceased operations in Canada. Redbox fourth quarter revenue fell from $491 million in 2014 to $407 million in 2015 (Outerwall, 2016). The fourth quarter includes the highly profitable month of December when Redbox rentals tend to be high. In addition to fewer kiosks, the parent company, Outerwall, blamed the lower performance on a fewer rentals from their highest volume customers, weak content to rent, and increased price sensitivity as customer saw new options for video rentals. In addition, the company anticipated a 15-20% decline in rentals for 2016 (Outerwall, 2016).
Factors to Watch
Business aspects of the home video industry are becoming an immediate concern. Determining the business models for content have taken more of the providers’ attention as more companies have entered the pay television market. Hulu currently offers three models from free to advertisement free at different monthly costs. Google is offering a family plan with restrictions that limit account sharing that has plagued Netflix.
Along the same line, advertising models need to be standardized across delivery platforms. While traditional broadcasting offers an accepted standard for audience measurement and pricing. Interactive delivery such as internet and cable PPV can access larger dataset on the audience and automatically monitor the actual delivery of an advertisement. Once purchase and return on investment models (ROI) can be standardized across traditional and interactive media, it will be easier to buy advertising with confidence that delivers the best of both platforms.
Media advertisers can finally access big data and higher quality support for ROI. People who understand both advertising and multiplatform analysis methods will be in demand. Already, big data analysts (see chapter 23) are some of the most highly paid new careers available.
Conclusion
Options are just too enticing as a new generation of home video technologies comes of age. The industry is readying for an age of multiple platforms from the very large home theater to the small mobile device. Which devices and markets will become a success is up to consumers and producers alike. The consumer must accept the platform, and the producer must create a business model that will work for everyone.
Projecting the Future
The trend in media over the last several years is toward diversity of content, delivery, and screens. There is every reason to believe that this trend will continue for the next 15 years.
Content has become increasingly targeted as programs have sought a niche of their own. The rise of Fox News came about as the network found a politically conservative audience to serve. Competitive news outlets responded by attempting to target other groups. In the same way, the growth of scripted programming has served the needs of individual channels serving ever more niche audiences.
Younger audiences are leading the abandonment of traditional media sources for video entertainment. The segment of highly desirable television viewers from age 18-34 has dropped 5% in the last four years down to 20.5% as they choose non-traditional online sources like YouTube (Battaglio, 2016). In a global survey, Nielsen found that 72% of video on demand users want even more content, and while it is not as good as watching the bigger screen, the convenience is important (Nielsen, 2016).
The growing dependence on tablets and smartphones as video delivery vehicles indicates a shift in the relationship between the display and the viewer. Isolated viewing that was once done with the small TV in the bedroom seems to be replaced by the even smaller screen in the bed. People are beginning to curl up with the video like they used to relate to a book.
Nielsen is starting to recognize the needs of the industry by creating their total audience measurement service to account for all viewing across TV, DVR, VOD, and Internet connected devices (Lynch, 2015). The change in ratings is a necessary first step in unifying audience measurement across platforms. These measurements will help advertisers understand shifting audiences and program producers monetize content. The shift is necessary for a unified model for the video industry.
One caveat as we look toward the coming 15 years. This chapter has covered approximately 65 years of home video where the dominate delivery vehicle has included broadcast, cable TV, DBS, VCR, DVD, DVR, and streaming media. There is a strong possibility that another delivery vehicle will become important in the coming years. Home video has been characterized by shifting technology and business models and there is no reason there will not be another shift.
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