16

Home Video

Matthew J. Haught, Ph.D.*

Overview

Home video technology encompasses a range of signal formats, from broadcast, cable, satellite, Internet protocol television (IPTV), over-the-top media services (OTT), and online video distributors (OVD). The three web-based signal formats have spurred major change to television sets, with Internet connectivity either built in (smart TVs), added via multi-platform streaming connectors (Google Chromecast, Amazon Fire TV Stick), or through an external device (Blu-ray player, gaming system, Apple TV, Roku). The trend of cord-cutting, dropping traditional cable or satellite service, and the rise of popular niche programming by OTT and OVD providers, has disrupted the business model for the entertainment and service provider industries.

Introduction

For decades, home video technology centered on receiving and displaying a signal carried through broadcast, cable, and satellite providers. Second to that purpose was recording content via videocassette recorder (VCR) and digital video recorder (DVR) and displaying content from personal video recorders, on video home system cassette tapes (VHS), laserdiscs, digital video discs (DVDs), and Bluray discs. However, the gradual shift toward the Internet and web-based home video has eroded home video’s legacy formats, in favor of Internet protocol television (IPTV), over-the-top media services (OTT), and online video distributors (OVD).

Today’s home video receivers can receive signals over the air (via an external antenna), via cable, satellite, or the Internet, from DVDs and Blu-rays, and from streaming service providers. Tube-based televisions have largely disappeared from stores, replaced by plasma, OLED, LCD, and LED flat-panel displays. However, some video gamers have re-embraced tube displays for their better connectivity with classic video game platforms (Newkirk, 2017).

Home video technology exists primarily for entertainment purposes; it also has utility as a channel for information and education. Broadcast television delivers a broad national audience for advertisers, and cable and OVD platforms deliver niche demographics.

Background

Today’s home video ecosphere sits at the intersection of three technologies: television, the Internet, and the film projector. Home video encompasses the many paths video content has into users’ home, as well as the devices used to consume that content.

Broadcast television began in 1941 when the Federal Communications Commission (FCC) established a standard for signal transmission. Up to that point, Philo T. Farnsworth, an independent researcher, as well as engineers and researchers at RCA and Westinghouse, had been working separately to develop the mechanics of the television set. Farnsworth is credited with inventing the first all-electric television, while RCA developed the cathode ray tube, and Westinghouse developed the iconoscope as a component of early video cameras. These inventions coalesced into the broadcast television system, where an image with video was captured, encoded into an electromagnetic signal, sent through the airwaves, received via antenna, and reproduced on a television screen (Eboch, 2015).

In 1953, issues with limited spectrum created a second tier of broadcast frequencies; the initial space was categorized as very high frequency (VHF), and the additional space as ultra-high frequency (UHF). Consumers were slow to adopt UHF, but eventually, in 1965 the FCC mandated UHF compatibility for television set manufacturers.

As discussed in Chapter 7, cable television originated in 1948 when rural communities in Arkansas, Oregon, and Pennsylvania separately erected community antennae to receive distant broadcast signals. By the late 1950s, these antennae could receive local and distant signals, providing subscribers choices for content. Following a few regulation issues, cable television began to expand rapidly in the 1970s, and some networks began using satellites to send signal to cable systems. In the mid- to late-1990s, cable systems began to transition from antenna-satellite distribution to a fiber optic and coaxial network, capable of supporting television signals, telephone calls, and Internet (Cal-Cable, n.d.). Satellite television began as users, primarily in rural areas, installed large dish receivers to receive signals sent via satellite. In 1990, DirecTV was the first direct broadcast satellite service available to users, followed soon by USSB, Dish, and others. Over the next two decades, the industry consolidated to two primary providers: AT&T’s DirecTV and Dish.

Consumer Internet access began in the 1980s through telephone dial-up service. However, by the mid-1990s, the slow speed of telephone modems was evident, and cable companies began to provide Internet access using the same coaxial cables that distributed television signals, supplanting telephone companies and third-party Internet Service Providers (ISPs). As Internet connectivity improved, video began to migrate to the platform.

Finally, the home film projector began as a way to show films and recorded home movies. Its use was expanded with the introduction of the consumer VHS and Betamax VCRs in the 1970s. After VHS won the standard war with Betamax, home video recording became quite popular through the VCR and through portable video camera recorders. The landmark Sony vs. University City Studios case in 1984, commonly called the Betamax case, established that home VCR users could record television programming for non-commercial use without infringing on copyright. In the 1990s and 2000s, DVDs replaced VHS as the primary means of storing recorded video, and portable video camera recorders transitioned to flash media for storage. In the mid-2000s, Sony’s Blu-ray format beat out Toshiba’s HD DVD as the format of choice for high definition video storage. Further, the digital video recorder, available through most cable and satellite systems, replaced the VCR as a means of recording and time-shifting/storing television programming.

Recent Developments

The recent developments in home video extend ongoing evolutions in the industry. Three key areas: Smart TVs, cord cutting via the expansion of OVD and OTT services, and changes to Net Neutrality laws, shape the industry’s present state. And, for the foreseeable future, these issues should remain at the forefront of home video.

Smarter TVs

The 2018 Consumer Electronics Show, as typical, featured a bevy of new television features, increases in size and quality, and incremental improvements to features in standard consumer models. Samsung and LG Electronics both expanded on new OLED and LED display technologies from 2017. LG launched a 65-inch 4K resolution OLED television that rolls down into a small box. Meanwhile, Samsung launched a 146-inch TV with its microLED display; the display’s name reflects its size: The Wall (Falcone, 2018).

Aside from the boasts in size and quality, the latest development with television sets themselves are a deeper connection to the Internet and added functionality beyond program viewing. With the Internet of Things (IoT) technology, television sets are just glass to gaze at an online world. Home video has spread beyond the television set: video-capable screens are even being installed in refrigerators. Television systems are working to serve their many purposes, from connected televisions to stream, better refresh rates to game, and integration with personal assistants such as Amazon Echo for convenience (Pierce, 2018).

Cord Cutting, OTT, and OVD

Over-the-top services and online video distributors, such as cable-like providers VerizonFIOS, AT&T U-verse, and Dish’s Sling app, plus streaming video services Netflix, Hulu, Amazon Prime, MLB.TV, YouTube Red, WWE Network, CBSAllaccess, and Crunchyroll, are disrupting the traditional television ecosystem. More than half of Wi-Fi homes have at least one OTT service. For many OTT consumers, streaming services have displaced traditional television viewing; users watch OTT content 19 days a month on average, and for 2.2 hours per day. The highest concentration OTT viewing also happens during prime-time hours. Sling leads all platforms in viewing time, with an average of 47 viewing hours per month, with Netflix following at 28 (Perez, 2017). Sling viewers, typically, are using the service as a cable replacement—a skinny way to cut the cord.

Table 16.1
Paying Subscribers, Popular Online Video Apps, 2017

Rank

App

Subscribers (Millions)

1

Netflix

53

2

Amazon

30.8

3

Hulu

18

4

MLB.TV

<2

5

HBO Now

<2

6

Starz

<2

7

YouTube Red

<2

8

Showtime

<2

9

CBS All-Access

<2

10

Sling

<2

SOURCE: Parks Associates, 2017

Traditional television providers can see the writing on the wall. AT&T has purchased DirectTV as a satellite provider and launched DirectTV Now as a streaming service. Comcast has taken its Xfinity network mobile. Dish launched Sling. Comcast, Disney, and Time Warner co-own Hulu. The major brands of pay television are likely to stick around as major brands in streaming television.

Net Neutrality

The 2017 FCC decision to rollback prohibitions on throttling speeds on certain websites or charging users for premium access to websites could have a drastic effect on home video (Kang, 2017). However, the ultimate impact is too early to know. Some fear that, as traditional cable television providers absorb OTT and OVD services, users might see ISPs favor their own streaming service over others. (Net neutrality is discussed in more detail in Chapter 5.)

Current Status

Home video is making a pivot from terrestrial and satellite providers to web-based providers. In 2017, pay TV market penetration was down to 79%, from a high of 88% in 2010 (Leichtman, 2017). Yet, 96.5% of U.S. homes with a television receive a video signal of some form, paid or otherwise, (Nielsen, 2017a). Of the 21% of households that do not have pay television, two-thirds had previously been pay TV subscribers. Cord-cutting is more common among those with household incomes below $50,000 annually. Thus, the cord-cutting phenomenon from traditional pay TV platforms is on the rise and is likely to define the home video industry through 2020.

Home video technology now engages mobile devices alongside television sets. Users, particularly younger users, are watching home video content on tablets and mobile devices increasingly, and soon will do so more often than on a television set (Eck, 2017). Even content creators for home video are shifting; Amazon, Netflix, and Hulu are producing original (critically acclaimed and award-winning) content for their platforms, in addition to content from traditional video creators. And specialized platforms are playing a role to provide content previously inaccessible to consumers; for example, Crunchyroll, an OVD specializing in anime, reports having 1 million paid subscribers and 20 million total users (Orsini, 2017). Specialized web networks with premium ad-free subscriptions or free-to-watch with advertising options are providing less-visible content to their niche audience.

Moreover, creatives developing new shows might first test them on YouTube or another low-end platform, and larger content companies can pluck new talent from these engaged creatives (Eck, 2017). Or, shows on traditional television can extend their brands with web shows.

Consider first the example of World of Wonder. The production company’s flagship show, RuPaul’s Drag Race, airs on VH1 and LOGO. However, because fans of the show are deeply engaged with its content, WOW has multiple active free programs on YouTube. Then, in 2017, it launched WOW Presents Plus, a premium YouTube channel to air additional content from former RuPaul’s Drag Race contestants. One free show, UNHhhh, starring former contestants Trixie Mattel and Katya Zamolodchikova, was picked up and expanded to a full 30-minute program by Viceland Network as The Trixie and Katya Show in 2017.

Second, the example of Issa Rae’s The Mis-Adventures of Awkward Black Girl YouTube series, exemplifies online video as an incubator of new talent. Rae launched the web series in 2011; its first episode, “The Stop Sign,” earned 2.4 million views. Rae’s success translated to an HBO series, Insecure, in 2016, which itself landed her deals for two more series with the premium network (Crucchiola, 2017).

Both these examples show how home video has democratized the television landscape. WOW’s programming caters to an LGBT audience, and Issa Rae’s work is popular among African-American audience. Networks have typically been hesitant to embrace programming for these limited audiences; however, because of their strong online followings, their creative content found a place on mainstream television.

The power of home video today is the ability reach diverse audiences with diverse content. No longer are audiences limited to the content created by studios and networks, or by the channels offered by their local cable companies. Users are able to find content that suits their tastes, and watch it on whatever device they have, whenever they want, and often, paying to avoid advertising, or watching free content with ads specific to their demographics.

Technology Ecosystem

Hardware:

The hardware for home video encompasses a range of devices, including television sets, computer monitors, tablets, and mobile phones (Eck, 2017). Similarly, these displays have associated terrestrial, satellite, or web-based connectivity through a receiver, and ultimately, the sender mechanism for encoding the video signal.

Television sets continue to evolve through Internet of Things (IoT) technology (Spangler, 2018). What used to be a purely home video terminal now ranks among twenty or so other smart devices in the home capable of displaying video from OVD, as well as monitoring other smart home systems. However, the key feature of a television set is its size. Mobile device screens are rarely more than 12 inches wide, but television screens can measure up to 60 or more inches (Pierce, 2018).

Software:

Software needed for home video viewing is limited. Typically, the viewing device itself has built-in viewing capabilities. However, mobile applications for OVD are common. Netflix, Amazon, and Hulu are the most popular apps, but more niche programming apps follow.

Organizational Infrastructure:

Home video infrastructure can be broken down into two broad categories: Viewing device manufacturers and service providers. Devices include television sets, computer monitors, mobile devices, Blu-ray and DVD players, and smart television connectors. Providers include cable and satellite services, Internet service providers, IPTV services, and OVD.

With 27.2% market share, Samsung leads all LCD television set manufacturers. The second most popular, LG Electronics, has an 11.9% market share, with TCL third at 9% (Statista, 2016). Higher-end Sony and LG organic light emitting diode (OLED) and Samsung quantum dot light emitting diode (QLED) are popular and deliver higher definition, but at higher costs (Katzmaier, 2017). Samsung, Sony, LG, and Panasonic also dominate the list of Blu-ray and DVD player manufacturers.

Top computer manufactures are led in market share by HP (21.8%), Lenovo (20.4%), Dell (15.9%), Apple (7%), and Acer (6.8%); Google’s Chromebook is a rising competitor, but still has a minimal market share (Dunn, 2017). Mobile devices are dominated by Apple’s iOS and Google’s Android OS, together accounting for 99.6% of the market share (Vincent, 2017). Globally, Android serves 81.7% of users, while Apple serves 17.9%. In the U.S., however, the market is more even, with about 53% of users on Android and 44% on iOS (ComScore, 2017). Apple leads smartphone manufacturers with 44.6% of the market; Samsung (28.3%) and LG (10%) follow (ComScore, 2017). Apple (25%) and Samsung (15%) also dominate tablet market share.

Comcast (22.4 million subscribers) is the largest cable provider in the U.S., followed by Charter (17.0 million), which in 2016 absorbed Time Warner Cable. AT&T’s Direct TV leads satellite with 21.0 million subscribers, Dish follows with 13.2 million subscribers. Verizon FIOS is the largest IPTV provider with 4.6 million subscribers; AT&T’s U-verse has about 4 million (NCTA, 2017; Spangler, 2017). Comcast (25.1 million), Charter (22.6 million), and AT&T (15.6 million) lead Internet Service Providers, with Verizon (7.0 million), Century Link (5.9 million), and Altrice (3.9 million) following (Molla, 2017).

Netflix leads all OVD platforms with 52.8 million subscribers, with Amazon and Hulu boasting high subscriptions. However, some OVD platforms offer free subscriptions. YouTube, for example, has 1 billion active users per month, while YouTube Red has more than 2 million paying subscribers; those 2 million can watch videos on the network ad-free, while the remainder can use the service, but must watch ads before most videos. This free-with-ads/paid-ad-free model operates for several platforms.

Social Systems:

The NCTA—The Internet & Television Association, is the lead trade association for the U.S. broadband and television industries. The NCTA was one of the lead lobbying groups pushing for the FCC’s 2017 rollback of Net Neutrality rules. However, the association claims it supports an open Internet, including no blocking of legal content, no throttling, no unfair discrimination, and transparency in customer practices (NCTA, n.d.). The 2017 Net Neutrality rollback removes rules blocking extra charges or slowing of content for specific sites. However, at the time of this writing, lawsuits and legislation could change this rollback, instituting new limits or overriding the change entirely (Kang, 2017).

Individual User:

Service penetration for television remains high; Nielsen estimated there were 119.6 million TV homes in the U.S. for the 2017-18 season, which is about 80% of households (Nielsen, 2017a). Meanwhile, 77% of U.S. adults own a smartphone, 51% own a tablet, and 78% own a desktop or laptop—all capable of home video viewing (Pew, 2017).

As of June 2017, 58.7% (69.5 million) of the 119.6 million TV households have at least one Internet-enabled device capable of streaming content to the television set (Nielsen, 2017b). Users access video content through gaming systems (39.4 million); smart televisions (36.6 million), and multimedia devices (30.6 million) with some overlap (Nielsen, 2017b).

Ultimately, individual user adoption can vary widely, from full cable and satellite with premium channels and multiple OTT, OVD platforms via multiple enabled devices to no television service with only a free OVD subscription on a single web-enabled device.

Figure 16.1
Household Ownership of Enabled Devices (One, Two or Three)
fig16_1

Source: Nielsen National Panel, 2017

Sales and Subscriptions

In 2017, DVD and Blu-Ray disc sales dropped 14% to $4.7 billion; video rentals from kiosks and stores dropped 17% for a little more than $2 billion. Streaming home video, including OTT and OVD platforms, grew by 30% to $9.5 billion. Pay-per-view and on-demand home video dropped nearly 7% to $1.9 billion. Meanwhile, electronic-sell-through, where users pay for a video and keep it on a hard drive, rose to about $2 billion (Lopez, 2018).

Outside the home, domestic box office spending dropped 2% to $11.1 billion. More often, consumers are opting to stay home and watch new streaming content rather than go to the cinemas and watch a movie (Lopez, 2018).

The number of home cable and satellite subscribers continues to decline as cord-cutters drop cable services in favor of OTT and OVD services; at the end of 2017, just below 80% of U.S. homes had cable television, down from a high of 91% in 2011. Kagan, a research unit in S&P Global Market Intelligence, reports that nearly 4 million homes dropped television in 2018, and it and other researchers expect the slide to continue, likely to about 67% of homes by 2027 (Adgate, 2017).

Despite declines in cable and satellite subscriptions, revenue in the industry is expected to increase. Kagan expects revenues from residential subscriptions to increase from $108.4 billion in 2016 to $117.7 billion in 2026. Broadband Internet services are largely driving this growth, with an expected 71 million subscribers by 2026 (Burger, 2016).

In advertising, television is no longer king. Brands spent about $71.3 billion on domestic television in 2016, while digital advertising spiked to $72.5 billion. Companies are concentrating television spending on fewer brands and products, and they are even launching new products without national television campaigns. Advertising on digital video platforms is on the rise, however, with digital video hitting a record $9.1 billion in 2016 and mobile video revenue hitting $4.2 billion (Slefo, 2017).

Factors to Watch

As cord-cutting and online transitions escalate, home video could transition further away from its traditional tether to a television set (Eck, 2017). Mobile video consumption is on the rise, but still lags traditional television consumption four-to-one (eMarketer, 2016). As OVD platforms Hulu, YouTube Red, Amazon Prime, Netflix, and others continue to generate original content, expect more mobile video consumption.

The caveat to this mobile pivot comes through the FCC’s 2017 decision to overturn Net Neutrality rules that prohibited ISPs from throttling speeds or charging uses more for streaming services. Considering the bulk of ISPs are cable, satellite, or IPTV companies, users who drop mainline video service in favor of OVD platforms outside the ISPs home brand might see slower speeds or higher costs.

Regardless, the ability of OVD and legacy video distributors to deliver an audience to advertisers remains strong. Big data tracking of users will be easier as more make the switch to online video. Thus, brands will be able to target specific users and demographics more easily and will be able to more effectively measure the return on investment for ad spending. Further, demographic-specific creative advertising could be channeled to users on the fragmented OVD platform, all driven by big data.

Home video is a commodity of the media convergence economy. Television set manufacturers have switched to making mobile phones and tablets. Computer manufacturers are making mobile phones and tablets and smart television systems. Movie and television studios, independent content creators, and cable companies have their own streaming platforms or investing in others. Home video is evolving far beyond channels and receivers to a new era of content and glass.

Getting a Job:

Students who are interested in production careers in home video need to learn the current technology for studios, including switchers, cameras, and lighting, as well as editing. Systems maintenance professionals can work outdoors or in close spaces to maintain the substantial infrastructure needed for transmission. Home video systems designers need to study engineering or physics to build knowledge about fiber optics and electricity.

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_______________

* Assistant Professor, University of Memphis, Department of Journalism and Strategic Media, Memphis, Tennessee

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