A look at what's ahead for the video business in the coming year.December 16, 2013
International CES used to be television heaven. Consumer electronics makers filled the vast Las Vegas Convention Center with floor to ceiling displays of TVs. But since the failure of 3-D sets to inspire a surge of sales, the excitement has gone out of the business.
Over the past two years, according to the market research firm IHS, global television shipments have fallen from 255 million to 227 million. With nothing really new to show, last year, only Korea's LG made television the centerpiece of its CES effort. And when the show opens next January, TV's are likely to be less prominent than ever.
But if the TV hardware business has cooled off since the heyday of big flat-screen, the content business is hotter than ever, with more providers offering more choices of programming to more types of devices—the TV business is no longer just for televisions.
Here's a look at some of the hot trends for the video business in the coming year:
Bye-bye plasma. With falling costs and rising quality, LCD displays have finally won a decisive victory in their long battle with plasma. Panasonic, which has dominated the plasma business, will make its last set in December. The only real rival to LCD, organic light-emitting diode or OLED, has been slow to take off due to very high prices, $8,000 to $9,000 for a 55" model.
Slow progress for 4K. The next big thing in TV hardware, is 4K or Ultra HD, with screens displaying 2160 lines of 3,840 pixels (vs. 1080 lines of 1,920 pixels for regular 1080p HP.) 4K displays are gorgeous, especially in large sizes and their super-sharp pictures offer an illusion of depth that is actually more convincing that gimmicky 3-D screens. Unfortunately, high prices--$3,000 and up for 55" models--and lack of 4K content are keeping sales very modest. This may change as increasing bandwidth and better compression make it easier to transmit the enormous number of bits needed for a 4K image. For example, Netflix has been experimenting with 4K content and hopes to begin offering a 4K service in 2014.
More content, fewer boxes. If you want to watch internet-delivered (or "over-the-top") video content on your big screen TV rather than a PC or tablet, you generally need something , such as a Roku or Google Chromecast unit, in addition to a cable or satellite box to deliver it. And now Microsoft's new Xbox One, for example, can control a cable box, allowing the Xbox to combine cable content with its own over-the-top offerings, which include Netflix, Amazon Instant Video, Hulu Plus, and Microsoft's own video rentals and sales.
Anyone can be a "network." In the beginning, there were just the broadcast networks. Then cable-only channels, which had offered news, sports, and a ton of recycled network content and movies, began creating their own scripted content. It started with premium channels such as HBO and moved to basic cable channels, such as AMC, which has had great success with Breaking Bad and The Walking Dead. Now everyone seems to be getting into the act. Netflix found success with the original House of Cards and Orange Is the New Black, and Amazon has launched Alpha House and Betas. Expect more players to get into the original content game.
The decline of broadcast. Broadcast TV is something of a misnomer, since only about 15% of U.S. households get their TV over the air. Most is delivered by cable or satellite, and the retransmission fees that cable operators pay for broadcast content has become an important part of TV stations' revenues. That arrangement is under attack from a startup called Aereo, whose technology lets it rent subscribers a tiny TV antenna that captures over-the-air signals and delivers them over the internet without paying transmission fees. Station owners have sued, charging copyright violation and federal appeals courts have split on the legality. The issue will have to be resolved by the Supreme Court and if Aereo wins, look for a move away from over-the-air broadcast, especially of high-value content like live sports, and more internet delivery.
The next couple of years could see a number of broadcast stations disappear from the airwaves. To free more bandwidth for wireless data, the government is offering TV station owners a share of the proceeds if they give up their licenses and allow their spectrum to be sold at auction. Broadcasters were originally unenthusiastic, but the turmoil in the industry may make this look like a good deal by 2015, when the "incentive auctions" are now scheduled to begin. Stations that go off the air won't necessarily disappear. They may just, like it seems everything else is doing move to the internet.
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