Industry Briefs & Reports
Study of the Impact of Multiple Systems for
Mobile/Handheld Digital Television
Richard V. Ducey, Ph.D., Chief Strategy
Officer
Mark Fratrik,
Ph.D., Vice President
NAB's FASTROAD
Technology advocacy program commissioned the study of the impact of
multiple systems for Mobile/Handheld DTV from BIA Financial Network
with support from Law
and Economics Consulting Group (LECG).
BIAfn performed research by conducting
extensive executive interviews with companies involved in all aspects of
the M/H DTV service and reviewing publicly available information.
The report assesses the various business
implications under different scenarios
and provides BIAfn's financial
estimates for incremental revenues and total station values from the
introduction of M/H DTV service.
The full report is available for download at
www.nabfastroad.org or by
clicking now.
A summary is also provided below.
Report Summary
Report Background
Conclusions
Analytical Assessments
Going Forward
NAB Press Announcement
OMVC Backs NAB/BIA Study on Mobile DTV
Over-the-air television broadcasting in
the United States is poised for the scheduled shut-off date of all high
power analog transmissions on February 17, 2009. This event is causing
excitement among broadcasters
as they consider the many different uses of their spectrum bandwidth that
are now possible with digital television (DTV).
Already television broadcasters have used a portion
of their 6 MHz channel for other purposes such as multicasting several
signals and datacasting and these services have delivered noticeable
revenues. Yet the potential for further revenues is quite promising when
considering the additional usage of the digital channel to broadcast
directly to mobile and/or handheld receivers, often referred to as M/H DTV.
(note:
In this report, “M/H DTV” refers to
the proposed technologies vying for the ATSC M/H standard.)
What is most interesting about this application are
the various mobile devices that could receive an M/H DTV signal in the
future. These include mobile phones, laptop computers, and other video
receivers in the hands of consumers (e.g., adapted video iPods, video
receivers in automobiles). This technical ability coupled with the content
that broadcasters consistently aggregate and air on their main signal could
provide a great supply of content that would be attractive to individuals
using any type of mobile and video devices.
However, in order to develop material M/H DTV
revenues, there are some pragmatic concerns.
First, there are a large number of stakeholders
(e.g., cellular network operators, content rights holders, chip set
manufacturers, consumer electronics companies, handset manufacturers,
vehicle manufacturers) with whom broadcasters will have to interact
successfully to build this business. This interaction needs to be in the
form of a viable digital media ecosystem in which each type of company has a
clear role, interoperates well with the other types of companies, creates
value for itself and the others in the ecosystem and is sustainable over
time.
Second, receiving the existing over-the-air
television signal in a mobile environment, using either the analog or
digital signal, is possible but fraught with problems such as interruptions
in service or leaving a potential market unserved by local broadcasters.
Third, other entrants using different spectrum have
entered into this marketplace and there are plans for others to enter as
well.
Given these developments, the NAB
FASTROAD (www.nabfastroad.org)
technology advocacy program commissioned BIA Financial Network (BIAfn) to
examine these issues.
(Joe Kraemer of LECG was a
joint author of the NAB report.)
The study’s purpose was to evaluate whether or not the
television broadcasting industry will be better served with a single
mobile/handheld standard for DTV, rather than having several competing
systems, and to consider whether market success is sensitive to the timing
of such M/H DTV standardization.
BIAfn estimates that broadcast television could reap an
additional $2 billion in annual revenue by 2012 delivering content
to mobile and handheld devices if an industry standard is adopted
and technology deployed quickly.
This consensus
view is based on interviews, trade press accounts and industry
presentations that clearly marks February 2009 as the critical date by
which ATSC must release its M/H standard specification. Otherwise,
broadcasters risk not having a strong showing in the fast evolving
mobile video market.
A successful
timeframe also indicates that that this work must be completed in
substance by the Summer of 2008 so that the various industry players may
begin making informed plans while the political processes of the ATSC
standard setting process wind their way through the final voting
procedures.
The
Open
Mobile Video Coalition,
an alliance of numerous U.S. commercial and public broadcasters,
announced its commitment to the development of mobile DTV in April 2007,
and the
ATSC
has
an accelerated program underway to standardize the system for M/H
broadcasting.
Assuming early
adoption of a M/H standard, our report concludes the estimated $2
billion in additional revenue by broadcasters would be shared between
local stations (approximately $1.1 billion), TV networks and syndicators
(approximately $900 million). Revenue opportunities will come in the
form of new advertising vehicles, monetizing over-the-air programming on
pay mobile platforms, and partnerships with cell phone and other mobile
delivery device providers.
To
analyze the possibilities of M/H DTV reception, we considered four
receiver categories:
Of
these, we recommend that broadcasters assign a higher priority to:
1.
Cellular
telephones; and
2.
Portable
video players.
The lower
priority assigned to video screens in vehicles was due to the relatively
long lead times associated with introducing new factory-installed
options, combined with the video-receive capability being relegated to
rear seat viewing. Laptops received an even lower priority because of a
consensus that laptops should initially have digital tuners to receive
the main OTA DTV signal as a near term opportunity, rather than wait for
the M/H DTV service to develop.
We view
broadcasters’ economic potential in this mobile television marketplace
as very promising in the relative near term, if broadcasters act quickly
to identify and advance their strategic interests.
While
there are other companies who have already entered this arena, it is
clear that broadcasters offering M/H DTV services may have certain
advantages.
-
Substantially lower capital requirements
-
Low cost and routine access to content
-
Lower coverage cost per population
-
Access to advertising revenue.
Considering these advantages and the present status of the mobile
television marketplace, BIA determines the impact of a M/H DTV standard
on the number of devices able to receive M/H DTV services by the year
2012 and the resulting additional revenues generated by the availability
of those services.
To estimate the impact of the standard, we provides
estimates and resulting revenues under four different scenarios:
-
A single system is introduced into the
marketplace and that system is the one the ATSC standardized.
-
Two systems are introduced into the
marketplace and only one of those systems was standardized by ATSC.
-
Two systems are introduced into the
marketplace and the ATSC was not able to agree upon a standard.
-
Three
systems are introduced into the marketplace and the ATSC did not agree
upon a standard.
The
summary table below reports the results for each of these scenarios.
While the assumptions used in developing the model are such that the
results could certainly differ from what we show below in absolute
terms, the relative results between the scenarios are not likely to
change significantly.
|
Scenario |
Time Delay in Successful Introduction as Compared to Scenario 1 |
Number of Receivers by Year End 2012 |
Local Station Share of M/H DTV Advertising Revenue |
|
1 |
--- |
130 million cellular
25 million Portable M/H video devices |
$1.1 billion |
|
2 |
18 months |
65 million cellular
12.5 million Portable M/H video devices |
$0.6 billion |
|
3 |
24 to 30 months |
22 to 43 million cellular
4 to 8 million Portable M/H video devices |
$0.2 to $0.4 billion |
|
4 |
36 to 40 months |
13 million cellular
2.5 million Portable M/H video devices |
$0.1 billion |
In addition
to the standard-setting process that must be accomplished for M/H DTV, there
are further steps BIA recommends that broadcasters take to ensure their
success in this marketplace:
-
Companies must negotiate, with reasonable and non-discriminatory,
(RAND) terms, rights to intellectual property associated with a
candidate standard.
-
Broadcasters intending to offer M/H program services which are
simulcasts of their main channels (HDTV or SDTV) must clarify their
rights to do so with program owners.
-
Reliable audience measurement procedures must be put in place to
measure the M/H DTV audiences in order for broadcasters to sell
advertising on those services.
-
A significant number of broadcasters are providing M/H DTV services
by Christmas 2009.
-
CE and cellular service providers offer M/H DTV devices by holiday
season 2009.
By
accomplishing these steps, this new service has the potential of noticeably
increasing local television station revenues and
their values.
It is vitally
important that broadcasters are able to announce M/H DTV services by
February 2009, which will be greatly facilitated by an agreed upon ATSC
standard for M/H DTV.
Realizing
this goal is necessary for maximizing the success of and resulting benefits
of local television stations providing this new service. If the schedule is
met and the other conditions satisfied, M/H DTV services will be a great
“shot in the arm” for over-the-air television broadcasters highlighting
their ability to reach mass audiences over a wide geographic area.
BIA fn's
Strategic Advisory Group serves broadcast companies in all layers of the
digital Media Ecosystem to help executives
understand the forces acting on
their companies such at M/H DTV.
We assist our clients in mapping their core competencies against current and
emerging market opportunities to reveal areas of strength and opportunity
for new business models.
As your station considers the implications
of this new report, we invite you to contact us to discuss how it applies to
your business and what strategic and tactical steps must be taken over the
next 12 months in order to take advantage of this opportunity.
info@bia.com
800.331.5086
The full report is available for download at
www.nabfastroad.org or by
clicking now.
Where is The Radio Industry Going?
A Look At The First Three Quarters of 2006
2006 has been an enigma.
On one hand, monthly revenue reports are extremely disappointing and quarterly earnings reports are anemic. The largest two markets are expected to post a year-to-year decline while many smaller markets are posting an excellent year.
Conversely, the number of radio stations sold and the total value of those sales are noticeably above last year's pace, with the values of many of the largest deals experiencing strong multiples. And, talk in the financial community indicates a healthy amount of willingness and capital to provide debt financing for new acquisitions.
With such conflicting signs, where is the radio industry going and what should we expect to see happening?
This new state-of-the industry report by BIA Financial Network answers these questions by exploring:
- The short run revenue prospects for the industry
- Why there has been an increase in the transaction pace the first three quarters of this year
- The continued interest in the purchase of stations
- Radio groups that are selling and groups that are buying
- The interesting opportunities created by a somewhat lackluster environment.
- How future success will require investment in what made radio successful in the past and the adoption of new distribution channels to distribute programming to additional audiences.
Charts and graphic illustrate:
- Radio station revenue growth rates for the last 10 years and projections for the next five years.
- Radio Station Transaction Volume 1996 - 2005
- Number of Radio Stations Sold: January - September, 2005 & 2006
The radio industry still reaches over 90% of the American public. Going forward, it must demonstrate a renewed vitality, a commitment to accountability, and a new energy to recapture its position in the ever-changing media landscape.
Please email Mark Fratrik to obtain a copy of this report by emailing him
at:
mfratrik@bia.com.
This paper was written by Mark Fratrik, Ph.D., Vice President of BIAfn.
Download this report now.
State-of-the-Industry Report:
Radio Station Transactions 2005
In this State-of-the-Industry Report, BIA Financial Network (BIAfn) analyzes the transactions that have occurred during the first six months of 2005 and compares them to the activities of 2004 to gain perspective of where the industry is and where it's going.
BIAfn also discusses the most significant challenges facing the radio industry today, which includes combating non-terrestrial radio and all forms of digital media for the same listeners and resulting advertising revenues.
BIAfn's Industry Report predicts that many radio groups will continue the trend of acquiring single stations as a method of filling-in the gaps in their existing markets. Nearly three-quarters of all radio station transactions reported in 2004 and the first six months of 2005 show evidence of this.
In addition to the single station strategy, BIAfn observes that many radio station buyers are acquiring technically disadvantaged radio stations to improve its facilities through a technical upgrade to increase the population served by the station, and consequently, the station's overall value.
There are serious issues facing the radio industry, but there is good news.
Current and emerging market opportunities are revealing areas of strength and opportunity for new business models, strategies and relationships, and BIAfn offers a challenge to the industry to rapidly engage in an evaluation of their position in the overall digital media landscape in order to best position itself to both survive and thrive.
This paper was written by Mark Fratrik, Ph.D., Vice President of BIAfn.
Download this report now.
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