Is Broadcast TV's Future Over-The-Top?

For most of the 20th century, broadcast television was the king of media. Families would gather in their living rooms to turn on their cathode-ray sets (and later plasma TVs and LED TVs) to get the most up-to-date news and enjoy a full day’s worth of entertainment.

Now, however, broadcast TV is at something of a crossroads, as Philo Farnsworth’s 20th century technology collides with 21st Century ingenuity.

The future of broadcast TV, it seems, is over-the-top. Fewer and fewer Americans are getting their broadcast TV delivered via public airwaves routed through an antenna. 

The decline has been a long time coming, of course. Cable and satellite TV began the process by offering clearer signals through popular video packages. Now, OTT may be ready to finish the job.

For starters, consumers can now get their broadcast channels through streaming bundles like YouTube TV, Hulu with Live TV, Fubo TV, and Sling TV. These bundles are aiming to replace the pricey cable bundles of yore, offering the same channels at a slightly more attractive price point. 

Their success at that lower price point remains uncertain, but the versatility and customization of an internet-powered user interface is likely to stick around, so the video bundles of the future will be powered by streaming.

Meanwhile, CBS is taking a different approach, offering its national feed and local affiliate content through a direct-to-consumer offering called CBS All Access. All Access streams on connected TV devices and mobile devices, with both a live feed of your local affiliate and on-demand content from the network.

So far, CBS is the only broadcaster to take that plunge, but the proof of concept appears to be working. The company says it expects All Access to have about four million paying subscribers by 2019.

Even local broadcast players are getting into the game. At the NAB Show New York last week, Sinclair CEO Chris Ripley teased STIRR, an upcoming ad-supported OTT service that will bring together digital entertainment content with national news content, national syndicated talk content, and local news and sports from the company’s affiliates.

While the technology is there, and the consumer sentiment appears to be strong, if there is one thing holding back broadcast’s shift to OTT, it is the business model.

Streaming bundles don’t have the profit margins that cable and satellite bundles have, making their long-term futures muddied. Direct-to-consumer is hard and expensive and may require broadcasters to be more niche -- the exact opposite of the model that propelled the business for the last century.

Ultimately, the money will need to start flowing in order for all the key players to embrace the streaming future.

“The challenge has been to show a consistent case for monetization to the point where investors can begin to take note, and ascribe meaningful multiples to those businesses,” Tuna Amobi, director and senior equity analyst for CFRA Research, said during a panel at the NAB Show New York last week. “There is a variety of initiatives we are seeing in the digital space from these stations, but I think that we are probably still a few more years before they can move the needle.”

2 comments about "Is Broadcast TV's Future Over-The-Top?".
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  1. Douglas Ferguson from College of Charleston, October 23, 2018 at 9:47 a.m.

    Broadcast was never the best way to distribute TV content. It was simply the ONLY way for a very long time. Nowadays, satellite and wired make more sense. I grew up loving terrestrial TV but that was then. Maybe TV 3.0 will arrive in time, we'll see.

  2. James Smith from J. R. Smith Group, October 25, 2018 at 2:20 a.m.

    One wonders.  If the OTT appeal is at least partially based on availability of long-tail, niche programming (something broadcast might not opt for)...then maybe both broadcast and cable nets have worries ahead.  But, it harkens to the concept of defining yourself by the distribution channel, not the function.  Traditional TV's functions, or if you prefer business, are information and entertainment, thereby delivering audiences to advertisers.  The industry is more worried about "channel" than the consumers, who seem to appear rather channel agnostic.  Of course, many other issues are in play here too.  

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