Trends Paint the Picture of Next Gen TV
May 4, 2023
For decades, “TV” meant broadcast. The television experience meant literally turning a physical dial, and frequent adjustment of a set’s built-in “rabbit ears” antenna. Eventually pay-TV via cable and satellite TV became ubiquitous. As these services grew to include hundreds of channels, an interactive programming guide became essential, replacing the old print TV Guide and eponymous channel scrolled through a similar grid 24/7.
After almost three decades, that era is coming to pass. Every year, the rate at which consumers drop cable and satellite TV accelerates. But with a whole host of streaming services and technologies vying to take their place, the only thing certain is that the standard television experience is poised to undergo a transformation.
To most of the television industry, this may feel like a casino game. You can try to place a smart bet, but there’s no good way to know who will be the winners in tomorrow’s TV industry. And indeed, we’ve already seen several massive media corporations place losing bets. But there are also distinct trends emerging in the TV industry that may well outline the future of TV for the next few decades.
Fast Growth for FAST Channels and Services
While the traditional media companies that have launched streaming services have struggled to find traction and lost money, FAST channels have been experiencing rapid growth. A number of reports coming out in early 2023 have shared a similar story: linear FAST channels and the services that provide them are growing rapidly. Their revenues grew a whopping 20 times from 2019 to 2022, undeterred if not helped by pandemic era trends, and are expected to triple by 2027, according to data from research firm Omdia.
A report from TiVo shows two-thirds of US households using FAST services. Colin Dixon of nScreenMedia attributes this to low barriers to entry, and groundwork laid by subscription services over the last decade. This speaks to a problem that FreeCast has been warning about for a while now: consumers are fed up with new subscription products and juggling accounts to multiple services. Free TV services, many of which don’t require an account or login, are thus seeing all the growth that fled from the SVOD space when Disney, Warner Media, Discovery, NBC Universal, and Viacom all launched their own streaming products at once.
With the economy weakening, the push from premium to free services is only likely to accelerate in the coming years. What this means is that free content is going mainstream. Crackle, Pluto TV, Tubi, and other free services were also-rans a few years ago, but next gen television is almost certainly going to be built on a foundation of free content.
Tech-Accelerated Antenna Renaissance
Years ago when the cord-cutting trend first popped up, many consumers turned to TV antennas, using over-the-air broadcasts to get their live local channels for things like news, sports, and weather. Back when Netflix, Amazon Prime Video, and Hulu dominated the streaming market, roughly $30 a month in SVOD subscriptions and an antenna offered a compelling alternative to spending hundreds of dollars a month on cable or satellite TV.
While antenna TV’s comeback may appear to have faltered in recent years as the streaming market has grown and gotten more competitive, a study from research firm Horowitz shows that 18% of TV viewers use an antenna. While cable and satellite subscriptions include retransmission of major local broadcast stations, this number likely consists almost entirely of cord-cutters. A mere two in ten might not seem like a huge number, but when you narrow the view down to households without a MVPD, it’s a significant portion.
ATSC 3.0 is poised to give over-the-air television a boost. Highlight benefits of the new broadcast standards include 4K video, HDR, and Dolby Atmos support, but ATSC 3.0 has the potential to deliver new over-the-air services.
Because ATSC 3.0 uses internet protocol, it can function similarly to a 25 Mbps one-way internet connection. The lack of upload capability is a limitation that can be overcome when an ATSC 3.0 tuner is paired with an internet-connected device. Many mobile devices have cellular connections, while smart TVs and set-top boxes can utilize a home’s wifi or wired internet. This may one day enable more interactive or on-demand services via OTA broadcast, or even wireless pay-TV.
During the era of cable TV’s dominance, it was easy to forget antenna TV. But its comeback began with people looking for cheaper alternatives to cable and satellite. With the cable era coming to a close and over-the-air TV getting a tech upgrade, it’s not hard to see broadcast rising to become an essential part of many households’ TV mix. Live and local content continue to be a gap in most streaming services, and with ATSC 3.0 enabling higher video quality and other modern features, free broadcast TV will be well positioned to fill that gap.
Changing Expectations About Ads
While FAST and broadcast TV have been on the rise, subscription video has been another story. The fragmented streaming market has frustrated consumers and pushed up costs, because each new streaming service is replicating the expenses that were once consolidated to only a few platforms. With consumers unwilling to simply cough up $10 a month to every new streaming service that comes along, everyone’s had to reevaluate their options for monetizing their content.
Netflix, Hulu, Disney Plus, and NBC’s Peacock have all experimented with partially or fully ad-supported tiers, in an effort to get prices down. While some of these hybrid offerings got off to a slow start, MediaPost reports that as many as 32% of new SVOD subs are in ad-supported tiers. The takeaway is that how best to monetize a consumer that wants to view a piece of content is a live question, and the biggest businesses in the TV industry in a process of trial and error to find the answer.
Consumer expectations are also changing. The cable TV era got the TV industry accustomed to double-dipping with both subscription fees and hefty ad loads. But for SVOD, an ad-free experience has been standard for years, and such products are often pitched as premium offerings. Whether those customers will ads in a subscription product and/or a perpetually climbing price remains to be seen, especially as the content they want to watch becomes spread across a greater number of paid services.
Advanced Aggregation
For decades, a single conduit to consumers dominated: cable and satellite MVPDs. As that model fades away, consumers and content providers face a sea change. No one delivery system, no one means of monetization, no one format or technology will ever be as ubiquitous as the old pay-TV bundles once were.
Early cord-cutters have long had to stitch together their own television experience, accepting the inconvenience as a trade-off for savings. But that math is changing as more streaming services come online.
That’s why FreeCast’s vision is to manage at all. Free and paid. Linear and on-demand. And now, with the debut of FreeCast Home, over-the-top and over-the-air.
