i3 - November/December 2017 - 67

By Steve Koenig

M A R K E T B E AT

ATSC 3.0 - A Catalyst
for Cord-Cutting?

 T 

he diffusion of video content consumption continues as
consumers engage with the content they crave anytime
and anywhere. This trend has steadily gained momentum,
prompting a seismic shift in the devices used to watch, distribution models to deliver, and consumer attitudes concerning video.
Cord-cutting, once deemed a radical
behavior, has become a pragmatic strategy for households who wish to kick the
cable bill in favor of alternative video
sources, such as over-the-top (OTT) and
over-the-air (OTA). Indeed, this trend
has given rise to a new breed of young
consumers - 'cord-nevers' - who from
adulthood subscribe to the cord-cutter
doctrine, opposed to pay TV.

Michal Saganowski/Getty Images

On the Horizon

Consumers now have many options
to watch video content. ATSC 3.0, the
next-generation DTV broadcast standard, prepares for a probable debut in
2019. What's significant is the new ATSC
3.0 standard allows broadcasters to combine their "free-to-air" service with additional OTT-like features, like custom
recommendations for programs to watch
or resuming a program where you
stopped watching. Based on the trend,
ATSC 3.0 has the potential to further
disrupt the landscape of video content
sources, but much depends on the ultimate features and benefits broadcasters
will deliver with the new DTV standard.
C TA . t e c h / i 3

While we wait for ATSC 3.0, CTA
expects disruption to deepen as cordcutter ranks are expected to grow. CTA's
Impact of Next-Gen TV on Consumer
Behavior study (August 2017) explores
current and future video content sourcing
behaviors and ATSC 3.0's potential
influence on this dynamic. The analysis
shows 63 percent of U.S. online adults
say they use pay TV as a video source
at home. However, only 54 percent of
these consumers expect to employ this
content source in the next 12 months.
Helping take up the sourcing slack,
use of OTA/antenna as a video source is
expected to rise over the next 12 months
by four percentage points (from 21 percent to 25 percent), with the biggest shift
among adults 40 and over (18 percent vs.
26 percent in the next 12 months). More,
the new frontier of paid live-TV streaming
subscriptions - also called skinny bundles - are expected to rise to a household
penetration of 22 percent, over the
next 12 months, up from 15 percent.
While pay TV is expected to reign as
the top source for video content over
the next year, 21 percent of subscribers

Business

surveyed say they are likely to scale
back their subscriptions during this
timeframe. Most of these consumers
(53 percent) claim they will replace
scaled-back pay TV content with SVOD
content like Netflix. More interestingly,
39 percent say they will replace pay
TV content with (free) broadcast TV.
The expansion of the community
of cord-cutters (and cord-nevers) coupled with the anticipated downsizing
of pay TV subscriptions is a welcome
mat for ATSC 3.0. The exact timing
and method for the rollout of the new
standard remains clouded pending final
FCC rules, expected to be issued no
later than Q1 2018. While that process
unfolds, the market conditions and consumer mindset are clearly favorable for
the capabilities offered by ATSC 3.0.

ATSC 3.0 Features
Consumers Want

CTA's research found that consumers
will most value better picture quality
such as broadcasts in 4K UHD,
VOD features that mirror the OTT
experience, and better sound quality.
The planned deployment of ATSC 3.0
comes when many consumers are
adjusting their portfolio of content
sources to fit their needs.
Consumers will benefit from the mix
of OTT, pay TV and OTA services all competing to provide personalized content
when and where they want it. Download
CTA's study on the member site for more
perspective on video trends.

2018

CTA's Research Summit at CES
gives CT professionals timely
intelligence on the trends and
technologies shaping the industry.
NOVEMBER/DECEMBER 2017

67


http://www.ces.tech/Conference/ConferenceProgram/Conference-Tracks/Research-Summit.aspx http://cta.tech/i3

i3 - November/December 2017

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