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Picture This

1 Mar, 2009 By: Response Contributor Response

Internet and television meet in the living room while American viewers learn the term DTV.

According to a December 2008 report, the FCC anticipated that 196 of the 1,749 full-power broadcast stations — about 11 percent overall — would have trouble reaching about 2-4 percent of their coverage zones. While 89 percent of stations, (1,553 stations) will benefit from stronger digital signals and reach larger audiences, the National Association of Broadcasters (NAB) and the FCC worked together to set up a number of safety nets to restore service to viewers who did not receive the signals. The Commission has also considered a new rule to implement a translator service for stations that could not reach their entire coverage area.

RayV is a new online broadcast system where approved users set up their own channels, stream content for free and monetize their channel through subscriptions or advertising. The tools needed to create, manage and monetize an online broadcast channel are all pre-packaged into the system.
RayV is a new online broadcast system where approved users set up their own channels, stream content for free and monetize their channel through subscriptions or advertising. The tools needed to create, manage and monetize an online broadcast channel are all pre-packaged into the system.

These technical limitations are compounded by a stale economy where many Americans cannot afford the upgrade to a new TV or purchase a digital converter box. More than $1 billion of federal funds were allocated for digital converter vouchers, worth $40 apiece, and consumers were told that they could request one up until March 31, 2009. However, the number of voucher requests exceeded expectations and the stipend ran dry by January.

NAB president and CEO David K. Rehr sent a letter to members of Congress and the FCC requesting more funding. The letter states, "The $1.5 billion appropriated to the TV Converter Box Coupon Program permits approximately 33.5 million coupons to be redeemed. With 44.6 million coupons requested as of December 31, 2008, it appears that demand could exceed supply."

Meredith Baker, acting head of the Commerce Department's National Telecommunications and Information Administration, the organization orchestrating the voucher redemption program, told the press in an open media conference call in January that 103,000 people were already on the list. She was not able to approximate how long it would take for consumers to receive a voucher once they were on the list, but the vouchers do have a 90-day expiration date on them. If they are not redeemed in time, the next person in line gets the voucher.

Cercone explains that fewer television viewers could ... maybe ... present a silver lining.

"Technically this could be a good-news, bad-news situation. With fewer viewers watching, it should mean lower advertising rates implemented by the stations," says Cercone. "I am doubtful this will happen, however, because many stations are incurring as much as $20,000 more per month on average in utility bills generated by their full power stations that must continue to send analog signals. These costs will have to be passed on to billings to absorb costs. Stations — please erase that last sentence from your memory. All of us agencies have read the prior paragraph and are privy to the fact that there is going to be reduced viewership for a while."

Video-on-Demand — in High Demand

Another potential ray of optimism in the digital foreground is the expanded use of cable, satellite and video-on-demand (VOD). Since the DTV transition mandate, broadcast stations have invested billions of dollars to juice up their towers while cable and satellite services introduced premium products and services to optimize the digital entertainment experience. Viewers with cable and satellite TV will transition to DTV broadcasting seamlessly, so industry analysts predicted that the homes affected by the switchover would spur cable and satellite subscriptions as well as flat-screen HDTV sales.

To some extent, the recession appears to have thwarted these expectations, at least temporarily. Nielsen, which helped educate policy makers and consumers about nationwide readiness for the switchover, reported that converter box sales spiked as much as 50 percent at the end of 2008, a clear indication that consumers were opting for the bare necessities rather than upgrading their TV sets or cable and satellite programming options.

Economic setbacks are no match, however, for the explosive advancements being made in digital entertainment, particularly in VOD offerings.

Consumers can get their fix for movies and television programs streamed directly to their computer or television from set-top products including the new high-definition AppleTV, which also brings Internet content, such as Apple iTunes music and video to enjoy over the television. There's the Xbox 360 gaming console that enables users to buy and watch video from select content providers including Paramount, Disney, Warner and MGM. Vudu offers on-demand movies from all major studios, but it cannot stream content from a computer, while TiVo's partnership with Amazon's Unbox enables viewers to access Amazon video directly onscreen using the TiVo interface. And Roku is a set-top box that enables instant streaming video from Netflix and Amazon Video-On-Demand.

A slew of even more VOD products debuted at the Consumer Electronics Show (CES) in January. Apple TV got an upgrade and introduced an impressive set of features including movie rentals (currently, iTunes only allows movie purchases) as well as the ability to downloaded TV shows from the iTunes store directly from the television.

Yahoo! used the CES stage to introduce its TV Widgets product, a set of software applications, developed with Intel, that bring Internet content to the television. Some TV Widgets will come pre-installed in new TV models with broadband and high-definition capabilities from manufacturers such as LG Electronics and VIZIO.

About 20 TV Widgets were initially created, some from outside developers including social media giant MySpace and the up-and-coming Twitter. The widgets enable users to view Internet and TV content side-by-side, completely customizing their own experience. And the ability to create products for Widget Gallery is open to all outside developers, a model that's evolving similarly to Facebook and iTunes, where developers can set their own price on for-sale applications based on organic consumer demand.

Yahoo!'s TV Widget technology also presents intriguing prospects for interactive and highly measurable marketing campaigns. With the new platform, many of the targeting and response metrics that marketers see from online media will also converge with TV.

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