BBC expert cites 4K as “next big thing”

BBC presenter and economics journalist Andrew Neil told delegates to the SES ‘Satellite Monitor’ event in London that Ultra HD “was the next big thing”. Neil was the founding chairman of Sky TV (in 1988) and was instrumental in the merger between Sky and British Satellite Broadcasting in 1990. An economist by training, he is now a regular broadcaster on the BBC.

Neil spoke extremely optimistically about Ultra-HD, saying that 4K had now embarked on its first stage of commercialisation. “Tests are proving to be extremely successful. Its breakthrough at CES saw people quite amazed at its quality, and I urge those who have not yet seen demonstrations to visit a store and see Ultra-HD in action. It is fantastic, and will be a huge game-changer. There might be some obstacles ahead, but this is quite normal with any new technology change. Prices [of sets] are now falling, and these trends we have seen before. Satellite can handle transmissions without problem. ESPN has closed its 3D channel, but 4K is so clear that you don’t need 3D. 4K is the future, and will again enhance the importance of the main screen in the living room.”

Neil added a number of other useful TV insights:

·     Neil said he still believed that Netflix should be viewed as an enhancement rather than a disrupter of the existing broadcasting pattern. “Quite remarkably, on any given night in the US Netflix takes one-third of the broadband capacity. Frequently this leads to pixelisation and slow download speeds. They are spending $3 billion on acquiring new programming this year, and subscriptions are growing well in the US, UK and Nordic countries. It has brought changes, not least in binge viewing of series such as House of Cards.” Neil said that one lesson learnt from Netflix was that audiences were enthusiastic consumers of long-form story-telling, and that experience was echoed in Britain lately with the slew of so-called Scandi-Noir TV dramas from Denmark and Sweden. “But OTT is not going to be a game-changer. Despite Netflix and its imitators traditional old US network television is doing just fine. Last year the main US networks took in $70bn in ad-revenues, a record. And up from the $63 billion of 2012. Cable and satellite between them took in $97 billion, or 44 times Netflix’s revenues. And while Netflix will spend $3 billion this year on acquiring content, pay-TV in the US spent $43 billion on content!

·     So-called 2nd Screens (tablets and smart phones) are extremely important, but would have only marginal impact on 1st Screen viewing. “Broadcasters are making their programming available on every available platform, but there has been no material impact on 1st Screen viewing, or on industry revenues, advertising or profitability of main screen broadcasters. Second screens either complement main screen viewing, or enhances the experience.” Neil said that TV viewing on second screens/smart phones averaged (in the UK) just 3 minutes a day, and this figure had not increased over the past two years and indeed had fallen since 2012 (when the Olympics were on).

·     Despite the proliferation of PVRs Neil said the loyalty towards ‘live’ TV viewing remained strong telling delegates that in 2012 (in the UK) 89.9 per cent of all viewing was of live TV. Last year that had dropped to 88.7 per cent. However, 81 per cent of so-called ‘catch up’ viewing of time-shifted content took place within two days. “There is an impact, but the impact is slight.”

·     However, Neil did predict that some pay-TV players, and the cable industry in general, might now be on the brink of cable and pay-TV ‘bundling’ of channels coming to an end. “Viewers are getting more sophisticated. They may no longer be prepared for these ‘bundles’ being forced upon them. There could be pressure from regulators and competition authorities.”

·     Neil spoke at length on the position of BT in the British marketplace, and in particular its competitive offering to BSkyB.  “BT has certainly annoyed Sky with its sports offerings, and there’s been an argument at Sky at whether it should have bid more in order to secure TV rights [for the Premier League soccer in particular], but will they follow Sky into movies and general entertainment. BT has tantalisingly said they might. Does BT have the skills and ability to move into entertainment? Sky has re-signed HBO earlier than necessary to its long-term output deal with HBO, which might be a clue. My guess is that BT does NOT have the skills to get into [a wider offering] of programming. But it could start by buying in movies, and Sky’s existing deals with the six major Hollywood studios expire in 2017-18. These deals are now worth about £300 million – £400 million a year to the studios. The regulators are already asking whether it is right that Sky is the sole carrier for all of these studios.”