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The Pearl TV Consortium
© 2017 Pearl 2
• 8 Broadcast TV media companies
• Cox, Graham, Hearst, Meredith, Nexstar, Raycom, Scripps, & Tegna
• Formed in 2010
• Almost 400 stations
• $6B+ in ad revenue
The Pearl TV Consortium
© 2017 Pearl 3
• Board, Tech Committee, Business Committee
• Anne Schelle, Managing Director
• Major initiatives include: Completion of 3.0 Standard (Team of technologists)
Commercialization of 3.0 (Various research projects and business studies)
Targeting and audience segmentation studies that inform 3.0 (SmartTV, Watermarks, and Hybrid Apps)
Google/Facebook
Collaboration Will Drive A Common Industry Vision For 3.0
Confidential © 2017 Pearl 4
Consumers
BroadcastersBroadcasters
DisplayDevicesDisplayDevices
NetworksNetworks
MVPDsMVPDs
AdvertisersAdvertisers
CTA
CTA
System providers
System providers
Consumers
Broadcasters
DisplayDevices
Networks
MVPDs
Advertisers
CTA
System providers
3.0 Ecosystem• Transmission • Middleware• Platform Providers• Conditional Access• Data & Analytics
OEM Partnerships• Samsung • VIZIO (LeEco) • LG • Sony• Chinese Manufacturers
Technology Partners• Amazon• Apple• Google• IBM• Intel
Networks• ABC• CBS• Fox• Ion• NBC• PBS• Univision
Broadcasters• Broadcast
Companies Across the Country
Focus On Developing Business Models and Commercialization
Confidential © 2017 Pearl 5
NAB
ATSC
CTA
ConsumerValue Prop.
Broadcasters
Business &Transition
Models
Standards Completion
Development & Testing
RecommendImplementation
Transition & Build
Broadcasters
OEMS
EquipmentVendors
SystemProviders
NAB & CTA
ATSC
Broadcasters
OEMS
EquipmentVendors
ATSC
Broadcasters
Current Environment for 3.0
© 2017 Pearl 6
• OTA is growing: soon to surpass 20%
• OTT is gaining traction
• Regulatory and Legislative: favorable and supportive to 3.0
• Repack aligns with 3.0 transition
• 5G on the horizon: major disruptor or does it complement 3.0?
• OEMs have helped design 3.0 and are deciding on initial features to drive TV and mobile device purchase
Current 1.0 Broadcast TV X Old and limited technologyX Limited bandwidthX 1K HD X No HDR/WCGX No Internet Protocol (IP)X No MobilityX Limited building penetration X No interactive featuresX No targeting of ads/contentX No On-DemandX Limited multicast
Wireless, MVPD, Digital & New 3.0 + New and evolving technology+ High bandwidth+ 4K UHD (Sharper)+ HDR/WCG (2X Color/Contrast)+ Internet Protocol+ Mobility+ Penetrates buildings + Interactive features+ Targeting for ads/content+ On-Demand+ Expanded multicast
Why 3.0? Competitive Assessment
Technology and Business Comparison
© 2017 Pearl
Over the Air Viewing is Increasing
OTA households may grow to 20-28% by 2024...
10.9
15.1
19.5
12.517.5
22.1
17
23
28
10
15
20
25
30
2016 a 2020 e 2024 e
Projected OTA-Only Homes (%) • Pay-TV subscribers declining about 1.5% per year
• Cost cutting was the main driver of cutting, shaving and OTA viewership growth
• 34% of homes regularly stream TV and Movies
Source: GfK, FTI, & Deloitte
© 2017 Pearl
5G - Competing Distribution?
The wireless industry plans to add television delivery as part of 5G
© 2017 Pearl
Consumer Demand for 3.0
Pearl and Sinclair commissioned a Magid consumer research project that measured the appeal of 3.0 features. A score of 60 or higher is considered significant for consumers to buy or adopt a new product.
• Improved picture quality – 81%• Improved audio quality – 74%• Enhanced emergency alerts – 67%• Targeted advertising – 56%
The appeal of the 3.0 features increased with younger demos:• 25-34 73% rated 3.0 as significant• 35-44 67%• 45-54 64%
© 2017 Pearl
3.0 International Standard Momentum
• Korean Government adopted 3.0
• 3.0 Broadcasts begin in Korea 3Q 2017
• 80% of Koreans will be able to receive 3.0 by EOY 2017
• Winter Olympics broadcast in 3.0 from Korea in February 2018
© 2017 Pearl
Broadcast Missing Link: Transmit in IP-Based 3.0
IP IP
IP IP
IP
Transmit IP 3.0 OTA
IP
IP
© 2017 Pearl
The Business Case for 3.0
“As local television stations confront incredible competition from many different fronts, the business case for investing in ATSC 3.0 is strong. The improvements this technology delivers -including improved picture quality, increased capacity, and new types of services – could greatly improve the financial position of local television stations.”
New BIA Kelsey Report
© 2017 Pearl
2015 – 3.0 Cost Study2015 – CE Manufacturers discussions and partnerships2015 – Revenue Study by FTI 2015/16/17 – Capitol Hill2016 – Channel Sharing Study2016 – Consumer Use Cases 2016 – Consumer Research Study by Magid2016 – Transition Study and Modeling by FTI2017 – 2nd Business and Revenue Study (Currently underway)
Building a 3.0 Business – Pearl Projects
© 2017 Pearl
Pearl 3.0 Revenue Study by FTI – Q4 2015
Without 3.0: Total Downside: Up to -$B annually1. No Improved Picture/Audio: -$B2. No Targeted Advertising: - $B
With 3.0: Total Upside: Up to +$B1. Improved Picture/Audio: Up to +$B 2. Targeted advertising (overlays and spots): +$B3. Mobility (requires SFNs): +$B4. Multicasting/D2: +$B5. OTT/MVPD-like skinny subscription bundle provided by multiple
stations in a market: +$B6. Datacasting: +$B
© 2017 Pearl
Pearl 3.0 Business Model Study – Q1 2017
Some of the business models under study:
• Hybrid TV Platform (OTA & OTT)• Consumer Hardware such as a Home Gateway• Mobile TV• Telco JV for data offload• CDN (Content Delivery Network) datacasting• MVPD-lite bundle• Automotive CDN
© 2017 Pearl
Targeting, Addressable, Measurement, and Data – Ongoing Trials
• SmartTV ACR technology and data
• Watermarks (Part of the 3.0 Standard)
• Broadcast App that includes registration
© 2017 Pearl
Consumer & Business Trend: Unified Platforms
OTA & OTT 3.0 PlatformBroadcasters might benefit with a unified platform and consumer experience
Unified 3.0 Platform?
© 2017 Pearl
O
Case Study: Freeview Plus in New Zealand and Australia
Hybrid TV App Combining OTA & OTT
© 2017 Pearl
3.0 Use Case: TV As A Gateway
Confidential20
Enabled By:
Smart TV (3.0 and 1.0)
3.0 Tablet
Mini Console / STB Gateway *
3.0 TV Dongle *
Mobile TBD
* Transition device opportunity
© 2017 Pearl
Transition to 3.0
• 3.0 is voluntary (not mandated)
• Pearl engaged FTI Consulting to build a transition model
• FTI built software that allows each DMA to model a multi-step transition taking into account market spectrum, market transmission facilities, network mbps, multicast channels, and financials
• Lighthouse station model
© 2017 Pearl