Broadcasters face an expected 9% loss in revenue next year, and after February 17th, 2009, every confused consumer will represent lost viewing, lower ratings, and potentially lower ad revenue. Broadcasters could fill some of this gap with revenue from new interactive services that take advantage of the opportunities afforded by digital transmission, but Mermigas writes that this isn’t happening. Many stations and group owners have no clear strategy for how to use the spectrum or how to make money from it.

What strategies are public TV stations pursuing? Public TV’s older demographic is most likely to be confused by the switch, and more likely to be cut off from viewing when analog goes dark. Beyond that difficult problem is how public broadcasters plan to achieve the revenues necessary to support 2-5 channels. And Mermigas’ post implies a bigger question: what new services can you develop that will utilize the capabilities of digital broadcasting to further your mission, while building a stronger financial future for public TV?

I watched this moment live today, just because it felt kind of important. Analog television broadcasts ended in Wilmington, NC today. At noon, they flipped the switch, and that was the end, after almost 70 years (counting from the granting of the first commercial television license on 7/1/1941 to NBC New York).

This was the dry run for the transition that the rest of the US will make on February 17, 2009… now about 160 days away. The photograph makes the ceremony appear ridiculous, but I saw the live coverage, and it was clear everyone was having a good time. (Who wouldn’t, with a big switch?)

This is the one of the few major broadcasting milestones I’ve experienced. There was the transition of the radio networks to satellites in 1980 – the Mutual Broadcasting System and NPR were first out of the gate; and I remember the end of the NBC Radio Network in 1987. I’ve probably skipped over a moment or two (the end of the cart machine, god be praised), but these two examples didn’t involve the obsolescence of an entire class of consumer equipment. Even color television was designed to be backward compatible.

Wilmington NC has a lower-than-average percentage of OTA viewers, so it was a good candidate to be the first, if you were looking for as smooth a transition as possible.

How many markets will have their own version of that big switch on February 17th? I’ll make a conservative guess and say ALL of them.

photo from Wilmington Star News Online

I wasn’t able to get out of Minneapolis (PRPD) until this morning, but I got in just in time for Phillip Swann’s unveiling of his annual list of HDTV predictions.

The list is below; Phillip’s complete version is here.

• Digital TV becomes a political football – expect calls to move the transition back a bit
• The average HDTV set price will stabilize a bit – prices went down too fast last year
• Consequently, more people will buy low cost digital televisions
• Digital TV converter boxes will do poorly – not much promotion; consumers will remain confused
• The HDTV arms race between sat, cable and the telcos will only get worse
• Consumer confusion will only increase – more and more stories about the transition, many will be incorrect
• Local HDTV news will become a marketing weapon to get ratings
• HDTV is going to become a marketing weapon among the cable companies
• The networks will produce more shows that are geared to the HDTV audience
• Sony and Toshiba will reach a deal on a single HD DVD standard

There seems to be a growing consensus around the importance of high definition programming – driven largely by consumer demand. (By “growing consensus” I mean, Dennis Haarsager and others have been saying something like this for a long time, and I finally understood that they’re right.)

My interest in multicasting was reasonably strong, until I finally upgraded to HD in May. Once I could watch HD every day, I lost interest in having additional, inferior-looking multicast channels thrust upon me, especially channels that merely regurgitate the stuff I don’t like from the main channel. (Ahem, Create.) In fact, I’ve grown to dislike watching any show in SD.
So there it is, I guess: when it comes to video, more isn’t better; better is better.

Speaking of Dennis Haarsager, he’ll be speaking at the DTV Symposium tomorrow afternoon. His topic: Myth, Media and Meta; Three Information Epochs and What The Mean for Broadcasting. I have no doubt it will be good, and I’ll be there taking notes.

I’ve already offered up my snarky remarks on the 24 hour PBS HD feed – that it looks great in a Best Buy store, but once it convinces you that you must own an HD set, it offers very little. My bias is toward multicast; or more choice, rather than more pixels.

This manager takes a somewhat different smarter view:

1) People really do watch that 24 hour HD channel. It’s mostly anecdotal, I think, but he’s probably right. There is something mesmerizing about programs like NOVA, or even Smart Travels, when you see them in high definition. It makes you want to watch more TV. I’m not sure how long that lasts, or whether it means that public TV should devote 24 hours a day to eye candy across the majority of the digital bandwidth. Especially when the HD channel schedule is repetitious, and often the series episodes shown don’t match what I see on my regular, old-fashioned PBS channel. But maybe this doesn’t matter. If I used to watch 3 hours of public TV a week, and now I watch 6 hours because the HD channel is really cool, that’s a good thing, right? Hmmm… maybe I should see a high definition TV personality occasionally, asking me for some more money.

2) How much HD you offer should be tied to how much HD you produce. It’s silly of me to ask my public TV station to stop transmitting all those bandwidth-sucking vistas; my public TV network here has made a huge commitment to HD. For a few years now, it’s entire production capability in the field has been HD. (Remember the Monty Python sketch where the guys are shot on video indoors, and they grow curious about why every time they look out the door, they’re shot on film?) The field makeover is to be followed by a makeover of its three studios, the first of which is likely to debut this fall. The reason for all this? The network is committed to preventing our small midwestern state from “disappearing” in the digital future. It’s a core piece of the network’s overall strategy. It goes without saying that a network that is churning out dozens of hours of HD programs a year can make a stronger case for a significant commitment of bandwidth to it.

3) Multicast is damn expensive. Even networks like Create that repackage stuff we’ve already paid for cost money. I hear that one planned multicast service is asking stations to sign 10 year contracts. That amazes me, but it’s the stark reality of maintaining the service.

So what do you do?

Our network here is investigating low cost ways to find existing content, which few ever see, and make it available to a much wider audience. This is a smart move. Research Channel dramatically increases a university’s ROI in lectures and presentations. When taxpayers help make all of this intellectual content possible at the universities in their state, they should be able to get access to more of it than they do, and public TV can be a conduit for it, and catalyst for the creation of more of it, at very little cost to itself.

What other content is there? Ethan Zuckerman writes compellingly about Al Jazeera English. Why can’t my public TV station offer it for a few hours a week on multicast? My PBS station already offers BBC World News. Slap an hour of BBC World News next to an hour of Al Jazeera, or (as the PBS manager says) next to an hour of TV produced for external consumption by our own Broadcasting Board of Governors. Put fixed cameras in public radio studios and offer up talk shows and other programs on TV. A few hundred thousand people watch Imus on TV every day. Follow the TPT or CET models and find partners who will help you create content. I still really like the idea of giving over a small portion of digital bandwidth to retransmit public radio stations. Your channel becomes a portal to a wealth of public media content, whether audio or video. (btw, at present, can you do this? Public radio network number one: no; public radio network number two: maybe; public radio network number three: yes. Streaming rights? Don’t even ask.)
Are three cameras always better than one? No. C-SPAN has shown us that an event recorded with one camera, can result in compelling content for those who are compelled to view it. I watch Merlin Mann’s “The Merlin Show” religiously. It’s shot with one camera that never moves. Is it an amateur video podcast? No, it’s well produced and soon it will be available in 720p. Does it need a second camera? No. Why? Because the production doesn’t require it, AND it’s great content.

People far smarter than me could come up with many more ideas than that, and are. I can live with big, jaw-droppingly beautiful HD images, if there’s still some room for innovation and experimentation in multicasting. In a way, this is like the first days of television all over again. Once again, we have a medium that almost no one is watching, a space to try anything that we can think of, for little or no money (relatively speaking), a space in which to fall flat on our faces, or perhaps to rewrite the rule book for TV.

Great thoughts in the past few weeks on the TV digital multicast front: first, from David Liroff and second from Dennis Haarsager.

Why can’t our fat digital TV pipelines serve as a portal for all public media? If I’m a statewide PTV network, why couldn’t I reserve bandwidth for the audio streams of all the public radio stations in my state? Setting aside the rights issues for now, what would the bandwidth be for that? Very little.

Yes, it’s not an entirely portable portal, so to speak; but I’ve been known to listen to radio at home. That HD-capable USB receiver you’re thinking about buying for your desktop (or laptop) could pick it up.

Would anyone use it? I’m not sure, but it’s probably so cheap that it’s worth trying. And you gotta admit, it’s at least as compelling as another rerun of “New Scandinavian Cooking” on Create or a near-useless 24 hour HD channel.

The internet shows us that, assuming a minimum level of quality, consumers will choose quantity over quality. NPR’s audience testing shows that listeners can’t tell much difference between CD-quality digital music and a 48kb/s stream of the same music on an HD stream. Perhaps the more correct way to say this is that listeners might hear a difference, but for them, it’s a completely acceptable trade-off for having more choices.

I bet you can think of several ways that you’ve made this compromise. I spend several hours a day listening to soma.fm’s Groove Salad internet stream while I work. I’ve pruned my CD collection as I’ve ripped the CD’s into my iTunes library. I listen to my iPod in the car using an FM transmitter, rather than CD’s. We’re about to sell the big Klipsch speakers in the living room; the likely replacement for our stereo and TV – the Apple Hifi.

As broacasters and programmers, we need to consider carefully what consumers are telling us about how the listen to music and the kinds of compromises they’re willing to make in return for other perceived benefits. This should guide our multicasting strategies for radio.

And I’m beginning to wonder how this might play out on TV. Consumers appear to be sending a very clear message about HDTV; they’re buying giant HD screens by the thousands. But I think if you look deeper, you’ll find that most of them are taking their sets home, hooking up the DVD player, plugging in analog cable, or SD digital satellite, and are watching the 4:3 signals stretched across their 16:9 screens. In other words, most of what they’re watching now actually looks worse than it did on their old TV’s – it’s flattened and stretched and more grainy; but it’s on a brighter, bigger screen.

It’s too early to draw many conclusions from this. If more of the popular cable networks were in HD, for instance, it might be easier to judge viewing patterns. But I do find myself wondering if, ultimately, viewers will seek out HD where the content demands it – movies, drama, nature docs, etc – and will be happy will SD quality for much of the rest of what they see. (Will viewers care if you spend half a million dollars to convert your local news to HD?) That compromise ultimately means more choices in the available bandwidth and if there’s anything that consumers seem to be saying clearly so far in this vast transformation of broadcasting, choice is important.