A game of high-definition musical chairs has begun.
With the dust having settled on the high-definition programming pioneers, competitive jockeying for the next round of coveted channel space is under way in what distributors refer to as an increasingly bandwidth-constrained world.
The Big 4 networks and several cable channels have taken the lead in HD, based largely on the type of content they offer-sports, movies and natural-world productions. Most of these networks and cable channels expect a significant increase in their HD output over the next two years. But questions remain: From where else will the next round of HD content come? What will it be? And perhaps most intriguingly, will those programmers launch HD feeds, HD services culled from various networks, a smattering of select events in HD or HD on-demand?
While each network’s tipping point will be different, most believe that to secure channel space for the future, they need a foothold now. Real capacity issues lie ahead. Even multiple system operators who have rebuilt with full digital plants have expressed concern about the amount of bandwidth an HD channel takes, far in excess of what an analog channel requires. That will over time limit the number of channels that any MSO can carry.
“The strategy we are looking at is to hopefully get into this market by aggregating programming from all of our brands onto one network,” said David Zagin, senior VP of affiliate sales for A&E Television Networks.
If AETN follows through with a 24-hour HD channel harvested from A&E and History Channel networks, it has an example before it in Discovery HD Theater. A critical difference is that Discovery drew on the resources of its hefty stable of 14 networks when it launched the service two years ago with about 100 hours of HD developed over several years. The service will close in on nearly 1,000 hours of content in early 2005.
Mr. Zagin declined to reveal how many hours of HD content are in the AETN pipeline, but said he expects to amass enough to satisfy a 24-hour HD network. The company already has a “pretty good library” of content that’s been shot in HD, such as the A&E series “100 Centre Street,” and an original movie, “The Crossing.” But these programs, like History Channel’s documentary “Gold!” which was shot mostly in HD, have not aired yet in that format for public consumption.
The company’s first venture into HD programming will likely be this fall with some sort of special, perhaps an original movie, airing on an existing HD channel such as cable programming supplier iN Demand’s INHD. Timing is, in this case, everything. “I think right now there is a window available, [but] the bandwidth is still very constrained,” Mr. Zagin said. “We don’t want to be late to the market.”
NBC Universal Cable expects to fine-tune its HD strategy within the next 60 days now that the merger between NBC and Vivendi Universal has been completed, said David Zaslav, president of NBC Universal Cable. “We think HD is real and there will be a transformation over a long period of time,” he said.
“There is a wealth of content in the Universal library-over 200 movies in HD, [and] rights to a significant amount of sports in HD, including the U.S. Open,” Mr. Zaslav said. One of the options for that content is an additional “thematic” HD channel or two, rather than simply an HD simulcast of an existing channel. The company is also looking into the possibility of offering HD content on-demand, he said.
Barriers to Entry
While networks are eager to lock up shelf space, significant barriers exist to HD entry, primarily in the form of cost and distribution. On average, shooting and post-production in HD costs about 20 percent more than in standard definition, said Clint Stinchcomb, senior VP and general manager for Discovery HD Theater and VOD. That includes the expense of cameras, editing, graphics rendering and mixing in Dolby Digital 5.1 surround sound, he said.
One way to predict whether a network is apt to go HD in the near term is to look at whether it airs many live events, since those are the easiest to convert to HD, said Mark Cuban, chairman and co-founder of HDNet, which carries only HD programming. “You just switch out your cameras or trucks and you are HD-ready,” he said.
“For scripted entertainment, the question is whether or not it’s originally produced or licensed entertainment. If it’s originally produced,” Mr. Cuban said, “then the network has the opportunity to shoot or master it in HD format, and most are doing so.”
Networks may face problems in converting to HD if they have long-term content licenses that don’t include HD rights. In addition, if content was shot on tape, converting it can be expensive and it rarely ends up looking right, according to Mr. Cuban.
Knowing when to launch a network in HD has to do with the value HD can bring to a channel’s brand, said Dennis Quinn, executive VP, business development, Turner Broadcasting System. TNT, for instance, leaped into HD two months ago as part of the network’s larger strategy to position itself as a top-five network with a “parity” product to the broadcast networks, Mr. Quinn said. Turner’s 10 other domestic channels are evaluating whether HD will be key drivers for their businesses, he said, pointing out that sports and movies are particularly compelling in HD. “We have a lot of movies on TBS, TNT, Turner South [and Turner Classic Movies],” he said.
Mr. Quinn was reluctant to address speculation that because film can be converted relatively easily to HD, Turner Classic Movies would be the next logical Turner product to appear in that format. “We are looking at that and evaluating that,” he said.
HD content offered on-demand is an alternative to supplying an HD linear feed, Mr. Quinn said. E! Networks plans to carry 10 hours of red carpet coverage from the Emmy Awards this fall in HD on INHD. It will be the second excursion into HD for E!, following the network’s two hours of Academy Awards coverage earlier this year.
During the next 18 to 24 months, E! and Style will invest in HD cameras and editing systems to collect HD footage and build shows from it, said Howard Bolter, the company’s senior VP, network and production operations. “We want to actually flip the business around so we are operating in a hi-def environment and we send it out in SD,” he said.
That doesn’t mean that within two years the networks will have converted to HD feeds, but it does mean they would be virtually ready to do so if the timing is right. “It’s an investment in technology and equipment that we need to make,” said Mark Sonnenberg, E! executive VP of entertainment. “It’s important to be able to deliver to consumers the best products available and things like VOD and hi-def television. All of those things are not only going to interest the consumer, but will be demanded by the consumer. So it’s up to us to lay that foundation.”
Mr. Sonnenberg declined to disclose costs of the HD buildout. “I think if a cable channel is smart, they are making the investment now because it is coming and coming fast, and if they don’t they are going to lose out on a big opportunity,” he said.
Scripps plans to explore the requirements of HD production this year through a series of specials its four networks will produce in HD, as the company develops its strategy for 2005 and beyond. The possible specials for airing in the second half of the year are “Hawaii’s Dream 18,” a golf special on Fine Living; “Fly-Fishing in Yellowstone”; a DIY special; and “Extreme Homes of Europe,” an HGTV special showcasing unique and interesting homes in Europe.
MTV Networks declined to comment for this story, but its music video content would seem a natural fit for HD, insiders said. National Geographic Channel’s content is also a shoo-in for the format. The network has begun shooting content in HD to stockpile an inventory as it explores its HD programming options.
Expect to see more competition for channel space in the next few years as the next round of HD programmers joins the stew. The industry has always suffered from bandwidt
h limitations in one form or another, yet new services continue to launch. “There are bandwidth constraints,” said Mark Greenberg, executive VP, Showtime Networks, “but over time that bandwidth will be freed up. We will see technological improvements.”
Showtime is among the growing list of existing HD networks that plan to expand their lineups over the next two years, partly by converting additional library titles to the format. Within the next 18 to 24 months about 90 percent of prime-time content on Showtime will be available in HD, up from 75 percent today, Mr. Greenberg said.
ESPN fired up its new digital center in its Bristol, Conn., headquarters last month but is using only about 20 percent to 25 percent of its capacity so far, said Bryan Burns, VP, strategic business planning and development, for ESPN and head of the network’s HD service. The network is already producing its flagship show “SportsCenter” in HD and plans to generate its NFL studio shows, including “Sunday NFL Countdown,” in HD starting in September. “Baseball Tonight” will move to HD next spring, Mr. Burns said.
The challenge with airing such studio programs in HD is that they are inherently dependent on highlight footage from games that are most often shot in standard definition, creating a herky-jerkiness within the broadcast. That will change as more and more events are shot in HD. For now, “There is no other way around it,” Mr. Burns said.
ESPN HD is on pace to carry about 185 telecasts, including live game coverage, this year in HD.
Discovery HD Theater plans to introduce additional series in HD this year, with Discovery Channel’s “American Chopper” and “Monster Garage” slated for premieres this month, “Big” planned for third quarter and “No Opportunity Wasted” intended for a first-quarter launch next year.
Animal Planet’s “Austin Stevens’ World’s Most Dangerous Animals” is scheduled to go HD in 2005. In addition, the amount of big Discovery specials on Discovery HD Theater will increase to about 65 percent next year, up from 20 percent this year, Discovery’s Mr. Stinchcomb said. That includes specials such as “Atlas HD,” planned for November, and “Saving the Cheetahs of Namibia,” scheduled for 2005.
TNT’s next big HD event will be a NASCAR race Sept. 11, its first ever to be aired in that format. “It’s a pretty big endeavor,” said Turner’s Mr. Quinn, referring to the number of cameras needed to shoot such an event.
In addition, Turner South began carrying Atlanta Braves games in HD on June 4, and TBS began June 28.
In five years, about half of TV content will be carried in HD, said Danielle Levitas, senior analyst and director for consumer markets research with research firm IDC in Mountain View, Calif. By 2008, she predicted, 79 million U.S. homes will have 94 million digital TV sets. About 72 percent of those homes, or 58 million, will be watching in HD.