What's the future of TV in New Zealand?

The Government has kicked off a $13 million marketing campaign to encourage the 29 per cent of the country’s households still watching analogue TV to switch to digital services ahead of the planned shutdown of analogue transmissions in November 2013.

Newspaper ad for Going Digital campaign
Newspaper ad for Going Digital campaign

For most of us, digital TV is taken for granted – if you subscribe to Sky TV, watch the Freeview service or have a TelstraClear pay TV box in your lounge you are already watching digital TV supplied either via satellite (Sky & Freeview), UHF terrestrial broadcast (Freeview) or hybrid fibre cable (TelstraClear in Wellington and Christchurch).

Digital – a no brainer

No matter what you think about public broadcasting or whether the Government should fund nationwide TV broadcast infrastructure, the transition to digital is a good thing from a technical point of view. Analogue TV depends on broadcasting out signals as electronic pulses to be received by aerial receivers. It is reliable and cheap and compatible with any TV equipped with an external aerial or rabbits ears set-top aerial and within range of a broadcast tower.

Digital TV brings us into the binary world, where rather than being broadcast out as a continuous signal, the content is converted into bits of data and sent in packets as ones and zeros. Equipment at the receiving end reassembles the ones and zeros into the images and sounds you see on your screen.

Digital allows for a more efficient use of radio frequency so you can provide more channels, high-definition channels and better picture quality. In the analogue world, electronic interference means many people put up with a less than perfect picture. In the digital world, if the signal is interrupted by rain fade or if you don’t have good coverage, you either won’t see anything or the picture will devolve into a pixelated mess.

But going digital requires a digital receiver – a new piece of relatively cheap equipment that plugs into your TV and receives a digital signal. You also need either a satellite dish or UHF aerial to pick up a digital signal. And that’s at the heart of the digital TV issue – we have two years to get tens of thousands of homes onto a digital service before the analogue broadcast towers are shut off for good.

While a public awareness campaign and the “Going Digital” website will serve to push many towards a digital platform, its likely that thousands of homes will still not be digital come switch-off time. Its possible that the Government will step in with cheap digital receivers and aerials at that stage, particularly in lower socio-economic areas to make sure families aren’t cut off from receiving free-t0-air TV. New Zealand has good, reliable digital services in place already, but the looming analogue switch-off raises some interesting questions about the future of TV in New Zealand at a time of rapid technological convergence between broadcasting, communications and consumer electronics.

Going digital – many ways to view

While the bulk of the population still tunes in to watch TV shows delivered by analogue or digital broadcasts, a growing number of people are watching streaming video on the internet or downloading TV episodes or movies. From Youtube to TVNZ’s On Demand service to the TV3 playback service to TiVo’s Caspa movie download service, there are already plenty of options in New Zealand for watching programmes via the internet. By late 2013 we will have likely seen an explosion in the availability of these types of services.

Sky TV will next month launch iSky – a service that lets existing Sky digital subscribers access Sky channels on their computer. The BBC’s popular iPlayer service which is currently only available to those in the UK, will next year be extended globally, potentially offering New Zealanders access to BBC TV shows at the same time as they screen overseas. Content is already being served up to internet-enabled video game consoles like the Xbox 360 and the Playstation 3 as well as the pint-sized Apple TV device. So by the time the analogue airwaves go quiet, what proportion of the population will actually still be dependent on traditional broadcast services like free-to-air TV and Sky TV for TV programming?

Well, probably still the majority of people. The continuing lack of good-quality broadband in New Zealand, the greater level of technical know-how needed to access online programming and the relatively high price of fledgling online content services means that even by the end of 2013, digital TV will still be the hassle-free, cost-effective way to watch TV. Devices like the My Sky personal video recorder and its rival TiVo make the digital TV viewing all the more convenient.

But TV viewing culture is changing, particularly among the younger demographic where people are as likely to download a TV show or spend an evening browsing video clips on the web as they are sitting in front of the TV and watching what is served up. The concept of time-shifting, where people use PVRs to record and watch shows when they want to – and fast-forward through the adverts, is also changing attitudes towards TV content. There is now an appetite for “on demand” content which perfectly suits the internet delivery model, where an episode is just a download or internet stream away. The better broadband connectivity gets – and the Government is pouring $1.5 billion into improving high-speed internet in New Zealand, the better this model of delivery gets.

One box to rule them all

Google TV - merging internet services and digital TV
Google TV - merging internet services and digital TV

The immediate future of TV is likely to look a lot like what internet giant Google is planning. Its Google TV service, which is being integrated into TV sets by the likes of Sony and or set-top boxes from electronics makers like Logitech, will effectively integrate the best features of the internet into the high-definition digital service you currently receive. Google TV for instance, will let you surf the web from your TV set, download applications that organise content and let you use services like Twitter and Facebook on your TV screen. So you could be watching a rugby game while a stream of tweets from friends watching the game elsewhere scroll across the screen. You can also use your mobile phone as a remote with Google TV.

All of this requires a fairly clever integration of broadcasting, a TV user-interface and the delivery of internet-enabled services to your HD TV set. Google isn’t trying to bypass existing broadcasters with Google TV – it wants to enhance these services by offering all the flexibility of the web alongside TV. A primitive version of this already existings on the Playstation 3, which you can use to watch TVNZ On Demand, surf the web and watch Youtube clips. Rivals to Google TV will quickly appear, but one thing will prevent internet giants like Google from subverting the digital broadcast model of TV delivery for some time to come – the traditional players have the content deals sewn up.

The future of NZ TV – look to Sky

iskyOne of the most successful New Zealand companies of the last few years has been Sky TV, a company that over two decades has built a market for itself as the sole pay TV operator in the country serving over 700,000 homes. Sky’s advantage is that it isn’t completely reliant on advertising to pay its way. It charges monthly subscription fees and its swelling subscriber base has allowed it to buy up attractive contact, particularly when it comes to sports coverage. The internet may offer a technical path around Sky TV and the traditional free-to-air broadcasters who compete with Sky in auctions for the New Zealand rights to screen content. But the purchasing power of the likes of Sky and TVNZ means it is unlikely any internet-based operator will be able to get a toe-hold in the market unless it can come up with some compelling TV – and pay the associated licensing fees.

What may change that is a move by content owners – basically the large US and European network operators and movie studios to move to immediate release of content on a global scale. For instance, if iPlayer becomes available to New Zealanders in the next year or two, you could potentially watch Top Gear via the your laptop or internet-enabled TV screen at pretty much the same time it becomes available to online viewers in the UK. However, the BBC sells the rights for Top Gear to Sky-owned Prime TV, so it would be burning a lucrative international sale by doing so. However, if the iPlayer service found another way to make revenue – charging users directly which is pretty easy in the age of internet micro-payments, or displaying advertisements in the iPlayer service, the BBC could be in a position to go to viewers globally and make more money – cutting out the middlemen.

I think that will be the real thing that defines how TV will develop beyond 2013 and the analogue switch-off. Will content makers start to push out content globally in simultaneous release via the internet and internet-enabled services like Google TV and will they come to favour this method rather than partnering with traditional broadcasters around the world?

One thing is for sure – the dominance of Sky in the local market is making many people nervous. Sky is the largest digital TV platform and with its advertising-dependent rivals TVNZ and Ironbridge (owners of TV3 and C4) facing tough times, Sky’s ability to snap up the attractive content is only going to get better. That’s why you are seeing TVNZ cozying up to Sky, featuring Freeview content on the Sky platform. It can’t beat Sky, so its keen to get into the Sky camp.

The future of TV in New Zealand then, apart from public broadcasting TV which is likely to be maintained in some form by the Government, is pretty much dictated by Sky TV. As the big content buyer in this country, Sky will also largely control the technological developments that determine how people receive digital TV. Having sunk a lot of investment into its high definition satellite service, there isn’t compelling reason for Sky to pursue internet TV other than as adjunct services for existing subscribers – which is what iSky will effectively be.

While the move to all-digital delivery for TV in New Zealand is a significant step that other countries are also pursuing, the integration of internet services and TV and the commercial realities of TV and movie content deals are going to be the big determinants of how we watch and what we watch in the coming few years.

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