Consumers regularly rank ABC, CBS, Fox, and NBC in their top 10 must-have channels. With new options to receive these broadcast channels for free over-the-air (OTA) appearing in 2017, will we see a big uptick in OTA usage? And will it lead to a wave of cord-cutting?
More OTA options coming in 2017
It is very problematic for online TV providers like Sling TV and PlayStation Vue to incorporate a comprehensive set of local broadcast channels. Each company must go market-by-market to negotiate with the local stations. It is also a logistical nightmare bringing all those locals into the service, and guaranteeing they can only be seen in the local markets they originate from. There are also details like local sports blackout rules that must be adhered to.
Almost a year ago, I suggested Sling TV could take a shortcut to integrate local channels. The company could provide a simply TV tuner (either in a stick or cheap set-top box) and leverage an antenna installed at the customer home. It looks like Sling TV is preparing to do just that. The company is readying a set-top box called AirTV that combines an over-the-air TV tuner and Sling TV. There has been no announcement about pricing or release date, though CES in three weeks would be a great venue for that.
Other companies like Mohu, the indoor TV antenna maker, are trying to make it easier for consumers to cut-the-cord. The company has created a website, called untangle.tv, to help consumers build a package of SVOD and over-the-air channels to replace their pay TV subscription. Of course, the company offers to sell you an antenna (even when you tell it you already have one.)
Over-the-air usage sees modest growth
According to Nielsen data, over-the-air (OTA) usage has seen steady growth over the last 4 years. In Q2 2012 there were 11.1M homes relying on broadcast for the television service. This has increased 2.5M, to reach 13.6M in Q2 2016.
During that time, consumers have been able to buy cheaper USB tuner dongles for the PC to watch and record live TV on a computer. TiVo has had at least one over-the-air capable DVR in market throughout its entire existence. Channel Master has even integrated its subscription-free OTA DVR+ with Sling TV. There are also several options, including HDHomeRun, to stream live TV channels to devices on a home network.
Despite these options, adoption of OTA television has grown only very slowly. Between 2012 and 2016 year-over-year growth has never exceeded 10%.
Why OTA usage growth will remain modest in 2017
Certainly, Sling TV and Mohu’s efforts could help boost OTA usage somewhat in 2017. However, there are three primary reasons it is unlikely to lead to a massive return to over-the-air television.
The barriers to OTA adoption remain as they have been for years. Fiddling around with antennas to get good reception is very problematic for consumers.
In addition, the young are moving away from traditional television. As I reported yesterday, the amount of time millennials spent watching TV between 2014 and 2015 fell 20%.
Finally, even broadcasters seem less committed to the OTA channels. CBS will put its new Star Trek: Discovery series exclusively on its SVOD service, and not on its broadcast channels.
Why it matters
Consumers will have new options to re-integrate over-the-air broadcast television into their lives in 2017.
However, this will not cause a massive increase in the number of people switching to OTA television.
Traditional barriers to OTA still exist, millennials are moving away from linear TV, and broadcasters are waiving in their commitment to their OTA properties.