Broadcasters are betting that antennas and modern DVRs will help them stay relevant. But a stalled transition to ATSC 3.0 and massive growth of linear streaming services could throw a wrench into those plans.
Antenna television is back. In recent years, millions of cord-cutters have rediscovered antennas as a reliable way to watch broadcast networks like ABC, NBC, and FOX, all for free — and now, broadcasters are eager to get the rest of us hooked. They’ve been marching ahead with the deployment of ATSC 3.0, a next-generation broadcast format that supports 4K, HDR, Dolby Atmos audio, and even interactive apps over the air, no cable or streaming subscription required.
A little over a year ago, one of the country’s biggest broadcasters made an unexpected acquisition to help bolster the transition: The E.W. Scripps Company, which operates dozens of ABC, NBC and Fox stations as well as a handful of nationwide broadcast networks, quietly bought Nuvyyo, a Canadian startup best known for its Tablo DVR devices for cord-cutters. The acquisition, which hasn’t been previously reported, is part of Scripps’ multibillion-dollar bet on acquiring stations, networks, and spectrum for an ATSC 3.0-powered antenna TV future.
But the transition to ATSC 3.0 has been anything but smooth. Five years after its launch, the format is still not available in many major markets. Support from TV makers has been limited, and some of the promised features likely won’t be available for years to come. Meanwhile, free streaming TV channels are growing by leaps and bounds and are quickly becoming a viable alternative to both cable and antenna TV. As it stands, the future of broadcast TV is looking remarkably fuzzy.
A big promise, a small start
ATSC 3.0 is to broadcast television what 5G was to mobile a few years ago: a mixture of buzzwords and real innovation, something that’s definitely coming, but no one really quite knows yet what its true impact will be. And on paper, there’s a lot to like about it: the standard allows broadcasters to transmit TV signals with up to 4K HDR and better audio. ATSC 3.0 also includes data transmission features for better program guides, interactive apps and, eventually, advertising services.
The first tests of ATSC 3.0 began a decade ago. The FCC gave the full go-ahead for the new standard in 2017, and local broadcasters have gradually been adding ATSC 3.0 feeds ever since. In early 2023, broadcasters were utilizing ATSC 3.0 in around 50 local markets, including Los Angeles, Portland, and Washington, DC. By the end of the year, 75 percent of US households will have access to ATSC 3.0, according to Pearl TV, a broadcaster group that’s promoting the standard under the Nextgen TV moniker.
Consumer adoption is another story. Most people aren’t currently able to watch over-the-air broadcasts in ATSC 3.0, even if they live in a market where it has been rolled out. While any existing antenna can receive ATSC 3.0 signals, the same isn’t true for TVs. ATSC 3.0 is not backward-compatible with ATSC 1.0, the current broadcast standard, and most existing TVs can only receive ATSC 1.0 signals. Manufacturers like Samsung and LG began equipping some of their higher-end TV sets with ATSC 3.0 tuners in recent years, and Sony is even building a tuner for the new format into every new TV sold in the United States.
However, adding ATSC 3.0 compatibility raises the component costs of a TV, which is why many makers of budget-priced TV sets have so far been shunning the new format. “The current VIZIO TVs on the market do not include ATSC 3.0 tuners,” a Vizio spokesperson told us after CES in January. TCL, known for its low-price Roku TVs, also remains on the sidelines. “We will not incorporate ATSC 3.0 in (the) first half of 2023, as consumer demand for the functionality is still low,” a spokesperson told us. “We will continue to watch the market and adjust when needed.”
How new hardware can help
With most TVs not supporting ATSC 3.0 out of the box, external hardware could be key to the adoption of the format. That’s where Nuvyyo, a small Canadian startup best known for its Tablo DVRs, comes in. Regulatory filings show that Scripps acquired Nuvyyo for less than $14 million in cash in January of 2022; the startup had raised $10 million over two rounds since it was founded a decade earlier. The modest price tag speaks to how difficult it is to innovate in the over-the-air television space.
Nuvyyo’s Tablo DVRs have become a favorite among cord cutting enthusiasts, but Tablo’s value proposition has been harder to explain to the average consumer. Most of Tablo’s devices don’t directly connect to a TV but instead capture over-the-air TV signals and then serve the resulting recordings over Wi-Fi. This whole-home DVR setup makes it possible to stream recorded TV shows to a wide range of devices, including phones and tablets, on the go, but it also is a lot more complicated than just hooking up a Roku to your TV.
The fact that Tablo charges a monthly service fee for access to its program guide hasn’t exactly helped with adoption. Over 10 years, Nuvyyo has shipped just over 200,000 Tablos, and the company currently has around 80,000 active customers, according to the LinkedIn bio of its VP of finance.
Still, Scripps has big plans for Tablo DVRs. “It’s a very important project to us,” said Scripps Networks chief distribution officer Jeffrey Wolf in a conversation with The Verge. Wolf didn’t share any details on how exactly Scripps plans to use Tablo going forward but said that it was “a critical piece” of the company’s push towards broader over-the-air adoption — a push that also includes a marketing campaign dubbed The Free TV Project.
Wolf argued that an over-the-air DVR could make cord cutting more convenient and help over-the-air networks compete with streaming services. “It allows viewers to watch over-the-air content essentially on demand,” as Wolf put it.
Perhaps just as important is that Nuvyyo has been working on tech to make its DVRs and existing TV sets futureproof. The startup experimented with a cloud DVR in the past and in early 2022 announced its first device supporting the new ATSC 3.0 broadcast standard. Wolf didn’t want to spill the beans on how exactly his company intends to use Tablo, but he hinted at plans to use the company’s future devices to aid the transition to ATSC 3.0. “Not everyone wants to change their TV for new technology,” he said. “Converters or dongles are going to be important pieces of the success of that transition.”
4K support is still MIA
There are other reasons consumer adoption is lagging. Even viewers who happen to have a compatible TV and live in a market where ATSC 3.0 is available quickly find that the broadcasts aren’t all they’re cracked up to be. ATSC 3.0 may, in theory, support 4K HDR, but at this point, 4K broadcasts are virtually nonexistent in the United States.
One reason for this is that the FCC decided against a hard transition to ATSC 3.0 that would have left everyone without a compatible device in the dark. “We have to both offer our current services (ATSC 1.0) while also offering the 3.0 signal,” explained Alex Siciliano, a spokesperson for the National Association of Broadcasters (NAB). The FCC currently mandates that stations transitioning to ATSC 3.0 keep their legacy signals up and running for at least five years, but it could extend that timeline.
To achieve dual support with a limited amount of spectrum, broadcasters partner with each other in local markets. A local ABC affiliate may, for instance, switch to ATSC 3.0 and also carry the local NBC and FOX stations in the new format. In exchange, those stations will continue to broadcast the ABC station’s signal in the legacy ATSC 1.0 format — an approach known in the industry as “lighthousing” that simply doesn’t leave enough bandwidth for 4K signals. “We are spectrum-constrained,” admitted Pearl TV’s managing director, Anne Schelle.
The transition to ATSC 3.0 is “stalled” and “in peril” due to regulatory inaction, the NAB wrote in a letter to the FCC earlier this year. Highlighting the 4K issue, broadcasters called for “a plan to eventually end the wasteful dual transmission in both ATSC 1.0 and ATSC 3.0” and suggested that an FCC task force should come up with a firmer transition timeline.
“It is time for the FCC to take a more active role,” said Siciliano, adding that it wasn’t in the commission’s interest to “leave behind viewers — especially those that rely solely on over-the-air TV for their news and information.”
Free streaming channels are booming
Antenna usage remains popular, especially among lower-income and immigrant households. Eighteen percent of TV viewers told market researchers last year that they owned an antenna. Among Latinx audiences, one in four viewers said they owned an antenna. The Consumer Technology Association estimates that there will be around 8.5 million antenna sales this year alone.
Those numbers have prompted Scripps to bet big on over-the-air television. With cable TV audiences declining, over-the-air seemed like the best bet to reach millions of eyeballs that the company can then monetize with advertising. In addition to buying up dozens of local broadcast stations, the company spent around $300 million on broadcast-only BET competitor Bounce in 2017, followed by the $2.65 billion acquisition of the over-the-air networks Ion as well as associated spectrum in 2020.
But while Scripps was busy pouring billions into broadcast networks and infrastructure, another way to watch linear television emerged: free, ad-supported streaming channels. Turn on any smart TV these days, and you’ll find program guides with hundreds of TV channels featuring familiar names like AMC, NBC and FOX, with no need to pay for cable or hook up an antenna.
These free linear channels have been a big hit with audiences and advertisers: Samsung alone claims to stream more than 3 billion hours of free linear programming to its smart TVs per year, and advertisers are expected to spend more than $4 billion on domestic linear streaming services this year — ad revenue that directly benefits TV makers, unlike those costly ATSC 3.0 tuners.
Today, many media companies still use these so-called FAST channels as a way to make some extra money with older shows. AMC, for instance, doesn’t stream its cable channel to smart TV viewers, in part because it has exclusive deals with cable TV services. Instead, it has dedicated FAST channels for back-to-back The Walking Dead and Portlandia reruns.
However, some broadcasters have begun to retransmit their linear feeds as FAST channels. Scripps, for instance, has been streaming its Ion and Bounce broadcast networks in their entirety, and the explosive growth of FAST is not lost on the company. “When we track audience levels for over the air, we’re generally looking at how we’re doing year over year because it’s kind of a slower-moving train at this point,” said Scripps Networks chief research officer Jon Marks. “When we look at FAST, we’re looking at it quarter by quarter because that’s how fast it’s growing.”
In light of these changes, Scripps is hedging its bets. The company plans to keep promoting over-the-air viewing and also talk more publicly about its plans for Tablo in the coming months. Scripps also remains committed to ATSC 3.0, which will be a quality improvement even without 4K. “Our networks right now are mostly SD,” Wolf said. “The ability to put our product out there in HD will change the value of our proposition.”
But it’s also looking to invest more into free streaming. For the first time, the company aims to launch a new TV network on FAST services this spring and then bring it to antenna audiences if it does well with streamers. Marks still doesn’t expect linear streaming to overtake over the air from an audience size perspective any time soon. Then again, with the transition to ATSC 3.0 moving as slow as it is, it’s possible that free streaming will eventually leapfrog over-the-air broadcasting and turn into the de facto future of free TV while antennas slowly become irrelevant.
“Right now, the best use of our spectrum is building over-the-air broadcast networks,” said Wolf. “Is that the path of the future? Time will tell.”