Introduction

IABM Business Intelligence (BI) Regional Reports provide IABM members with insight into the latest broadcast and media industry developments for a specific region. Over the course of each year, these reports build into a full overview of all the major regional markets around the world.

Report Contents and Structure

The analysis is undertaken by our Head of Insight and Analysis, Lorenzo Zanni, Principal Analyst, Riikka Koponen and Research Analyst, Chiara Raucci. The report includes the latest news and research findings across a variety of topics, including:

• Business Environment
• Broadcast and Media Technology Industry
• Media Technology Demand Drivers

This edition of the BI Regional Report will include a focus on North America.

Market Overview

Business Environment

• Economic growth in the US was 2.9% in 2018, up from 2.2% in 2017 mostly reflecting stronger-than-expected domestic demand
• The World Bank predicts economic growth to slightly decline to 2.5% in 2019 due to intensifying trade tensions, particularly between China and the US
• During 2018, the US administration imposed three rounds of tariffs on Chinese goods, totaling over US$250bn
• The World Bank estimates that new tariffs may expand further, translating into higher prices and increased political uncertainty
• In 2018, global oil prices averaged US$68 per barrel (bbl), which was about 30% higher than in 2017, mainly due to continuing declines in production in Venezuela and the impact of US sanctions on Iran
• The US Federal Reserve (Fed) is gradually removing stimulus in response to low unemployment and near-target inflation (2%), and it raised interest rates four times in 2018, with forecasts of two to three more hikes coming up during 2019
• Higher bond yields, which partly resulted from the Fed’s rate hikes, and improved economic growth in the US in 2018 led to an increased demand for the US dollar, thus strengthening the currency – as of February 2019, the US dollar index was at its highest level since December 2018 equaling 97.084 index points

Broadcast and Media Industry

• With 119 million TV households in the US, North America constitutes one of the largest markets for broadcast and media technology products and services
• The broadcast industry in North America is now in the midst of a radical transformation and stepping into an “OTT 2.0” era, where media companies are harnessing the OTT lessons learnt over the past few years of experimentation and reshaping their business models toward direct-to-consumer (DTC)
• In the television industry, the until-now solid business model of cable and satellite networks is being increasingly disrupted by competition from OTT operators such as Netflix, Amazon and Hulu
• The number of American adults who have stopped subscribing to traditional Pay-TV services (i.e. cord-cutters) grew by an estimated 33% to 33 million in 2018
• According to Digital TV Research, Pay-TV revenues in the US will decline by 26% from $101.71bn in 2015 to $75.13bn in 2023
• Pay-TV penetration in Canada will go down from 85.1% in 2013 to 74.8% in 2023, according to Digital TV Research
• Disney’s acquisition of Fox highlights how scale is becoming important in the US media industry
• Netflix invested around US$12bn in developing and producing original content in 2018. In 2019, Netflix plans to invest about US$15bn in original content, up by 25% from the previous year
• North American companies are increasingly investing in emerging technologies such as the cloud, AI and IP to achieve greater efficiencies and agility

Media Technology Demand Drivers

• The transition to digital broadcasting has almost reached maturity and therefore does not represent a significant driver of broadcast and media technology spending
• The number of HD channels grew significantly between 2005 and 2012, with HD now mainstream
• Canada is similar to the US with the transition to HDTV reaching maturity in 2012
• Most use cases of UHD have focused on live sports broadcasting
• VR deployments in sports broadcasting accelerated in 2018
• Evidence suggests that OTT penetration is still rising among internet users with a noteworthy share of traditional Pay-TV subscribers “cutting the cord” to rely only on OTT offerings
• The OTT landscape in North America is dominated by Netflix, Amazon and Hulu with Netflix being the clear leader in terms of SVOD revenues  
• ATSC 3.0 is the next-generation terrestrial system providing broadcasters with additional spectrum efficiency – at the end of 2017, the FCC voted to allow broadcasters to voluntarily roll out ATSC 3.0

Business Environment

Economic growth in the US was 2.9% in 2018, up from 2.2% in 2017 mostly reflecting stronger-than-expected domestic demand, according to the World Bank. Economic activity in the US was boosted by procyclical fiscal stimulus as well as accommodative monetary policy in 2018. The unemployment rate fell to a near 50-year low in 2018 equating on average to 3.9%, while labor productivity has shown signs of picking up. Hence, the labor market is expected to remain robust bolstering consumption also in 2019.

In contrast with the optimistic sentiment of 2017, the year of 2018 was characterized by increased political uncertainty. At the beginning of 2018, president Trump announced that the government would impose tariffs on imported steel (25%) and aluminum (10%).

Accordingly, real GDP growth in the US is expected to decline to 2.5% in 2019 and to an average of 1.7% in 2020-21.

In 2018, global oil prices averaged US$68 per barrel (bbl), which was about 30% higher than in 2017. This was mainly due to continuing declines in production in Venezuela and the impact of US sanctions on Iran, which contributed to rising Brent crude oil prices peaking at US$86 per barrel in early October 2018. Nevertheless, prices fell sharply in November 2018 after the US announced temporary exemptions from the sanctions on Iran for eight countries, including China, India and Japan. The decline in prices was also partly due to continued rapid growth in oil production in the US, the OPEC countries and Russia.

As of early January 2019, crude oil prices stood at about US$55 per barrel, and markets expect the prices to remain broadly at that level over the next 4-5 years, according to the International Monetary Fund (IMF). The World Bank, in turn, estimates oil prices to average US$67 per barrel in 2019 and 2020, even though uncertainty around the forecast is high due to considerably high trade tensions and uncertainties around the full impact of Iranian sanctions once the exemption period of the eight countries ends. In addition, the ever-increasing political instability in Venezuela and recent demonstrations against president Maduro’s government may result in further declines in oil production in Venezuela. In the US, crude oil output is expected to rise by further 1 mb/d in 2019 after new pipelines come onstream in the second half of 2019.

Heightened trade tensions and weakened demand from China had an impact on other commodities such as metals, whose prices rose on average by 6% in 2018. The price of steel and aluminum in the US rose following the announcement of specific tariffs on imports on those metals from a wide range of countries, while the price of nickel fell by over 20% during the year. According to the IMF, metals prices are expected to decrease 7.4% year-on-year in 2019 and to remain roughly unchanged in 2020. Price forecasts for most major agricultural commodities have been revised modestly downwards amid trade tensions between the US and China.

According to the U.S. Bureau of Labor Statistics, the unemployment rate equaled 4% and the number of unemployed persons stood at 6.5 million in January 2019. This was clearly up from the last two quarters of 2018, when the unemployment rate ranged from 3.7% to 3.9%. The chart below illustrates the latest development of the monthly unemployment rate in the US.

Part of 2018’s robust growth was driven by fiscal expansion following the Tax reform and Bilateral Budget Act in 2018. This year, however, fiscal stimulus will be fading, and additional tax cuts or spending increases look unlikely in the new political constellation following the result of midterm elections in late 2018. The US Federal Reserve (Fed) is gradually removing stimulus in response to low unemployment and near-target inflation (2%). For the first time since the 2008 financial crisis, the main US policy rate is approaching its neutral level. Marking the new era of tighter monetary policy following a decade of stimulus after the financial crisis, the Fed stopped its Quantitative Easing (QE) program – a mixture of low interest rates and an expansionary stimulus program – and raised interest rates four times in 2018, with forecasts of two to three more hikes coming up during 2019. The hike in interest rates highlights the confidence in increased growth for the US economy on the back of the tax cuts and government spending. The Fed last raised its benchmark interest rate in December 2018 from 2.25% to 2.5%, and its projection now is for 2.3% real GDP growth in 2019 and an unemployment rate of 3.5% in the fourth quarter of 2019, even with two interest rate hikes.

Higher bond yields, which partly resulted from the Fed’s rate hikes, and improved economic growth in the US in 2018 spurred foreign investors to shift funds into the US, which led to an increased demand for the US dollar and thus a strengthening of the currency – as of January 2019, the US dollar index was up about 5.9% against other major currencies including the euro, pound and yen. Since November 2018, the euro weakened about 2% amid slower economic growth in the Euro Area and concerns about Italy’s fiscal policy, and the pound depreciated about 2% due to increased uncertainty around Brexit.

Even though a strong dollar can be interpreted as a sign of a strong economy, the stronger dollar is a problem for many large American companies, because it reduces the value of their international sales and profits. The stronger dollar may also have a negative impact on large American firms in the US, because it makes products from overseas cheaper and US goods more expensive in international markets. This is particularly a concern for giant technology hardware companies like Apple, which rely on international markets. Taking into account forecasts of two to three more possible interest rate hikes during 2019, the value of the US dollar could lift further this year. On the other hand, it is also possible that, with US economic growth forecast to slow in 2019, the Fed will take a break from hiking interest rates in the middle of the year, which would weaken the US dollar.

In Canada, economic growth remains relatively strong, even though it is expected to slow down from 2.0% in 2018 toward 1.9% in 2019, according to the IMF. The unemployment rate of 5.6% in 2018 was a multi-decade low, and monthly employment growth has been robust averaging over 20,000 new jobs over the past three years. Canada’s economy is export based, with exports accounting for 45% of its total GDP. As the world’s seventh largest oil producing country and a net exporter of crude oil (accounting for 10% of total Canadian exports), Canada’s economic growth is influenced by global oil prices. In January 2019, the Bank of Canada (BoC) estimated that lower oil prices would detract 0.5% from real GDP growth in 2019. The BoC’s 2019 real GDP estimate relies upon a robust export forecast thanks to the new US-Mexico-Canada Agreement (USMCA) replacing the former NAFTA.

It is worth noting that the Canadian economy is highly dependent on economic activity in the US – about two-thirds of Canada’s exports go to the US. Hence, implementation of the new USMCA agreement as well as the outcome of tariff-related disputes between the US and China will affect the course of Canada’s economic growth in 2019.

The Broadcast & Media Industry

Overview

Compared to Europe, where broadcasting mostly started as a state monopoly, and with many public service broadcasters (PSBs) still playing a major role in many European countries, North America’s broadcast and media sector has favored private offerings of radio and television services. Initially, the broadcasting industry was financed only through advertising, but it later developed into a complex ecosystem of different networks, Pay-TV operators, affiliates – and most recently, over-the-top (OTT) players.

In Canada, the Canadian Broadcasting Corporation (CBC) – a public broadcaster – was the first network to be established in the country, but from the 1960s onwards the broadcasting industry started to diversify thanks to private networks entering the market, and CBC’s market share was diminished.

• With 119 million TV households in the US, North America constitutes one of the largest markets for broadcast and media technology products and services, and hence it is home to a number of very large broadcast and media organizations. In 2018, the top three North American broadcast and media organizations - Comcast, Disney and AT&T - generated media revenues of US$86bn, US$59bn and US$48bn respectively. The size asymmetry between end-users and technology suppliers in this region has often caused pressure on broadcast and media technology product prices.

The traditional broadcast landscape in North America is structured around the relationship between media networks and distributors:

• Media networks are broadcast and cable/premium programmers that derive money from advertising and distribution fees charged to third-party distributors. Media networks can be divided into:
  

• Distributors are free-to-air terrestrial stations, station operators and Pay-TV operators carrying a mix of original content and programming from external media networks. They derive money from advertising and fees charged to subscribers.

The emergence of OTT is now radically changing this traditional model, and the broadcast industry in North America is now in the midst of a radical transformation. It is stepping into an “OTT 2.0” era, where media companies are harnessing the OTT lessons learnt over the past few years of experimentation and reshaping their business models to increasingly deliver their original content direct-to-consumer (DTC), bypassing traditional means of distribution. According to The Diffusion Group, all “major” TV networks in the US will introduce standalone DTC OTT services by 2022, driving total DTC subscriptions close to 50 million by 2022. Moreover, Akamai estimates that over 50% of publishers view DTC video services as a primary or secondary revenue source. Hence, broadcasters’ DTC initiatives are crucial, as cord-cutting continues to outpace projections.

In the context of rapidly rising competition, media companies are increasingly focusing on original content investment and trying to find ways to deliver new services as efficiently as possible. Competition from powerful OTT operators such as Netflix, Amazon and Hulu is pushing broadcasters to launch their own OTT offerings to reach out directly to viewers – particularly the millennials – whose tastes increasingly run to mobile and social offerings.

Pay-TV operators have responded to fierce competition by announcing smaller, cheaper “skinny bundles” of content packages priced lower than their traditional offerings. In addition to video-on-demand (VOD) services, new formats and strategies for monetization are gaining ground, and the fragmentation of content presentation and consumption continues, as devices proliferate and diversify.

Pay-TV penetration has declined in the US recent years, particularly due to the high costs associated with Pay-TV subscriptions. Pay-TV profit margins continue to erode as programming licence fees increase far ahead of subscription rate increases. According to eMarketer, the number of American adults who have stopped subscribing to traditional Pay-TV services (i.e. cord-cutters) grew by an estimated 33% to 33 million in 2018. In total, there were 186.7 million Pay-TV subscribers in the US in 2018, which was 3.8% less than in 2017. The chart below illustrates the long-term trend of declining number of Pay-TV subscribers in the US.

In terms of Pay-TV revenues, Digital TV Research estimates that revenues will decline by 26% from US$101.71 billion in 2015 to US$75.13 billion in 2023. Canada is expected to face a similar situation as the US, but the decline of Pay-TV is slower – Pay-TV penetration in Canada will go from 85.1% in 2013 to 74.8% in 2023, according to Digital TV Research.  Nevertheless, it is important to note that despite its continual decline, the cable and satellite Pay-TV business is still very large in North America.

To attract millennials, who are reluctant to pay the cost of a full cable or satellite subscription and prefer to watch video content on multi-devices, many traditional networks and cable companies are offering their viewers the option to binge-watch their favorite series and movies with the same convenience as the top streamers. For example, the legacy TV and radio network CBS launched its direct-to-consumer offering, CBS All Access, in 2014 while its Showtime subsidiary, a premium cable and satellite television network, launched its own OTT service SHOWTIME in 2015, soon followed by the cable giant HBO launching its own direct-to-consumer services, HBO Now and HBO Go. The satellite provider Dish Network also launched its own OTT platform, Sling TV, in 2015, which offered a selection of Dish Network’s subscription channels for US$20. Later in 2015, Verizon launched go90 – a free, ad-funded online platform accessible only via mobile devices.

After purchasing DirecTV for US$48.5bn in 2015, at the end of 2016, AT&T launched its own direct-to-consumer skinny bundle offering, DirecTV Now. However, with a monthly price of about US$40, DirecTV Now operates at a loss, and cannot generate enough revenue to offset fast-rising programming costs. This is in line with Deutsche Bank’s calculations that skinny bundles’ profit margins are a negative 6% versus a positive 38% for traditional Pay-TV, and thus less appealing to cable companies. With DirecTV Now’s customer growth decelerating, AT&T is preparing to launch a new IP-based “OTT thin-client service” in the first quarter of 2019. The new OTT service will run on the open internet, with users plugging in a proprietary set-top box that connects via USB port. AT&T has not announced a price point for the new service, but it is expected to be more expensive and to offer more channels than DirecTV Now, which in turn will likely fall in the middle of AT&T’s video value proposition – between the new OTT service and its bottom-end AT&T Watch streaming service.

As the competition around original content intensifies, TV networks and broadcasters are adopting a holistic method of monetizing their inventory. Instead of working in silos, traditional media companies are increasingly combining different monetization methods such as ad-funded, subscription and transaction, which allows them to have more transparency and a better understanding of their whole inventory and how it works across different delivery systems. This also means that TV networks’ core business is converging, as they are overlapping on more fronts than ever before. For example, AT&T, which is also the largest phone company in the US, now owns cable network HBO, satellite provider DirectTV and Time Warner (now WarnerMedia), which enables AT&T to both produce and distribute content. In the fourth quarter of 2019, WarnerMedia plans to launch its own streaming service, adding to a growing list of OTT services that bypass cable providers and bring TV series and movies directly to viewers. In the intensifying competition over original content, WarnerMedia is well positioned as it has several TV-content networks under its umbrella including HBO, Warner Bros and Turner. HBO produces original series like Game of Thrones and Westworld, while Turner’s assets include CNN, TNT, TBS, Cartoon Network and Turner Classic Movies. Warner Bros, in turn, produces series such as The Big Bang Theory, The Voice, The Bachelor and movies like Crazy Rich Asians, Dunkirk, Wonder Woman and Blade Runner 2049.

In November 2018, satellite provider Dish Network’s customers lost access to HBO due to an ongoing licensing dispute between the premium cable channel and the TV distributor. This was the first time in HBO’s over 40-year history that it went dark. This could signal that AT&T, which now owns HBO through WarnerMedia, is demanding more money for carrying its channels, which Dish would not want to pay. During the Dish shutdown, HBO commented that it hopes that “the situation with DISH changes soon, but in the meantime our valued customers should take advantage of other ways to access an HBO subscription”. This could be interpreted as WarnerMedia aiming at sending customers to another cable company, which will agree to pay its new prices or meet its subscriber quota. The negotiating power of cable and satellite distributors over content deals will be increasingly challenged when AT&T’s WarnerMedia launches its own direct-to-consumer OTT platform later in 2019.

In 2017, Disney announced that it will pull its content from Netflix starting from 2019 and launch its own direct-to-consumer offering, Disney+. It also decided to launch an ESPN-branded sports streaming service from 2018. To bring in-house the necessary technology development capabilities, Disney acquired streaming technology provider BAMTech at the end of 2017. Moreover, in July 2018, Disney and 21^st Century Fox shareholders approved a US$71.3bn deal, in which Disney purchased Fox assents and got control over Fox’s entertainment properties and a 39% stake in Sky, India’s Star and Hulu. Fox, in turn, announced in September 2018 that it will sell the remainder of its stake in Sky to Comcast. Disney’s acquisition of Fox highlights how scale is becoming important in the US media industry.

Slated to be launched in late 2019, the new Disney+ streaming service will charge a monthly fee and provide access to TV shows, movies and other content from the world of Disney, while its other streaming services – Hulu and ESPN+ – will run on the same technology platform. Most of the programming planned for the new Disney+ is likely to leverage Disney franchises such as Marvel and Star Wars. The Disney+ monthly subscription is expected to be slightly cheaper than Netflix’s, and the first film to stream on Disney+ instead of Netflix will be Captain Marvel, which is opening in theaters in March 2019. ESPN+ will continue to focus on sports and Hulu is expected to continue to stream content from three of the broadcast networks and its own original series like The Handmaid’s Tale.  

In September 2018, Comcast – America’s biggest provider of cable and broadband services – won the bidding war with Disney over Sky in a deal worth US$40bn. Through Sky, Comcast is able to strengthen its footprint in Europe, where Sky has around 27 million users – and data about its customers’ interests. Compared to ad-funded broadcasters in Europe, Sky has had a strong couple of years with growing revenues thanks to its major sports rights deals, significant partnerships with BT Sport, Spotify and Netflix as well as its strong, world-class production capabilities. Given that Disney now owns Fox, which already owns 39% of Sky, Comcast had to secure the remaining 61% for itself. These mega deals among the largest media companies during 2018 illustrate that the battle over original content is intensifying. The chart below illustrates increase in the number of original scripted TV series in the US.

Another reason for the consolidation among traditional broadcast and media companies is that they require sufficient scale to compete effectively with the new media and OTT players such as the FAANGs (i.e. Facebook, Amazon, Apple, Netflix and Google). According to research firm MTM, the premium OTT market in the US is expected to reach US$21 billion by 2020, significantly up from US$16.4 billion in 2017. New media players with big budgets and scale are also increasingly stepping on traditional media companies’ toes in the field of sports – the crown jewels of linear TV. Sport has been the missing piece of the content portfolio for the new media giants, but this likely to change soon. There are rumors that Amazon would be interested in acquiring DAZN, a sports OTT platform, through which Amazon would gain strong sports rights in key global markets including Germany and Japan. As consumers continue to adopt OTT and connected TV viewing, the next big opportunity for the new media companies will be live OTT particularly in the field of sports.

Even though Amazon has not spent as much on original content as Netflix, its market cap is six times bigger than that of Netflix, its main rival. According to internal documents obtained by Reuters, Amazon Prime had over 100 million subscribers worldwide, of which 26 million were in the US. Hence, in terms of subscriber base, Amazon is still far behind Netflix, but it has the advantage of having in place a platform ecosystem of partners and a digital platform that invites third parties to make money on the Amazon platform, which Netflix still has yet to build.

In 2019, Netflix plans to invest about US$15bn in original content, up by 25% on the previous year. According to BMO Capital Markets, Netflix’s content spending will reach an estimated US$17.8bn in 2020. Ahead of facing serious new streaming competition from Disney, WarnerMedia and NBCUniversal starting later this year, Netflix has dramatically increased its marketing spending to promote its originals – its marketing costs grew 65% in 2018 to US$2.4 billion. To compensate for its massive spending on originals, Netflix raised the prices of its streaming plans in the US and in some Latin American countries. For example, Netflix’s Standard plan (two HD streams) increased from US$10.99 to US$12.99 per month for new subscribers, and the new price is also taking effect for existing customers in Q1 and Q2 of 2019.

Compared to Netflix’s continuing strategy of relying on a monthly subscription-based revenue model and heavy investment in original content, Facebook is strengthening its position as an interactive video platform provider for user generated content (UGC) and live videos. According to Forbes, over half a billion internet users globally now watch online videos daily on Facebook, while other established video platforms like YouTube, Twitch and Vimeo are losing their users to the “new” market entrant, Facebook. With the Facebook-owned Instagram Live and Facebook Live user base increasing, the popularity of live video for business is increasingly growing – daily watch time for Facebook Live broadcasts grew by four times during the course of 2018, according to Facebook. With live video, viewers seem to feel that the presenter is speaking directly with them and that they can engage in a conversation by commenting and asking questions in real-time. Moreover, the added personalization in live videos is estimated to significantly lengthen time spent watching the live content.

Apple, which already produces some original shows such as Planet of the Apps and Carpool Karaoke, is also expected to launch an OTT service later this year, and the company has already publicly announced an investment of US$1bn in original content in the project. Apple is looking at investing in original content because iTunes, its music and entertainment sale and rental service, has suffered from increased competition from on-demand subscription offerings such as those provided by Netflix, Amazon and Hulu. Apple’s new OTT service is expected to debut in the US in the first half of 2019 and expand to over 100 countries in the following months. According to a CNBC report, content will be free and ad-supported, and the new service will be available through its devices including Apple TVs, iPhones and iPads, but not computers. However, Apple will not do anything to jeopardize its product sales and hence streaming is not expected to become its primary business. With its OTT initiative, Apple can respond to the intensifying competition and find new revenue sources. For example, Netflix is no longer allowing new customers to subscribe via iTunes in-app purchase from their iPhones and iPads to avoid paying a 30% commission to Apple.

Google has been investing in original content through its YouTube division in recent years, launching subscription services YouTube Red in 2015 and YouTube TV in 2017. YouTube Red is an ad-free subscription service that also includes Google’s originals, while YouTube TV is a skinny-bundle of live premium channels. However, according to recent reports, the company may have decided to cap its investment in content for the next few years. Google’s investment in original content amounts to a few hundred million dollars according to recent reports.

As a developed broadcast and media market, North America’s transition to digital broadcasting and HD have reached maturity with technology spending now focusing on multi-platform, IP, AI and cloud-based technology – however, HD spending has not halted as demonstrated by recent HDTV channel launches. The rollout of the next-generation terrestrial standard, ATSC 3.0, by broadcasters in the US is also expected to drive spending, particularly with regard to transmission-related equipment. This will provide broadcasters new tools to reach consumers in a multi-platform world although there may be some constraints preventing the standard taking off immediately – a major one being consumer adoption of compatible equipment.

The emergence of OTT and adoption of new direct-to-consumer business models naturally changes media companies’ content delivery strategies. Accordingly, broadcasters and media companies are seeking to increase their operational efficiency by deploying IT-driven solutions. Large US broadcasters like Fox and ABC-owned ESPN have built new facilities based on IP rather than traditional broadcast products. Already in 2015, Disney and ABC announced during the NAB Show that they will virtualize their master control infrastructure by using technology from Imagine Communications to be able to playout from the cloud and to provide pop-up channels. In 2018, Telemundo opened its new headquarters in Miami, with its infrastructure based on advanced IP technology (ST 2110). The facility now hosts Telemundo Network, Telemundo Studios, Telemundo International and the cable network NBCUniversal as well as the company’s digital media operations.

 The next chapter will discuss the major technology trends in the North American broadcast and media technology market more in detail.

Media Technology Demand Drivers

Key Trends

We examine specific trends driving broadcast and media technology spending in North America. The trends we discuss are:

• Transition to Digital and HD Broadcasting
• New Viewing Experiences (UHD and VR)
• OTT and Multi-Platform Delivery
• ATSC 3.0

The transitions to digital and HD broadcasting are mature trends in this region and do not represent significant spending drivers for vendors to exploit. The transitions to new viewing experiences, multi-platform delivery and ATSC 3.0 are instead now the principal spurs.

Transition to Digital and HD Broadcasting

In North America, the transition to digital broadcasting has almost reached maturity and therefore does not represent a significant driver of broadcast and media technology spending.

In the US, the Federal Communications Commission (FCC) started running tests of digital transmission in 2008. The requirement was set for full-power TV stations to shut down their analog transmissions by June 2009. Low-power TV stations were given an extended deadline of September 2015 and continued to broadcast in analog. However, the FCC suspended this deadline due to the Incentive Auction, which required the repacking of TV spectrum, and meant that some stations may have had to go off air or change channels. On completion of the auction in 2017, the FCC announced a new date of July 13, 2021 for low-power TV stations to shut off analog transmissions.

After the completion of the spectrum auction in March 2017, the FCC issued a new channel allocation table for US broadcasters. This meant the start of the FCC-mandated 39-month timeframe for repacking the spectrum, during which broadcasters must move their transmission frequency to a new position on the spectrum. The process of repacking the spectrum impacts nearly 1,000 TV stations in the US and should be finished by 2020, according to the FCC. The work during the repack process consists of upgrading transmission infrastructure such as digital TV transmitters, broadcast antennas, RF components, and any required structural engineering work on TV transmission towers.

Initially, the US government allocated US$1.75 billion to reimburse broadcasters for reasonable expenses incurred during the repack process. Congress allocated an additional US$1 bn to repack expense reimbursement at the start of 2018.

In Canada, the CRTC set the initial deadline for the transition to digital of full-power TV stations as the end of August 2011. A total of 28 markets were involved with the exception of some CBC transmitters which were given a one-year extension to continue analog transmissions. A deadline is yet to be set for low-power TV stations. The remaining analog over-the-air television signals across Canada are scheduled for shutdown no later than 2022.