Northern Sky Research

2015’s Award Goes to … 4K UHD!

Jan 22nd, 2015 by Christopher Baugh   More from this Analyst | Profile

If the recent CES show in Las Vegas is any indication, a key consumer theme in 2015 will undoubtedly be 4K UHD TV.  The biggest names in electronics displayed the latest 4K UHD technologies, adding elements such as OLED (a superior display technology to LED/LCD), curved screens and HDR (High Dynamic Range) creating an unparalleled viewing experience. In fact, 60% of the TV set lineup at CES was 4K UHD defining 2015 as the year where 4K UHD becomes the new “normal”. Simultaneously and in sync with the industry, satellite operators see a strong start into 2015.  Capacities are being booked or discussed for what has been viewed as tier-2 Occasional Use (OU) events from a media perspective, which will be transmitted either primarily or backed up over satellite after the World Cup’s success in 2014.  

In reality, the final determinant of 4K UHD success will be that of the end-consumer. While TV set manufacturers, satellite operators and media broadcasters try to push UHD, only the uptake of 4K UHD TV sets by end-consumers will define the success of 4K as a broadcasting standard. 2015 seems to be that year, driven by mature and affordable technology on one hand as well as successful trials of broadcasting major sports events in 2014 such as the semi-finals and the finals of the World Cup 2014 in 4K UHD over satellite as well as terrestrial means. The Consumer Electronics Association forecasts shipments of 4K UHD TV sets to hit four million units in 2015: a 200% increase from 2014. This will have a ripple effect throughout the various segments of the industry, ultimately resulting in higher OU satellite capacity uptake and revenue growth for satellite operators coming from bandwidth demanding 4K UHD content pushed by media broadcasters. 

The push of 4K TV sets at CES 2015 is no coincidence. The buzz that followed the show is to encourage consumers to buy such sets just ahead of the NFL Super Bowl that will have specific segments of it shot in 4K.  The Women’s World Cup in Canada will also most likely follow the World Cup 2014 in Brazil and broadcast parts of the tournament in 4K. In India Tata Sky has launched 4K set-top boxes in anticipation of 4K broadcast of the ICC Cricket World Cup.  

As NSR lays out in its Contribution and Occasional Use TV Markets, 2nd Edition report, all these major event broadcasts in 4K give OU over satellite a push upwards in terms of revenues and bandwidth.  As the higher resolutions demand more bandwidth, this will outweigh the efficiencies introduced by advanced codecs, such as HEVC that would compress a UHD transmission to 20 Mbps. With respect to the competition between satellite and terrestrial for the transmission of OU events, satellite continues to hold strong grounds and regain some lost ones. This is driven by three factors: 

  • The first is the high standard of reliability required for transmitting major sports and other similar events, which is immediately understood when more than 100 million viewers are expected to tune into the Super Bowl leading to charging up to $4M USD for a 30 second commercial spot. Satellite has proven to be the most reliable transmission medium even when compared to fiber. Hence, even when fiber is used as the primary link, satellite will continue to be relied on as the secondary link. 
  • The second factor relates to underserved areas where DTH satellite TV continues to dominate as the main reception technology for households, such as in the Midwest of the USA or in topologically hard-to-reach areas in India making OU transmission over satellite necessary to serve these populations. 
  • The third factor touches on the limited supply of last-mile bandwidth when scaling up to hundreds of thousands or several million viewers watching an event simultaneously. In this case only the interplay of terrestrial and satellite can serve that demand avoiding bottlenecks.

Bottom Line
The maturity and affordability of 4K UHD consumer technology will have 2015 witness the development of 4K OU transmission to a standard. The higher resolution (though feasible through progressive codecs, such as HEVC) demands more bandwidth than HD and SD leading to higher revenues for satellite operators who will sell more OU capacity than before continuing to boast the highest reliability standards that broadcasters gravitate towards. The unfolding of this trend in 2015, an odd year, and after the success of the World Cup 2014 draws more attention to historically smaller events, such as the Women’s World Cup, making them shine brighter, grow more popular and in return generate more revenues. This will smoothly iron out the peaks and valleys in OU revenues between even and odd years leading to linear growth in the years to come.