Broadcasters, advertisers reluctant to embrace high-definition TV broadcasting

Broadcasters are reluctant to invest in high definition (HD), stating that advertisers aren’t on board either and that there simply isn’t the necessary revenue flowing for adoption of the technology known for its superior picture quality. "Advertisers aren’t prepared to pay a premium for HD commercials," said Canadian Association of Broadcasters (CAB) senior VP of policy and regulatory affairs David Keeble. "We need to be thinking about how we make the value chain between the consumer and the advertiser flow up through the broadcaster and BDU (broadcast distribution undertaking) to content producers if we are serious about making the transition." Moreover, he added that broadcasters haven’t yet been given any commercials in HD from advertisers. Speaking during a session on HD television at the fifth annual conference of the Canadian chapter of the International Institute of Communications on December 12 in Ottawa, Keeble stated, "We can’t make the transition if we don’t have content, and right now the revenue is not flowing to people who make the content in the broadcast system." Robert Reaume, VP of media research at the Association of Canadian Advertisers, confirmed that advertisers aren’t prepared to pay a premium to have their commercials broadcast in high definition on HD versions of analog channels. He told Canadian Communications Reports that HD versions of ads are generally only available if they are going to run in the cinema prior to the screening of movies. He said, however, the drawback isn’t the cost of creating an advertisement in high definition. Rather, "there isn’t enough programming on enough stations to warrant commercials being done in high definition every time. And it’s not a question of money, because it isn’t particularly an expensive extra project to produce in HD," Reaume notes. "It’s a question of the critical mass not being there. I guess it’s a question of awareness to an extent as well, and don’t want to confuse things with two versions, one for HD and one not for HD." Reaume predicts that it will probably be a couple of years before there are enough viewers of HD television channels to warrant advertisers supplying most, if not all, of their commercials in HD. "I think, in particular, food advertisers who can enhance the appetite appeal would look upon this as a very good development," he stated. "And if we wanted to encourage , this would be a good place to start." Canadian Digital Television (CDTV) president Michael McEwen, who served as the panel’s moderator, told CCR in an interview that advertisers expect their HD commercials to air at no extra cost, and that they would likely only be willing to pay a premium for airing them during big events such as the SuperBowl. It’s the same attitude that’s held by the broadcasters, most of which expect to pick up HD versions of Hollywood movies at no extra cost just because the format is different. "Right now it isn’t a big part of advertisers’ demographics. They don’t see it in the ratings. It’s not there," McEwen stated. "What is happening in the United States is there’s a simultaneous release so advertisers are buying both the HD and analog space as one. But in a couple cases, such as the Emmys or the Grammys, HD ad space has been sold for more because it is a very special program. But the question from an advertisers’ point of view is, ‘Is it worth paying a premium for a market that you already have?’ It’s unrealistic for broadcasters to say, ‘I want a special price for my HD service when they’re not delivering any more audience.’" But there is still a need to have HD versions of advertisements, said McEwen, so that all programming aired on HD television channels is consistent "in terms of quality and style." It can be distracting for a viewer to be watching a program in HD and then be hit with an analog commercial, he pointed out. McEwen also predicts that HD ads probably won’t regularly air on HD television channels for a year or two. "If it happens in the United States, it will automatically happen North American-based ads, and then those commercials that are generic to the Canadian market will start to do that to keep pace," he noted. During the panel discussion, McEwen suggested that adopting HD was simply a broadcaster cost of doing business and remaining relevant in the face of changing technology. There was no extra revenue generated when the industry switched from black-and-white TVs to colour TVs, he noted, adding "when you go into a home with HD, there are some of the same arguments ." However, Keeble disagreed fervently. He noted that colour televisions were backward-compatible, meaning that consumers could continue to use their black and white sets as colour was adopted. HDTV is not, meaning that consumers will not be able to receive HD programming without the proper set-top boxes, and viewers with analog boxes will not be able to receive any channels in an all-digital world. Keeble suggested that the Canadian government should follow the lead of the U.S. government and offer subsidies to encourage consumers to trade in their analog set-top boxes for digital HD television versions. The CAB executive noted that broadcasters were waiting to see what developments there would be on the regulatory and government policy side before they invested too much time and money in HD. During the question session, Canadian Cable Telecommunications Association (CCTA) president Michael Hennessy asked whether broadcasters such as Rogers and Bell Globemedia, both of which are airing some HD programming, might benefit from the entry of U.S. channel HDNet in Canada (see sidebar below). The 24-hour HD channel might inject some competition on the HD front and provide some impetus to Canadian broadcasters to get into the act. His question, however, went unanswered by the panelists and McEwen simply stated, "Point taken." In a later interview with CCR, Hennessy expressed concerns that the application to distribute HDNet in Canada will have been before the CRTC for four years this coming February (CCR, Jan. 28/05). "I think that if one listened to the broadcasters on high-definition, it was certainly a less than enthusiastic endorsement. I’ve always argued putting up a channel like HDNet is just a little incentive. I would say from listening on Tuesday , that’s exactly what we need because if anything it sounds like there is less commitment coming from a lot of the broadcasters than there was five years ago. I was extremely disappointed to hear that, and talking to people at Industry and Heritage, I think they were extremely disappointed too."

Broadcasters, advertisers reluctant to embrace high-definition TV broadcasting

News | 12/21/2005 5:00 am EST

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