Hybrid TV: Is North America About to Join In?

Harmonizing and hybridizing seemingly incongruent elements into one thing have resulted in smash-up hits like the smartphone, the SUV and the peanut butter cup. Creating a hybrid of broadcast and internet streaming services seems like a logical extension of this tradition.

Like the peanut butter cup, the blending of the broadcast and broadband isn’t exactly new, however, it is still in the development stage. The European-based Hybrid broadcast broadband TV (HbbTV) standard, which provides a common interface within a STB or TV with both receiver types, is the hybrid pioneer. The numbers of HbbTV-supported receivers are in the tens of millions, according to the HbbTV Association.

The hybrid method has not been as widespread in North America, unless you count TVs with internet connections, OTA receivers (most of which are unused) and underdeveloped common interfaces. Hybrid devices designed to appeal to “cord cutters/shavers/nevers/shifters” like TiVo, Tablo and others sparsely populate the receiver landscape.

Recent events suggest the population may soon grow. Most notable is Amazon’s announcement that it will soon sell a device called Fire TV Recast, which blends OTA and broadband into a single box that also works as a network DVR.  It and the other hybrid solutions require more installation effort from consumers. Thus, a new marketing coalition was recently formed to educate consumers on how to pull off the hybrid trick.

The shrinking of traditional pay TV subscribership in North America is a trend in progress. From where those not subscribing to a traditional pay TV service will ultimately access their content is not yet certain. Amazon’s release of its new device suggests it thinks that viewers may be ready to install an antenna and couple that with streaming services. Further, the number of U.S. OTA HHs has grown in recent years. That said, to date, these remain niche products.

South Korean and U.S. broadcasters are exploring a more tightly integrated way of blending IP and broadcast elements with the next-generation TV platform, ATSC 3.0, which we’ve written about in this space. In this system, content (before transmission) can be prepared for distribution over the air and ultimately over IP/broadband networks. The new system is being tested by U.S. broadcasters and there are still some developmental, operational and financial hurdles to clear. It will be a few years before it is integrated into the U.S. TV ecosystem.

Why would broadcasters go to all this trouble in these already adolescent years of the streaming business? After all, there are now services that stream select content that can otherwise be viewed over traditional pay TV networks or from receiving free OTA signals.

Broadcast and cable networks have licensed content to “skinny bundle” and distribute live TV over the internet because they want to experiment with the distribution technology and business models. Maximizing revenue by licensing content for all distribution methods is standard business practice—and, undoubtedly, the main driver.

But, despite participation in these services, internet distribution is not being done to the exclusion of broadcast and that is for a good reason. Broadcast platforms continue to provide the most reliable live TV distribution, especially with network crashes and automated picture degradation of live popular events delivered over the internet. Broadcast distribution is inherently more efficient, and it will continue to be used as long as internet bandwidth is insufficient to satisfy all demand. It seems like blending both delivery systems into a more consumer-friendly service makes a lot of common sense.