Technology

Fuzzy Picture for HD Spots

Better infrastructure for delivering high-definition ads could give local cable an edge over broadcasters 12/13/2010 12:01:00 AM Eastern

Getting the Picture

The number of U.S. homes with HD sets stood at 63.1% as of Dec. 1, but only 14% of the commercials sent to broadcast and cable channels in the third quarter of 2010 were in native HD. A look what percentage of key distributors of TV content are able to accept HD ads:

Broadcast Networks .......... 83%

Cable Networks ................. 59%

Local Cable Systems ..........57%

Local TV Stations ................32%

Source: Extreme Reach. Data based on 91,000 ads that passed through the Extreme Reach platform in the third quarter of 2010.

Tis the season for flashy high-production
ads to sell expensive new HD TVs, but come
January, the owners of these new sets won’t be
watching many ads in hi-def.

Even though the number of homes with HD sets
passed the 50% milestone this summer and stood at
63.1% on Dec. 1, according to Nielsen, only 14% of the
commercials sent to broadcast and cable channels in the
3rd quarter of this year were in native HD, according to
Extreme Reach, which provides a software platform for
the electronic delivery of ads.

“With all the HD sets in homes, you would think we
would be further along, but in terms of ads in highdefinition, we are only in the second inning of the game,”
notes John Roland, chairman, CEO and co-founder of
Extreme Reach.

Even worse numbers can be found at DG, which
works with media companies to electronically deliver
more than $40 billion in ad buys each year. DG won’t
be releasing 2010 figures for another month, but president/
COO Neil Nguyen says the proportion of HD ads
for 2010 will “probably be in the upper end” of the 6%
to 9% prediction they made earlier this year.

The discrepancy underlines a rarely discussed side
of the HD revolution: Years after HD programming
became widely available, many stations and channels
still haven’t completely upgraded their infrastructure
to handle HD and are simply up-converting standard
definition ads to HD.

The dearth of HD ads runs across all sectors of the
television industry, beginning with advertisers that are
still producing a lot of spots in standard definition.
Some 83% of the broadcast networks are
able to get HD ads, but only 30% of the ads they
receive are in native HD.

The problem is particularly acute at local stations.
Only 32% of local broadcast stations are
able to take ads in HD—compared to a majority
of cable networks and local cable systems--and
only 8% of the ads they receive are in native HD.

That is potentially bad news for broadcasters trying
to compete with local cable systems for ad dollars
in 2011. About 57% of local cable systems have upgraded
to take HD ads,
according to Extreme
Reach, with more on
the way. Comcast, for
example, lit up a number
of systems for HD
ads in the 3rd quarter.

“It gives local cable
systems a definite
competitive advantage,”
notes Roland,
who adds that big
MSOs have the capital
to move much faster
than cash-strapped stations.

Still, progress is being made. Low-cost cameras and
editing solutions are encouraging more local advertisers
to shoot spots in HD, notes DG’s Nguyen. He also
stresses that DG saw a threefold increase in HD spots
during the first half of this year,
and that syndicators made a
big push to high-definition
this fall.

“In the top 30 markets, roughly
70% of the stations are now in HD, and that
is a big jump in the last 10 months,” Nguyen adds. “We
also saw a signifi cant growth in HD volume for Thanksgiving
and the holiday push.”

Media distribution providers DG and Extreme Reach
are both working to smooth the path for HD ads. As
part of a major initiative for the distribution and management
of HD ads, DG has upgraded its platform and
rebuilt its facilities at 10 operating offi ces to support
HD-related services in the last two years.

Meanwhile, Extreme Reach has been working to automate
as much as possible the delivery of hi-def ads
through its software platform. In November, the company
introduced what it is billing as the industry’s first
automated Active Format Description (AFD) flagging
solution to set how 16-by-9 HD spots would appear
in 4-by-3 standard-definition simulcasts. “We’re doing
everything we can to get rid of the pains of the HD transition
and make it as simple as possible,” Roland says.

Getting the Picture

The number of U.S. homes with HD sets stood at 63.1% as of Dec. 1, but only 14% of the commercials sent to broadcast and cable channels in the third quarter of 2010 were in native HD. A look what percentage of key distributors of TV content are able to accept HD ads:

Broadcast Networks .......... 83%

Cable Networks ................. 59%

Local Cable Systems ..........57%

Local TV Stations ................32%

Source: Extreme Reach. Data based on 91,000 ads that passed through the Extreme Reach platform in the third quarter of 2010.

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