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Ultra HD 4K TVs were the star of this year’s International CES, at least if measured by the amount of exhibit space dedicated to such products. There were flat screen 4K sets, sets with curved screens, wide screens and ultrawide screens, big sets and even bigger sets, all of which kept he floor of the Las Vegas Convention Center bathed in a constant, upscaled, high-resolution glow.
Yet many analysts are skeptical that consumers have much appetite right now for (very) pricey new TVs so soon after many just upgraded to plain-old HD. Major broadcasters are also wary of taking the 4K plunge right now while they’re still licking their wounds from their investment in 3D, meaning little programming support to help drive sales of Ultra HD TVs. According to research firm IHS, the worldwide consumer electronics business is likely to contract in 2014, due in part to slack sales of TVs, 4K or otherwise.
That doesn’t mean 4K video isn’t going anywhere, however. Even if consumers do not start snapping up new Ultra HD TVs right away, 4K video is already becoming the go-to strategic wedge for those looking for a bigger role in the TV ecosystem.
The most aggressive so far is Google. As noted here last week, Google is leveraging TV-makers’ hunger for 4K content that will show off their new displays to drive adoption of its VP9 codec in TVs and TV chipsets. At CES, YouTube lined up several major set-makers to demo 4K streaming using VP9, but Google’s ambitions for VP9 go beyond supporting 4K video. The long-term goal is to build an alternative, Google-friendly TV platform at scale around Chromecast, VP9 and over-the-top video via YouTube.
Google is also targeting next-generation tablets and smartphones with VP9, many of which are expected to feature 4K displays.
Netflix is also actively looking to leverage 4K video to strengthen its ties with CE companies. The Netflix app is already ubiquitous on connected devices, but it’s angling to make sure it’s built in from the start of the next generation of connected TVs. At CES Netflix showed off 4K streaming of the second season of House of Cards and has struck partnerships with Sony, LG, Vizio and Samsung to make sure that happens. To underscore the importance of the partnerships, Netflix CEO Reed Hastings joined Sony CEO Kaz Harai on stage at Sony’s CES press conference to plug 4K streaming. Samsung has also struck partnerships with Amazon, Comcast/Xfinity, DirecTV and M-Go, in addition to Netflix, to embed native support for their 4K streaming efforts in its UHD sets.
Unlike YouTube, Google will stream its 4K content using the HEVC (H.265) codec, and its CE partners will add hardware decoding of HEVC to their connected UHD to support it. Like Google, however, Netflix is more interested in driving hardware adoption of a next-generation codec than in 4K streaming per se. As with VP9, HEVC significantly reduces the bandwidth requirements for streaming conventional HD programming, and in a world of bandwidth caps and uncertain legal support for net neutrality, reducing bandwidth use reduces Netflix’s vulnerability to being held hostage by broadband providers.
A new initiative known as SeeQVault, which is backed by Panasonic, Samsung, Sony and Toshiba, is looking to leverage interest in 4K content to drive adoption of a new, removable-media format that enables sideloading of content among devices using specially secured flash memory.
None of those partnerships is likely to do much to move the needle on UHD sales in the near term. But Google, Netflix, Amazon and the other OTT providers staking out positions on 4K-capable devices are playing a longer game.
The major broadcasters have been burned in the past by hardware-driven format shifts. They never really saw a return on their investment in making the switch from standard-def to high-def broadcasting, and 3D proved a fiasco. From their point of view, there is little incentive to rush into another overhaul of their production and transmission infrastructure to support 4K unless they have some assurance they can earn higher fees from it, either in terms of advertising or in terms of retransmission fees, or both.
That backward-looking hesitance, however, has left the door open for OTT providers to expand their beachheads on connected devices, and cement their relationships with TV-makers desperate to avoid being consigned to selling commoditized “dumb” displays.
As CE companies begin redesigning the chassis of their TVs and retooling their production processes to accommodate new chipsets, OTT providers have an opportunity to build a next-generation, IP-based TV distribution platform from the ground up, as robust and capable as the current system, and populate it with their own brands and content. If the price of that to stream some content in 4K it’s a small one compared to the potential payoff.