The 3D Monster or Pussycat?

Will these 3D announcements equate to an impending capacity demand spike, or is 3D destined for niche status? The stars certainly appear aligned in one direction, at least in the near term. The hype surrounding 3D over the last year has led NSR to make a first ever attempt at forecasting actual take-up of full-time 3D TV channels within its recently published Global Assessment of Satellite Supply & Demand, 7th Edition study and what this might mean in driving additional capacity leasing for satellite operators.

The momentum towards 3D remains very strong and, for anyone walking into a consumer electronics store, it is clearly being pushed by TV manufacturers whose goal is to shift high-end and high margin TV sets out the door. On the broadcaster and content owner side of the equation, NSR found that producing content in 3D, be it sports, special events or general entertainment, is (to date) a costly and challenging endeavor with content producers and broadcasters still very much in a learning mode. It is one thing to produce a high budget film or animation movie in 3D and quite another for a live event or more limited budget general entertainment content (e.g. documentaries, travel, etc.). Yet, NSR’s view is that developing substantial libraries of 3D content is certainly a long-term goal of these entities that see 3D as a way to distinguish and add value to their brand. Plus, 3D content can be sold at a premium and drive much higher revenues than SD and even HD content. The same logic applies to DTH and other pay-TV service providers such as cable MSOs and IPTV players that see 3D content as offering differentiation for their service, attracting and keeping subscribers, and helping push up ARPU.

Yet, when one turns to satellite operators, the impact of 3D begins to look a bit different. Yes, 3D channels will require more capacity per channel, but not substantially more than HD, and can essentially be seen in capacity requirement terms as equivalent to a “high-end” HD channel. Further, securing a 3D channel for carriage at an existing video distribution hot spot will certainly add value to the video location and reinforce the importance of specific orbital locations to the distribution sector just as HD channels currently do. This inherently adds value as it attracts other video clients who feel they need to be carried at a specific orbital location.

Bottom Line

Yet, when it really comes down to it, 3D is still costly, be it for carriage or production, and it seems unlikely to NSR that any pay-TV service provider will feel the need to carry more than a handful of 3D channels within their line-ups anytime within the foreseeable future. With the top-end DTH players or cable MSOs probably only seeing the need to add a couple sports, movie and general entertainment 3D channels (at most) and the smaller pay-TV players offering an even more limited selection (if at all), the 3D phenomena is fairly limited in terms of the total number of full-time channels required in any given regional market.

NSR’s best estimate is that approximately 200 full-time 3D channels will be carried globally within the coming ten years with the DTH segment being the leading platform. Plus, these are individual video streams such that the number of unique content 3D channels will actually be much lower than this. This total compares to almost 6,000 HD channels expected by the end of the same time period making 3D in many ways a small sub-set of the greater HD market. While 3D is certainly important to different segments of the industry, it will generate in capacity terms the equivalent of a few additional transponder leases (at most) in each key region of the world as of 2019. This is tiny compared to HD, and even SD, which implies that the 3D monster is really a pussycat when it comes to driving new capacity demand.