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The State of 4K and HDR 2017
4K is making inroads, but it's the profound visual richness of high dynamic range video that will really revolutionize how people watch television. Streaming networks are leading the way.
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Amazon and Netflix began delivering 4K/Ultra HD (UHD) content 2 years ago, but 2016 ushered in a series of 4K broadcast launches beginning in Canada. With the expertise of U.K. telco BT Sport—pioneer of live 4K broadcasts since fall 2015— Rogers Media’s Sportsnet and Bell Media’s TSN each debuted live 4K services starting with a Toronto Raptors versus Orlando Magic game from London’s O2 Arena in January. This was the first of more than 100 live 4K (including Toronto Blue Jays home games and NHL games) events produced by Rogers last year.

In April, AT&T launched DirecTV’s first dedicated 4K channel with broadcasts from the Masters Tournament at Augusta National and later that month began the first of regular live 4K baseball broadcasts via the MLB Network Showcase. Other events DirecTV delivered in UHD included NCAA Football, UFC fights, PGA tournaments, and the Country Music Awards.

CBS eschewed any UHD transmission of Super Bowl 50, opting for tried-and-trusted HD, although Japanese broadcaster NHK was in the Levi’s Stadium to test 8K Super Hi-Vision. NHK repeated its tests at Super Bowl LI, although Fox again only broadcast in 4K.

The Olympics provided a slightly wider UHD showcase. Customers of DirecTV, Dish Network, and Comcast were able to view certain events from Rio in 4K (provided they had 4K screens, of course).

NBC took the 4K feed of 83 hours (a fraction of the total games coverage of 6,700 hours) produced by the International Olympic Committee in partnership with NHK natively in 8K and downconverted. Because of this, none of the 4K coverage was live.

Comcast made UHD Olympics action available through broadband-connected UHD TVs from Samsung and LG, but only via its Xfinity Ultra High Definition app, not on a linear channel.

There were only around 70 channels globally outputting 4K/UHD content by year-end, according to Futuresource Consulting. This consists of a mix of 24-hour and occasionally broadcast channels. Even fewer operators are picking these channels up and broadcasting them because, in most cases, the business case doesn’t add up.

A low penetration of TVs with UHD resolution is one factor. Globally, this stood at just 5 percent by the end of 2016. “While higher in developed countries such as the U.S. (15 percent), this is still a low addressable base,” says Futuresource marketing analyst Tristan Veale. “Bearing in mind that 4K/UHD costs more to produce (or acquire) and distribute, in order for pay TV operators to make a profit either the extra costs need to be low, or they are significantly improving the service enough to be able to charge a premium to cover the costs.”

There are only a few circumstances where either one or both of these are actually true. One is that a broadcaster/platform owner produces its own content, and as such gains some efficiencies by shooting and producing in 4K/UHD and then outputting from this a 4K and HD feed (as Dome Productions is doing for Rogers).

Netflix continues to lead the 4K charge for SVOD OTT services, offering original content like Stranger Things, House of Cards, and The OA in 4K. 

A second circumstance is where distribution costs are low. Since the addressable base is low, the most cost-effective solution is delivery via IP, and this is improved further if the consumer is upsold to a higher-value broadband package by taking a double-, triple-, or quad-play service from the operator. “Broadband has a much higher margin than TV, and therefore this offsets the cost of producing in 4K/UHD,” says Veale.

A third scenario is where the content being recorded is of sufficient quality that it is imperative for future-proofing or reselling that the content be produced in 4K UHD. Examples include BBC’s Planet Earth II, which is likely to have a 10-year resell cycle, and major sports events like the Olympics.

“If we take those three criteria for launching a 4K service, we find that BT Sport and Rogers has all three while DirecTV has high-quality content,” says Veale.

However, there are other elements to 4K UHD outside of resolution, notably High Dynamic Range (HDR) and Wide Color Gamut (WCG), which make a significant visual impact on the consumer. Therefore, when they are added into the mix, the business case becomes a lot more attractive.

Bright Future for High Dynamic Range

HDR addresses the difference between the darkest and brightest parts of a picture and is considered a more profound upgrade than resolution, as most people usually don’t notice a difference in pixel density when sitting away at 8' to 10'.

Because of the move to 10-bit coding needed for recording, distributing, and delivering HDR according to UHD specifications, color accuracy and precision is improved almost as a by-product but visually also makes a big difference.

“This is the main reason [we saw] limited activity from pay TV operators [in 2016],” suggests Veale. “They know that when they can distribute HDR to consumers, the visual impact is sufficient that they don’t need the best quality sports or similar content to be able to charge the consumer more.”

This piece of the puzzle is now in place. The International Telecommunication Union (ITU) ratified its standard for working with HDR in July in a move that will accelerate broadcaster UHD services globally.

Netflix and Amazon are ahead of the game. Most Amazon Prime and Netflix content is now produced in 4K, with Netflix adding 600 hours of 4K content by the end of 2016 and Amazon amassing over 175 hours of UHD plus HDR programming including car show The Grand Tour. Netflix recommends at least a 25Mbps connection for Premium subscribers to appreciate UHD HDR Originals like Marvel’s Iron Fist.

Hollywood studios have mastered around 100 titles in UHD HDR for SVOD and Blu-ray, a number predicted to triple in 2017 by Warner Bros. Worldwide Home Entertainment Distribution president Ronald J. Sanders. “There’s a concerted effort to match the growth and install base at home,” he said at the CES. He said Warner Bros. was “aggressively” going into its catalog to refresh titles with an HDR sheen.

While Hulu finally joined the major streamers in offering titles in UHD, including time-travel thriller 11.22.63, its library has no advertised HDR content. YouTube confirmed its support for HDR videos in November.

The lack of a broadcast standard for HDR, as well as complications in introducing it into workflows, prevented broadcasters from adding HDR to their UHD packages in 2016. Rogers announced its intention to do so and then withdrew.

Some content is being produced in 4K primarily because of its long shelf life, such as BBC’s Planet Earth II, which is expected to have a 10-year resell cycle. 

Regionally, only Latin America’s biggest network, Globo, released a UHD and HDR project in 2016 when it offered flagship drama Dangerous Liaisons over its Globo Play VOD service.

If the Consumer Technology Association (CTA) is right, then 4K UHD TVs, “this time, arm in arm with High Dynamic Range,” according to Steve Koenig, its senior director of market research, remains one of the consumer electronics industry’s fastest-growing segments.

The CTA projects shipments of UHD displays to reach 15.6 million units in 2017 (up from 10 million in 2016) and earn $14.6 billion in revenue in the U.S. Global 4K UHD sales are expected to jump from 53 million units last year to 82 million in 2017.

“Growth of the 4K UHD market continues to dwarf the transition to high-definition television,” Koenig explains. “Just 3 years since introduction, cumulative sales of 4K UHD displays are forecast to hit 15.6 million units, while sales of HDTVs reached 4.2 million units in their first 3 years on the market.”

Display size is growing in tandem with resolution. In 2016, 73 percent of 55"+ TVs shipped were 4K-ready, according to IHS Markit TV, which predicts that penetration for sets 50" and higher will rise to 100 percent 4K by 2018. This year, some 78 million 4K TVs will sell, up 40 percent from 2016.

2017 will see a great deal more HDR activity as the addressable base of 4K UHD TV’s with HDR widens. In North America, the penetration of HDR TVs will be between 10 percent and 14 percent at year-end, reckons Futuresource.

Is Dolby Set for HDR Monopoly?

Innovation is never straightforward. Various HDR flavors are being implemented at various stages of the production to distribution chain, filtering into retail and risking consumer confusion about the product.

The baseline standard is HDR10, which is nonproprietary, defines a 10-bit video stream, and is included in the Blu-ray Disc Association’s specification for UHD Blu-rays. It also aligns with UHD Alliance certification.

Complementing and competing with HDR10 is Perceptual Quantizer (PQ), designed by Dolby and marketed as Dolby Vision (which includes surround sound format Atmos). The chief difference is that PQ can manage HDR from camera through post-processing, production, and on to final delivery. Dolby claims, with some justification, that it delivers superior contrast brightness and color. Dolby Vision delivers 12-bit color depth and is a future-proofed format that can play back on displays up to 10,000 candelas—which no consumer display currently offers.

In addition, rather than provide one value of brightness for the end display as HDR10 does, Dolby Vision performs this for every frame. This allows creators to have full control over the final image, a quality that is highly prized in Hollywood.

As a result, Dolby Vision has made considerable headway among U.S. studios. Lionsgate, Universal Studios, and Warner Bros. will be releasing Dolby Vision UHD Blu-ray Discs early in 2017.

A third variant, which has made more ground in Europe thanks to the prevalence of public service broadcasters, is Hybrid Log-Gamma (HLG). Developed by the BBC and NHK, it enables backward compatibility with legacy 4K displays and is considered easier to introduce into a live broadcast workflow. Unlike Dolby and HDR10, HLG is less complicated for live production purposes since it works without the need for additional metadata encoded into the video source. In addition, HLG will display video in standard dynamic range if the receiving device isn’t compatible with HDR. Consequently, this form is more useful to PSBs.

On top of those options, Dolby rival Technicolor has its own capture-to-display system called Advanced HDR.

It’s early days though, and wary of heading toward a dead end, content owners and display vendors are hedging their bets. Amazon and Netflix content is compatible with both HDR10 and Dolby Vision. Any TV with a Dolby Vision decoder will also be able to play back HDR10.

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