Falling Prices, Asia Push and Other Factors Buoy Upbeat Consensus on 4K

Tom Cosgrove, president & CEO, 3net Studios

Tom Cosgrove, president & CEO, 3net Studios

CES Panelists Believe Demand for Big Screens Will Drive Content Production

February 14, 2014 – Amid all the hype and demos at last month’s Consumer Electronics Show touting 4K there was no better place to get a feel for what key players really think about the potential and time line for Ultra HD than at a conference session featuring senior executives from across the ecosystem.

Six speakers from the cable, DBS, TV programming, CE manufacturing and encoding technology segments shared their views on issues like content development, UHD set prices, CPE evolution and much else. Participants included Tom Cosgrove, 3net Studios president & CEO Tom Cosgrove; CableLabs president & CEO Phil McKinney, Samsung senior manager Dan Schinasi, Elemental CEO Sam Blackman, Sky Deutschland head of innovations and standards Stephan Heimbecher and DirecTV SVP Henry Derovanessian, with Jim Chabin, president of the International 3D Society serving as moderator. The following is an edited transcript of their conversation.

Jim Chabin, president, International 3D Society –    Phil, how does the cable industry view 4K and Ultra HD? Are you all in?

Phil McKinney, president, CableLabs

Phil McKinney, president, CableLabs

Phil McKinney, president, CableLabs – Yes, The industry as a whole is all in on 4K. The question really gets down to timing. With the infrastructure the cable industry has put in place over the last 60 years the industry is able to do 4K both on the cable plant and on streaming. The real question just comes down to whether there are enough devices in the home to justify allocating bandwidth in the network to serve that content. It’s the same proverbial thing we went through in previous transitions: the chicken-and-egg problem. I think it’s a timing issue at this point.

Chabin – Your background includes Hewlett-Packard, and working with the team at DreamWorks and bringing in their new systems that enabled them to make 3D movies and the like. With that unique perspective, how would you see this transition to 4K, Ultra HD and the challenges of moving into the production pipeline and creating 4K content?

McKinney – A lot of people have compared the transition to 3D to the transition to 4K. I think the analogy is flawed, including the difference in the attitudes of consumers that seem to drive 4K.  I think 3D still has some interest in segments of the marketplace. But the progression of 4K is it’s just visually obvious to the consumer.

My personal opinion is that 4K TV sets are starting to get traction not just for the simple availability of content, but the fact that you can take a Blu-ray, and the upscaling technology that the CE manufacturers are putting in place is so good that you can take that Blu-ray and pop that in and you can see the visual difference on the upscale 4K display. I think that can be where that early traction comes from. So the content and the ability of the networks to start distributing that 4K content, to create the 4K libraries, will come.

Chabin – Let’s talk a little bit about the content part of this. Tom, 3net and your partners at Discovery, Sony and IMAX have been at the forefront of content creation in the 3D field. And you’ve spent a fair amount of your time in Korea, China, in program markets like MIP. What’s the appetite out there for 4K, and how does Discovery, the world’s largest owner of content, view 4K?

Tom Cosgrove, president & CEO, 3net Studios – The appetite seems big. There is the issue of how many devices there are in the market. Increasingly, they are at price points that people can afford. There are still some of the $150,000 sets out there, but there are also people that are selling at $3,000 now in all varieties.

So now it’s all about how we source content, how do we get content in the hands of consumers in their homes, because ultimately that’s what they want to watch. From the perspective of our company and our partners, there is a certain inevitability. This is different than what we’ve seen with 3D. It’s not a choice of do I like it or do I not like it. It’s clearly a better technology. It’s a better visual experience.

So I think it’s just a matter of time in terms of when we have enough volume out there, when we do have enough sets to create interest. I do think the upscaling is just an incentive, if you will, to lure at retail. And increasingly you’re going to see more and more 4K sets being the option. It’s just that little extra that says, you know what, I can use this today to get value on that so I don’t have to wait for hours and hours of content.

But knowing what true, native 4K looks like, it’s still going to be what, at some point, makes the difference. That’s the stuff that really blows your mind when you see it. So there’s going to be that demand. 3net and our partners are all there to start figuring out how we get that out to consumers, who do we partner with, how, what are the right means to get it out there.

Chabin – You’re a past president of Discovery. You run 3net Studios, and you’re producing 4K. Probably the most often-asked question I see asked of you whenever you speak at events is how much more does it cost to produce something in 3D versus 2D. So the next question that’s likely to arise is how much more does it cost to make an hour of 4K content than it does to make 2D content?

Cosgrove – In some ways that’s similar to what we saw with the introduction of HD and 3D. Today it is a little more expensive. But that’s a moving target, and it will keep moving for quite a while. It’s going to get less and less expensive as we go. From a television perspective, the equipment to go out in the field is starting to get better and better with smaller cameras, less expensive versus six months ago or a year ago.

It’s really the post (production) that’s going to take a little while to get there. We’re talking about programs and files where we used to talk gigabytes and now we’re talking terabytes – massive amounts of data. And with massive amounts of data you need a lot of speed, you need a lot of processing power, you need a lot of storage. And all those things are still catching up. And there are certain facilities that have it and can do it, but it’s still pricey. That will change.

Exactly how much more it is today, I don’t have a great number. It’s significant. But a year from now it will be far less.

Chabin – There’s a great legend that John Hendricks, head of Discovery, one time about ten years ago called everybody in and said, “I don’t know if the whole world is going HD, but effective on this date Discovery will not buy any programming that is not HD.” Do you think we’re going to have that kind of a moment where everybody says I don’t want to have standard HD content in my library if we’re going to be selling this into a universe of Ultra HD technology?

Cosgrove – Yeah, I think that day will come. I can’t tell you if it’s in a year or three years, but it will come, because I think it makes sense. Certainly you’re going to want to be able to shoot in 4K, even if you don’t provision in 4K because it gives you some abilities to do some things in post that you couldn’t otherwise do. So you’re going to want to go out and shoot it. And then it’s just a question of finishing in 4K, because the time will come in the market where you’ll say, I should go all the way with everything. Certainly within five years I think most people are going to be saying, why would I shoot in HD?

Some are very aggressive about shooting everything in 4K. Others are taking a more cautious approach. Obviously, that’s all we do is shoot in 4K, produce in 4K. So it depends on where you are in the marketplace.

Chabin – Dan, Samsung this week announced UHD content deals with Netflix, Comcast, Paramount, Amazon for titles like Star Trek, World War Z, and LG was announcing some sort of relationship for House of Cards and Netflix. So it seems like the manufacturers are taking the lead. How does Samsung feel about Ultra HD? Are there any lessons to be learned from the rollout of 3DTV, or for that matter, because you’ve been around and saw the rollout of HD? How do you view this?

Dan Schinasi, senior manager, product planning, Samsung

Dan Schinasi, senior manager, product planning, Samsung

Dan Schinasi, senior manager, product planning, Samsung – I’ve seen technologies come and go and evolve. Samsung is very bullish on 4K. But lesson learned is content. We still have the obstacle in 3D. People say they love the experience, but where are we going to get content.

With 4K we have a little bit of a seesaw; there are pros and cons. But one of the advantages is we can take full HD and upscale it, and it looks very good, more compelling than it would on a full HD.

But the aspiration we’re seeing on the show floor is that pristine 4K. So that’s ultimately where we want to go. And I think some of the unique things we’re seeing at this show are not just the prevalence of screens of different sizes and shapes, but the ability to deliver content. We’re seeing the [Samsung 4K] media server, which is content from Fox and Paramount. We’re seeing OTT delivery with services like M-Go, Amazon, Netflix.

We’re actually demonstrating the future of terrestrial broadcasting over live UHF Channel50 right here in Las Vegas. It’s just for the show, but we’re showing what’s possible, as well as paid video provider content from DirecTV and Comcast Xfinity. So lesson learned is content. Right now we’re building out the ecosystem. As content is made available we’ll have the TV sets to receive it.

Chabin – Stephan, at Sky Deutschland you’re a part of the Sky family. You’re seen as the most progressive broadcasters in the European theater for new content. Germany has one of the highest uptakes of 3D content, among the highest Blu-ray DV sales. So you have a country in Germany that is not only one of the highest consumers of 3D content in movies but is also known as an early adoption place. How does Sky Deutschland view this?

Stephan Heimbecher, head of innovations & standards, Sky Deutschland

Stephan Heimbecher, head of innovations & standards, Sky Deutschland

Stephan Heimbecher, head of innovations & standards, Sky Deutschland – For that reason we’ve been looking at Ultra HD for quite a while already. I don’t want to say the train has left the station, but I’d say, rather, the chicken and egg has left the farm. I think we’re back to where we’ve been with HD and where we were with 3D in the early days, but it’s just a natural thing, and there’s nothing we can do about. This is just a phase that we have to go through.

So what we did, we started doing some test productions back at the end of 2012. And we’ve been doing quite a number of test productions ever since. It’s far too early to deliver the whole chain at this point in time. But we want to get our hands on live production as soon as we can, because I think everywhere in the world, especially in Germany, where soccer is very big, live sports production will always play an important role when it comes to choosing technology such as Ultra HD. So that’s something that we put our focus on at a very early stage.

Last year at FIFA in August and September we were able with enough cooperation with our partners to close the end-to-end chain for Ultra HD. So we had some proof of concept to say, okay it’s happening. It’s not only that there are a growing number of devices out there, but the content, now the World Cup is coming. So we can produce it.

It’s all early days. It’s limited in frame rate. We’ll have to wait for the next steps on various parts of the chain. But it’s just normal.

What is a little bit un-normal this time is that when we look back to HD, all this stuff happened in the background. It was unknown by the public. And then when we were ready, all of a sudden, we said, okay, we see it coming and we produced it. Now it seems like we have a transparent lab situation, and everybody is watching us along the way. That’s what has changed. And it’s just natural that the whole technology cycle has sped up.

Chabin – Henry, you were in Korea. You were with Samsung, LG for the Korean Communications Commission. They say Korea is all in on Ultra HD. It’s a national priority. The government and private industry are working together.

You go to Beijing. Tom has been there, and I’ve been there. CCTV says when we hear it from the government that we’re going to do it, it’s done. The money is found. We will do it. Japan is certainly working hand in glove between regulators and NHK and manufacturers to make it happen.

In the U.S. we have private industry that is looking at their quarterly profits, their stock prices and their shareholder value, and the FCC may or may not play a role in regulating any part of this. From your standpoint, how does this roll out?

Henry Derovanessian, senior vice president, DirecTV

Henry Derovanessian, senior vice president, DirecTV

Henry Derovanessian, senior vice president, DirecTV – Honestly, I think we’ve heard it all. It’s a chicken-and-egg thing. It’s the question of is it working, is it interesting, is it exciting. Absolutely there is going to be a broad appeal to the consumer base. 4K is exciting.

The question is going to be whether there’s going to be enough content and whether or not the affordability factor is going to work out, which means the TVs will get to the kind of price point that consumers will feel comfortable investing in. So as to the question of whether or not it’s going to happen, I think there’s a good chance it will happen, but it’s a timing issue.

The thing that’s important is, I’ve seen it happen, is the chance that we’re taking by looking at different ways of delivering content to 4K TVs and compromising the picture quality, the 4K video quality, because some of these delivery paths don’t have the bandwidth necessary to deliver the bitrate you need to deliver that 4K experience. Unless we do that right there’s going to be a situation where we set the wrong expectations for the consumer and not deliver to those expectations. We’ve got to be very, very careful.

You go on the show floor today. We’re demonstrating 4K. We have the technology today in the field that will deliver a 4K signal to the TVs. We can actually turn it on any time depending on when we decide it’s the right time for that service. But if you look at the video quality we deliver today in the Samsung booth and look at our competition, there’s a stark difference in the video itself. We do it because we’ve got the fat pipe to the home.

Now there is a lot of debate about OTT and what that all means in terms of bitrate and whether that’s enough and whether that’s going to deliver the highest video quality to the consumer. I think that question hasn’t been answered yet. But from what I’ve seen so far, you’ll see four TVs out there in the Samsung booth, all claiming to be 4K. You look at these TVs and you go, well, geez, you know what, I don’t see the benefit. There is no value out there for me to invest in those 4K TVs, or for broadcasters like us, to say, look, you know we’re going to actually go on and invest in infrastructure, build all this, because we have the fat pipe.

The content guys are going to question it; the consumers are going to question it. So the success of 4K is going to depend on how successful we’ll be to deliver the highest video quality. If you look at DirecTV’s past history with HD and how successful we’ve been in delivering HD content at the highest video quality for our consumers, we’ve been very successful. We’re trying to succeed and be leaders in this area as well.

Chabin – From the time you had this same kind of experience with HD until you were pretty much into the marketplace offering it across the board, what was that period of time?

Derovanessian – I think we were all in from day one. DirecTV, when we went to high def, we went all in. We adopted the advanced compression technologies needed both at the broadcast end and in the receivers. It was just a matter of building the content. So we had already made the commitment to invest in the technologies and the infrastructure, and we worked with our content partners to build that content.

Chabin – Do you think you’re at that point now where you’re saying, okay, we’re going to do the same thing for Ultra HD that we did with HD?

Derovanessian – From a technology standpoint, what we’re demonstrating on the show floor is our Genie server that we’ve deployed millions in the field today. Those servers can deliver 4K content using the RVU standard to the smart TVs. The way we approach 4K Ultra HD displays is different from our competition. There are some similarities, but the approach is to align with the smart TVs to do the decode and the display of the 4K signal and the 4K content. We believe that the processing capabilities in the smart TVs are far better in terms of delivering that enhanced video quality to the consumer.

Chabin – Sam, our friend David Cohen in Variety describes video compression as an “arcane combination of high tech and black art, a combination upon which rest the dreams of next-generation broadcasting and CE firms. Hopes rest for billions of dollars in new TV sales.” You’ve got the software. How are we going to get this signal from point A to point B?

Sam Blackman, CEO, Elemental Technologies

Sam Blackman, CEO, Elemental Technologies

Sam Blackman, CEO, Elemental Technologies – The compression is a big piece of it. As you’ve seen on the show floor, there are a lot of cameras that are capable of capturing beautiful 4K content. Displays are showing beautiful 4K content. But that workflow that allows you to deliver that content from the camera to the display is still a work in progress.

Stephan mentioned that the compression piece is a very challenging piece to get done. If you look at the complexity of doing HEVC, H. 265 encoding, which is what you really need to deliver high-quality video over a limited amount of bandwidth, the complexity of compression into HEVC is about ten times the complexity of H. 264, which is the common standard today. And you have a similar challenge on the decode side.

So right now one of the limiting factors for rolling out all these HEVC 4K solutions is decoder systems have to keep up. TVs have some [decoding capabilities] integrated at times. But we’re waiting on the set-top boxes to have that whole 4K 60-frame support. So you’ll see those starting to roll out in the second quarter of 2014.

On the compression side Elemental and other vendors have done some early demonstrations of 4K encoding of live events. I think you’re going to see a lot more of that this year. But it is a big challenge, because we’re taking a compression standard that requires ten times as much computational horse power and trying to get that done quickly and efficiently.

Chabin – Tom, if you talk to content creators who supply programming to your network, are there any things they have to learn, or can your standard sports broadcast crew or a documentary filmmaking crew for Discovery, 3net, go out and pretty much do this? Does it take hand holding, or is this something that the greater community can adopt pretty quickly?

Cosgrove – It’s a little hand holding. It’s not as simple as pick up this camera versus that one. There are certainly other considerations you have to take into account. When you’re out in the field and capturing on the 4K cameras, you’re capturing a lot more and you have to know how to capture correctly. So there are certainly some things you have to learn. That’s relatively straight forward.

I think the bigger piece has been the post process, because you can get bogged down. One mistake, to go back, it’s a lot of time, because it’s so much information. Getting through that – we went through it. We started working in 4K in 2012, shooting. And we were one of the first entities doing it. Inevitably everything took a lot longer. It’s frustrating at first. But then you are going to get through that first one and suddenly you’re an expert or pretty close.

So the curve is very steep, but once you’re up there, it’s pretty good. Like anything, there are skills you have to learn.

Chabin – I don’t want to put you in a box, but is it your sense that just about every project you will green light going forward, you’ll have to have a 4K component as a part of your key discussion before you’ll spend your money to create something?

Cosgrove – Everything we’re going to do is going to be in 4K. Going into the consideration of what should be produced is a combination of the usual suspects, which is, is this a great story, something that needs to be told, and can we flip that in a really compelling way.

But then I think 4K is also a creative tool, right? So [you want to be] imaginative about what that tool can provide as you’re telling the stories, what you can do with it.

We’re going to play around with a bunch of different techniques. Actually we’ve already played around with doing some multi views, because with 4K you can break up the screen. So we’re trying to do things like that and just seeing what the tool brings. With every project there’s all the usual creative judgment and things to go through, and there’s also a sort of, okay, this is Ultra HD, what can we do to enhance the experience.

Chabin – There are various projections on the rollout of 4K. Phil, if you had to pick a year when you think the critical tipping point will be, how long is this?

McKinney –We’re not going to see the big hockey stick we saw when we made the jump to HD where everybody just did this mass wholesale swap out of every set in their home. You may see that they buy 4K for that main TV in the living room. My view is that the holiday season at the end of 2014 will be an interesting time for getting down the price point.

At HP we used to have this term we called spousal pricing. If the price gap was under $300 you didn’t have to go check with your spouse before you made the decision. The basic consumer electronics, the Best Busy pricing at $289, $290; there’s a lot of science behind the $300 spousal price cap.

Once you get the difference where you can buy either the HD set or the 4K set and the price gap – I’m not saying it has to be $250 – is maybe $500 or $700 or whatever, people are going to buy it as a natural choice: I’m going to future proof my house. I’ll pay the extra $500 for the 4K set.

My view is that when it really starts to take off, it’s going to be that post-holiday 2015 period.

Chabin – How are the standards bodies coming together with the necessary standards to get this done?

McKinney – From the standpoint of the standards bodies that we’re involved in, I think the progress on that is that it’s going extremely well. Everything was hung up on waiting for HDMI 2 to get done, which was a little bit of a lag that caused some problems. It’s kind of hard to design satellite or set-top boxes when the HDMI 2 standard was still flailing there for a while. But there was a big push, and they kind of jammed that through.

HEVC is pretty solid. We have production of encoder, decoder chips now in volume production. So those are pretty much in place. I think all the elements are there. So I think this is the year when you see all that come together.

But again, it’s the chicken and egg. When do you start in the set-top box business, and for satellite I assume it’s the same? You’ve got to be willing to make that capital investment ahead of the content, because you have to seed the customer’s ability to play that content when it becomes available so you don’t get into a big swap out of all your cap ex that you’ve got invested.

That work has already been underway for a while. So, again, all the elements are in place. I think 2014 is the year when you start seeing everything getting lined up. And then it really gets down to consumer adoption. Every conversation I’ve had here at the show, the TV manufacturers are looking at their trend lines for adoption, and we’re using that as the weak signal to calculate what that timing is.

Chabin – Can we infer that what you’re saying is by the time the marketplace is ready for Ultra HD all the set-top boxes are going to be capable of handling that?

McKinney – No, that’s not what I said. Keep in mind the average set-top box today has a life span between five and six years. So there are a lot of set-top boxes that were in place five or six years ago. There’s going to be an upgrade path that’s going to be needed in order to get set-top boxes in place.

From my perspective, where 4K content is going to appear isn’t really going to be on the traditional channel lineup. It’s going to be in the VOD catalog. Those set-top boxes today in many cases can deliver 4K VOD. A big portion of Comcast’s VOD is already IP streams into the home for playback. Xfinity has those pieces in place. So I think that’s where you’re going to see it first.

We’re not going to see where 20 percent of all TVs in the home are going to be 4K within two years. It’s going to be this kind of I’m going to replace my HD set with a 4K set. I think the uptake is going to be slower than what we saw in the past.

And as that happens you’re going to see in the case of the cable industry worldwide – J-COM is a member of CableLabs. The Japanese government is pushing very hard on 4K. They’ve already got the 2018 plan for 8K. So we’re already working 8K plans into the infrastructure plans.

But this migration is going to be a many, many year process. You’ve got to be far enough ahead so that when the consumer has the content, the consumer has the set in their house, everything comes together at the right time where everybody on that value chain has the ability to recoup the investment it takes to deliver that experience.

Chabin – CEA released some projections this week on 4K UHD set sales. These are U.S. numbers: in 2013 57,000 units were sold; 2014, they’re projecting 485,000; 2015, 1.2 million; 2016, 1.9 million, and 2017, 2.9 million. And they indicate that worldwide in 2014 they see something shy of nine million – 8.7 million – sets. How are we doing marketing this technology to consumers?

Schinasi – Certainly with this technology seeing is believing. We deliver the message of four times the number of pixels, but there’s more to it than just resolution and contrast. You have to go to retail to experience this.

For Samsung we’re going to make a significant investment in retail. So you’ll see the demonstrations of UHD TVs at every major retailer this year. There will be other messaging. Very common, traditional for our industry: Web materials, mall tours, CNET has the digital answer man. And a lot of what’s happening on the show floor is doing a great job to drumbeat and drive consumers and buyers to the show to see the technology.

Chabin – We had a conference in London in March, and representatives of the BBC. One of their analysts did research on television sets. He said as small as most flats are in the U.K. he could not get over the fact that consumers will drag in the largest screen they can possibly get even if they don’t have a wall big enough to hold it. So that brings up the issue of the current screen, and it also brings up the consumer’s appetite for big screens, because ultimately a big screen calls out for a big picture, and a big picture looks better if it’s a 4K instead of a high def. How do you view that?

Schinasi – Houses are only so big. Most consumers want the largest TV they can fit in their space. But at some point, when you get to 80 inches, for some of us, that’s a challenge. But what ultra HD does is it allows us to sit closer to the set. When we sit closer to the set and we see the full HD pixel structure, it’s not a really pretty picture. But with ultra HD it’s smaller pixels, greater resolution, greater contrast. You can sit closer and enjoy the picture in a small space.

Chabin – Someone told us they were in the Hisense booth and saw about eight Walmart executives’ badges as they stood around one of the larger screen sets. The Chinese and all the other set manufacturers – I think there are more than 50 that have announced plans – the sense is the price is going to come down on these a lot faster than ever before. From your point at DirecTV, how do you view the possibility that people will be able to buy an Ultra HD set for, using Phil’s number, a difference of $300 or $400? How does that impact the uptake?

Derovanessian – The driver here is the Chinese. The expectation is the Chinese are going to be driving the growth in China of 4K sets, and as soon as they do, that’s going to drive the TV set pricing down globally. So the catalyst is going to be the Asians, primarily the Chinese. What we’re seeing is the prices will come down.

The prices have come down. If you look at the price curves over the last two years, it’s coming down as fast or faster than the 2K TV sets back when the SD-to-HD transition was taking place.

From our standpoint, pricing is a factor, but it’s not the factor. The factor for us, again, is content. The compelling content for us is sports and high video quality is what is going to drive the adoption of 4K in the United States.

McKinney – Back to your question about how do we educate, when you talk about the Chinese sets, not all displays – I’m not plugging Samsung here – but not all displays are created equal.

We did a little informal survey. CableLabs has a 4K lab. We shoot our own 4K content to do our own testing. And we take that into the shopping malls. And we actually put it on a 4K set and an HD with the exact same content. We ask consumers to pick. We don’t tell them it’s 4K. We just ask them which image do you like better?

Amazingly enough, we did the exact same test with a bunch of video experts. Consumers were better at picking out the 4K than the experts – about 50-50 on the experts. Sixty-five percent of the consumers were able to pick out the 4K.

Why? The experts all get close to the screen trying to look for the video artifacts. We’re looking black bandings, we’re looking for artifacts. Our knowledge gets us in trouble. The consumer stands back, looks at two images, and they go, I like that one better. And they’re better at picking it out.

However, we also found the quality of the TVs we used to test on had an impact on their ability to pick out which was the better image. So part of the challenge we have as an industry is we say 4K, we’re batting around 4K. 4K is not equal. The difference is easily identified on different manufacturers’ 4K displays.

Chabin – How do you feel about high dynamic range?

McKinney – I think it’s important. I think it’s one of those differentiators. You’ve got the ability to go into ten-bit high dynamic range; it really changes people’s responses. We’ve done that test also with some sets where we showed high dynamic range, custom color – some of the TV manufacturers used custom color space to try to bring some more vibrancy to the images. We tested those out. They played very, very well in consumers’ perception of that quality.

Chabin – Tom, you and I did some research for the holidays. Fifty percent of the ultra HD sales in 2018 would be in China. Is it the tail that wags the dog?

We showed Gravity in China. You know what they loved? They loved the scene with the Chinese space station. Gravity did very well in China. And the government created a window for that movie. So the question is, if China is in, how can you be anywhere in the world creating content and say China isn’t going to be a market for us down the road?

Cosgrove – We look at China in two ways. One is it’s obviously a huge market, and they’re going through an infrastructure change. So they’re kind of jumping – they were late in the game, which in many ways is good for us, because they’re jumping to a higher capacity distribution system. So they’re going to have the infrastructure to deliver. It’s a massive market.

And the fact that the market will represent 50 percent of the sales of all UHD sets means these enormous Chinese companies who have not in some ways gone fully outside the market, they will have scale immediately. So the cost to sell that extra set in the U.S., Europe, Australia, wherever, is relatively small.

I think it’s a mixed bag in terms of what sets are coming out today. I think there are some, and that’s true across the board, but in China in particular, I think there are some sets that they’re aiming for the low end, and they’re priced accordingly, and they’re not fully featured. And there are probably some quality concerns.

But there are some other guys who are really going for it at the higher end and trying to compete with the likes of Samsung and Sony. So I think the new scale zone is going to bring the price points down rapidly, far more rapidly than in the past. I think we’re going to get to a point where the incremental cost of a 4K set over a certain size, whether it’s 50 or 60 inches, you get to a point where you start to question should I make an HD set at all at that size.

That’s when you start to see the ramp go way up, that’s the hockey stick moment. I think that’s coming pretty quickly. You’re always going to have a market for the lower end sets. But once you get to that higher size that’s where it takes off.

Chabin – Sam, none of this works if we can’t get our signal from point A to point B. We read that when it comes to making a movie, or making a documentary or a television program, where you have all the post capabilities, it’s a lot easier to render things in 4K. A live sports broadcast is a whole different problem. How do you view that?

Blackman – It’s a challenge and a challenge that Elemental and others in the field are working on. You’re going to see more 4K HEVC compression. We’re demonstrating it here in our suite. You’re going to see that be very widespread in the next couple of quarters.

But  I think the really important transition that’s happening kind of in the background below the Samsung displays, the Sony cameras and so on is that the infrastructure that delivers this content, which used to be very specialized pieces of hardware, specialized ASICs, specialized FPGAs, is now all transitioned to software. So companies like DirecTV, Comcast, Sky Deutschland and many others can buy software, and if 4K is the priority today, they’ll be able to evolve that. If dynamic range becomes critical they’ll be able to evolve to that. They do not have to swap out the underlying infrastructure.

That will enable the change much more rapidly than they’ve been able to do on the infrastructure side in the past, because it’s all software based. Think how Google, how Netflix  make YouTube or Netflix better; that can be done by pay TV operators, programmers and broadcasters. And that’s a real significant shift in the industry.

Chabin – One of the stumbling blocks that everybody is talking about is we have all this data, how are we going to get through the pipes? What you’re saying is the software and capabilities are coming fast enough that that’s not going to get in the way of delivering what we need to get delivered today that will drive these apps.

Blackman – Absolutely. They can make investments today and not be concerned by if dynamic range or other standards are required sooner that they have to upgrade again. They can upgrade the software, use the same infrastructure and deliver the content with the new features. That’s a completely different turnaround than we’ve had in the past.

Chabin – It’s reassuring to hear the tech guy saying that what we’re getting excited about is actually possible. In the year 2020, five plus years away, where is Ultra HD in your company? Is it the standard? Are we talking about 8K at that point? In 2020 where does the market stand?

Cosgrove – I think by that point we’ll see most people producing in 4K. I think we’ll see outlets like DirecTV, Netflix, Amazon, all those guys in the U.S. and similar companies around the world, offer a lot of 4K. You’re going to see sports in 4K.

The big broadcasters are going to be able to operate in 4K. I don’t know that CBS, NBC, ABC are going to be broadcasting in UHD necessarily, but I think there are going to be routes to see their programming in UHD.

I think the content will become available. There’s very little today. But in five, six years we’ll see that future proof thing takes hold. And I do think the pace of sales of the TVs is going to be in the hockey stick moment by that point in time, because I think the price points are going to collapse very rapidly.

Schinasi – I agree with Tom. By 2020 you’re going to see the threshold at 50 inches and up, everything in ultra HD for the larger screens. You’re going to see farther picture quality enhancements. I think picture quality will continue to get better. Screen size – we’re already pushing 110 inches. I don’t know how much larger our houses will have to be to accommodate that. We’ll try to make them larger as long as they fit in the front door. So screen sizes will certainly migrate higher and resolutions will increase as well.

McKinney – I think everybody is pretty much aligned on that. Content will be there. I think more or less everything over 55 inches will be 4K.

In our case we’ll be focusing on getting ready for 8K, because we already have members, in this case, J-COM in Japan, who are dictated by the government to be able to support delivery of 8K by that time. So we will have already been migrating to get ready for 8K starting in Japan,

Does that bleed over or not? Who knows? But probably with large screens you’re getting into 8K north of 100-inch displays.

But I think you’re going to see 4K become pretty much the standard offering in consumer electronics. You’ll see here on the floor 4K sets, 4K monitors with desktops from 30 inches and above. You’ll see 4K become the standard for desktops.

Derovanessian – I won’t repeat everything that’s been said. I agree with what’s been said so far. The only thing I would add beyond that is 2020 in our expectations consumers will be able to choose DirecTV for the best video quality in 4K.

Heimbecher – I agree with everything that’s been said. By 2020 not only will the pricing be a non-issue, but we’ll see a major uptake in Ultra HD by that time.

Blackman – I definitely agree with the rest of the panelists here. 4K will be completely main stream by 2020. I don’t think you will be able to buy a Samsung tablet or an iPad that’s not 4K. I think that’s going to happen a lot sooner than 2020. It will probably happen in 2016 at the latest. For companies like Elemental, we’re ensuring the software is working for 4K, and we’re working with CableLabs, J-COM and Japanese companies, ensuring that 8K is a reality long before the 2018 Olympics.