Introduction
　The United States could be regarded as one of the most diverse countries in the world when it comes to broadcasting. It has been a multichannel society, with cable TV and satellite broadcasts having nationwide penetration in addition to terrestrial radio and television. However, the passing of the Telecommunications Act of 1996, which amended the Communications Act of 1934 effectively removing the boundaries between broadcasting and telecommunications, as well as the spread of the internet, have made it the world’s most competitive market for the delivery of content, with open competition in prices, services, convenient delivery systems, and so on.

Changes in the US Media Environment Associated with the Spread of the Internet

(1)The Flood of Video Content on the Internet
　New online-oriented video services, businesses and operators providing video content via the internet are emerging in the United States, while over-the-top (OTT) services have been also spreading rapidly. There has been a surge in the number of users for YouTube (which lets people view all manner of clips free-of-charge), pay video-on-demand services like Hulu and Netflix, and OTT services like Amazon Fire TV and Apple TV. It has also become possible to send video content on Facebook, Twitter, and other social media.
　US broadcasters, naturally enough, are providing content on such platforms, and are also pursuing the production of original online video content. In recent times, moreover, they are striving to expand and enhance their online services, with a number of them launching their own OTT services.
　Meanwhile, the other media sectors, such as newspapers and magazines, which had not been competing in the same arena with television, have also begun streaming video clips on the internet. A number of newspapers have better footage gathering arrangements in place compared to some local broadcasters, with the Washington Post having about sixty TV journalists, for example.1 Old-established media firms, such as the Washington Post and the New York Times, as well as newly emerging digital media, are striving to enhance video content and diversify the means of transmission. Vice Media and Cheddar, which were established only recently, produce not only clips, but news programs and documentaries as well, and also provide them to TV stations.
　One could say that the flood of online content and the emergence of new operators and delivery formats have made it much more difficult for TV stations in the US to compete compared to the time when TV viewing was dominant.

(2)Changes to Viewing Habits
　The Nielson Total Audience Report: Q4 2016, published by the marketing research firm Nielson in March 2017, provides a summary of viewing patterns for the media as a whole, including television, radio, personal computers, and mobile devices. In news consumption by source, the report found a slight drop for television, while the amount of time spent on smartphones in 2016 averaged at 2 hours 32 minutes, or double that for 2015.2 The findings of a study published in June 2017 by the Pew Research Center (a non-profit research institute) found 85% of Americans were accessing news through mobile devices, up from 72% in the previous year, with a particularly big increase among elderly people over the age of 65 (up 24 points to 67%).3 Seventy-nine percent of people in the 50 to 64 year age group were also accessing news via mobile devices, double the level for 2013. Growing ownership of smartphones and other mobile phones among the elderly, and greater familiarity with new technologies among people in all age groups were cited as the factors for these increases. In the United States, the habit of viewing video content from tablets, smartphones and other devices apart from TV sets is becoming mainstream, particularly among the young. The viewing of live television is continuing to fall as viewers increasingly want to view content at any time, wherever and whenever they like.

(3)Cord Cutting
　Cable television and satellite broadcasts have nationwide penetration across the United States, making it one of the world’s most pronounced multichannel societies. The Federal Communications Commission (FCC) estimates about 80% of households nationwide subscribe to and watch pay multichannel services from multichannel video programming distributors (MVPDs) in the form of cable TV, satellite broadcasts, internet protocol TV (IPTV), and so on. But since 2013, a slowly growing number of households have been engaging in so-called “cord cutting”, i.e. canceling their subscriptions to the likes of cable TV.4 The growing tendency for watching video content on mobile devices, particularly among the young, has been cited as a factor for this. Even though there might be more than one hundred channels on offer, people normally only watch a limited number of them, and they cannot access pay TV unless their TV set is connected to a set-top box. MVPDs have accordingly focused on the likes of “TV Everywhere”, which lets subscribers view content on devices aside from TV sets, and on services harnessing broadband networks. But one could say that consumers are being lured by the new option of online video services, which are cheaper than cable and satellite, and which moreover give them the option of viewing wholly what they want.
　The growing tendency of cord cutting has accelerated moves among MVPDs to acquire customers through broadband, which is increasingly more profitable than cable. The business model is also shifting away from the bundle packages, which offer more than 100 channels for a flat fee, to à la carte plans. The satellite broadcast providers Dish Network and DirecTV, which offer fewer channels in their so-called “skinny bundles” compared to conventional packages, have been providing OTT services in the form of Sling TV and DirecTV Now from around 2016.
　The National Cable and Telecommunications Association (NCTA) changed its name to the Internet and Television Association in 2016. One could say this symbolizes the huge impact that the spread of the internet has had on pay TV in the United States, and it is also a reflection of the willingness among business operators to find forms of business suited to the internet age.

(4)Grouping and Vertical Integration of Media Corporations
　The terrestrial networks and other major commercial broadcasters, and the popular specialty cable channels in the United States are, by and large, under the umbrella of media conglomerates that are involved in a range of media operations. The terrestrial ABC network, for example, is affiliated with the Walt Disney Corporation, while NBC Universal and CNN are respectively affiliated with the cable TV operator Comcast and Time Warner. In the US, there had already been grouping and integration of broadcasting, motion pictures, print media, and other content media. The industry consolidation has gone through a further phase of mergers and acquisitions, with the broadband telecommunications firms joining in the competition among the content distributors (cable TV, satellite broadcasts, etc.) for market share. The telecom giant AT & T’s acquisition of the nation’s biggest satellite broadcast provider DirecTV, followed by its announcement in 2016 that it was acquiring the media giant Time Warner (which has CNN under its umbrella) for $85.4 billion (approximately 9.4 trillion yen) symbolizes the wholesale shake-up that is occurring in the United States, where there is competition for content in conjunction with the rivalry for online operations.

The Response of US Television Stations
　The US had 1,777 television stations as of March 31, 2017, according to the FCC, of which 1,383 were commercial, and the remaining 394 non-commercial; the latter figure including the Public Broadcasting Service stations.
　The TV stations are enhancing their respective websites and the information they transmit online, and also evolving into multiple media that provide content through online platforms.
　Let us now look at the cable networks that supply programs and channels to terrestrial TV networks, local terrestrial stations, public broadcasters, and MVPDs, as well as the major initiatives of US broadcasters in recent times.

(1)Initiatives of the Terrestrial Networks
　 News, variety shows, drama and other entertainment that had previously aired on television have been the mainstay of the online content of the terrestrial network stations. However, in recent times, they have also been putting effort into the development and production of content specifically for the internet. The search is on for formats and depictions compatible with media devices apart from television, as we have seen with panoramic camera images for mobile devices, the production of youth-oriented content harnessing evolving virtual reality (VR) and augmented reality (AR) technologies, and NBC news for Snapchat.
　The news reporting for the 2016 US presidential election is where one saw a change of attitudes among the network stations when it comes to the internet. ABC News, for example, in collaboration with Facebook, experimented outside the main news broadcast times with livestreams of major events of the election, harnessing the livestreaming function of Facebook Live. Although this initiative was carried out on a trial-basis for a limited period, the idea of using platforms apart from television and one’s own websites, symbolizes, as it were, the change of attitudes among the TV stations. ABC News, moreover, updated its website to allow the viewing of eight simultaneous live streams, and released apps for the likes of iPhone, Android, and Apple TV. From this also, one can discern an awareness among the terrestrial network stations that an expansion of online delivery routes and content is essential if they are to lure young people who are drifting away from television.
　During the 2016 election, CBS expanded the range of OTT platforms from which people could access its free streaming channel CBSN. CBSN was launched on Apple TV, Roku, and Android TV, as well as game consoles such as Xbox and PlayStation; and it also tried out streams of the Democratic and Republican national conventions and other major events on Twitter. In fact, when CBSN commenced in 2016 with a mainstay of news rather similar to what was on television, a lot of people in the TV industry, if anything, seemed skeptical of this initiatives by CBN, saying “they’ve done precisely what you shouldn’t do” or viewing it as little more than a reckless “pet project.”5 CBSN, however, notched up an all-time record of 19 million streams during the ballot counting in November 2016, successfully drawing attention to the strengths and presence of an established TV network among those segments of the population that view news from the internet. About 10% of the livestreams on the day ballots were being counted were accessed from PlayStation, which the General Manager of CBS Christy Tanner described in an interview with the author of this article, as a major discovery, revealing an interest in news even among the users of game consoles.6
　Anxiety about the rapidly changing media environment around them and the moderate success of CBSN and other precursors have prompted other network stations to launch their own OTT services. In 2018, Fox News announced that it would launch a pay streaming channel for its fans, Fox Nation, and there were reports that NBC News would commence a streaming service targeting the young. Both cases will involve the production of content in the same manner as CBNS that is different to that for terrestrial broadcasts. While the initiatives of CBS might seem prescient in hindsight, it is too early to tell whether they have been successful. The real test on whether the expansion by network stations from broadcasts into OTT has been a success is yet to come.

(2)Initiatives of the Local Terrestrial Stations
　The local terrestrial stations in the United States, unless directly controlled by the terrestrial networks, are basically independent of them in business operations and editorial power. Given their sheer numbers, we cannot cover all of their respective initiatives here, but they are also sending out a range of online content in the same manner as the network stations, transmitting news and other information about their local communities on social media and other outside platforms. Among the recent trends of the local stations, let us focus on the course being taken by the Maryland-based Sinclair Broadcast Group, which has its sights set on the next phase of the blending of broadcasts and telecommunications. Sinclair owns or runs about 200 stations across the US, and its founding family, which is involved in operations as the chief shareholder, is also known for its conservative political views, among other things, backing Trump during the 2016 presidential election. Sinclair has also been enthusiastic about adopting the ATSC 3.0 standards, which are highly compatible with internet protocol (IP) communications. It is putting considerable effort into establishing an industry group to promote these news standards, which it believes will provide new business opportunities to local stations.
　In April and May 2017, soon after the FCC under the Trump administration announced that it was easing restrictions of media ownership, Sinclair announced it was buying about fifty terrestrial stations from Tribune Media, which raised suspicions that the FCC reforms were rewarding Sinclair for its support of Trump. Concerns about the growing concentration of local stations into Sinclair’s hands were further heightened by reports in July 2017 that the company head had made the Sinclair stations run commentary segments by a former Trump aide.
　In the midst of this, the FCC in November 2017 approved the adoption of ATSC 3.0 on which Sinclair has been pinning its hopes. Although the approval allows stations to use ATSC 3.0 on a voluntary basis, rather than make adoption and switchover mandatory, this should be watched in conjunction with the decisions by the FCC and the Justice Department about Sinclair’s proposed acquisition of the Tribune Media stations. Sinclair already has the largest number of terrestrial stations across the United States, and if the acquisition goes ahead, it will have the numbers to become a media giant in its own right, and also provide impetus for the adoption of ATSC 3.0.
　Sinclair’s wholesale acquisition of local stations gives us an insight into its thinking. We should focus on the horizontal integration as a new phase in the consolidation in the US media industry. One could say that Sinclair has added the old but new perspectives of terrestrial broadcasts into this consolidation in the midst of the accelerating vertical integration from the acquisitions and mergers by the media giants in their quest to dominate internet operations.

(3)Initiatives by Public Broadcasters
　In the United States, public broadcasting refers to stations that have been licensed for non-commercial, educational purposes, with the majority of them belonging to the non-profit PBS (Public Broadcasting Service) that was established in 1969. The some 350 member stations have editorial independence, and the mission of the Virginia-based PBS, which does not produce any of its own programs, is to distribute those produced by its member stations and those procured from outside.
　When it comes to the internet, we should note the key role of PBS headquarters (which normally does not produce any content) in the development and running of shared online services and platforms, such as PBS Video, PBS Passport, and PBS KIDS, that all member stations can access.
　PBS Video is a streaming service that makes a number of PBS programs previously aired across the US available free-of-charge for limited periods from the PBS and member station websites. PBS Passport, on the other hand, is a video-on-demand service, which can be accessed by individuals who have made a certain amount of donations to public broadcasting and met other requirements. It is arranged to encourage voluntary donations, as it were, from individuals and organizations. It will be interesting to see whether PBS Passport can grow into a sustainable service and contribute to funding for public broadcasting.
　PBS KIDS, which commenced in 2017, provides broadcast programs for children, as well as simultaneous streams, which can be accessed free-of-charge through apps. Experts are among who have highly commended the ample amount of quizzes and other mobile content that make learning fun for small children, and the polished nature of the digital content designed for use with broadcasts.
　Meanwhile, looking at the initiatives for online services by individual public broadcasters, we can discern a wholly digital bias in the funding directed at broadcasts and the internet (a ratio of 3:7), with the emphasis moving from broadcasts to online in the same manner as the commercial broadcasters.7 Moreover, the drop in the number of people tuning into over-the-air transmissions has even prompted one public broadcaster, WYBE in Philadelphia, to pull out of broadcasting, giving up its broadcasting license in the frequency auction of 2016 and 2017. In the United States, cable and other pay TV had been the major viewing routes, more so than broadcasts; but with the spread of the internet, we can discern a change of attitudes among US broadcasters about the broadcasting transmission routes, with them regarding over-the-air delivery of content as inefficient and no longer convenient for viewers.8

(4)Initiatives by Cable Networks (Program Providers)
　Cable and other pay TV channels are starting up OTT services in a serious manner; HBO’s HBO Now being an example. A recent symbolic case is Disney’s announcement in August 2017 that it was setting up its own OTT service to stream Disney and Pixar dramas and movies, as well as the affiliated ESPN sports channel, and that it was subsequently canceling its streaming agreement with Netflix. In recent years, as more and more people cut the cord, so to speak, Amazon, Twitter and other online platforms are drawing on technical innovations and vast amounts of money to expand into the live streaming of sports and other genres that had been the monopoly of broadcasting. We could say that the providers of the popular pay channels have been forced to counter this by corralling popular content. Although doubts were raised about Disney’s decision to pull its content from Netflix, the environment and perceptions about OTT services in the US are changing a great deal, with reports only six months later that network stations were getting into OTT. The US-based marketing research firm, the Diffusion Group (TDG), predicts that all of the major networks will have launched OTT services to stream their channels by 2022, and that the number of subscribers for conventional multichannel cable and satellite packages will decline.9 As we can see in the case of Disney, there are likely to be quickening moves in the United States toward delivering content directly to viewers, instead of passing through the intermediaries that produce and possess content.

Prospects and Issues for the Future

Prospects for the Future
　When we look at the online video content and services of the terrestrial networks, we often get the impression that an experiment is underway, given the constant changes that are taking place. New technologies and formats are emerging all the time, and we realize that updates are not being made. It is unclear whether the current services will be with us permanently, but there are likely to be more changes in the streaming platforms and content formats of the broadcasters. The major broadcasters are likely to shift their emphasis from broadcasting to the internet, and focus increasingly more on OTT services, as TDG predicts.
　When it comes to the future of broadcasting in the US, it is likely to coexist with the internet for the time being. The number of viewers is dropping, partly as a result of cord cutting, although the ensuing damage to commercial broadcasting has been relatively mild compared to the decline that the newspapers and other media in the United States have experienced in their subscription and advertising revenue from the shrinking of their readership. The advertising revenue from the cycle of elections that takes place every two years is also likely to underpin the operations of the broadcasters for the immediate future.
　 A US-based marketing research firm found in March 2018 that among the leading MVPDs, Dish Network lost about 1 million subscribers in 2017, but picked up more than 700,000 for its Sling TV OTT service, revealing a situation that the new online-based services of MVPDs are putting a brake on the decline in subscribers for pay TV.10 The MVPDs will probably still be able to secure revenue in the immediate future from the retransmission fees they make from broadcasters.
　Meanwhile, a Republican, Ajit Pai, took over as FCC Chairman after Trump assumed the presidency, and he has pursued deregulation and reforms in quick succession. He immediately did away with the broadband privacy rules that had been adopted by the previous administration. This was followed by a loosening up of ownership rules for terrestrial broadcasters in April 2017, and a vote in December that year to repeal the rules on net neutrality. More deregulation from the FCC is likely to follow, but it is unclear what impact this will have on the US broadcasting industry. It needs to be watched, along with the industry shake-up that is occurring with acquisitions and mergers.

Issues for the Future
　The biggest issue facing US broadcasters as they pursue online strategies is that expansion on to the internet will not lead to any major revenue. Online advertising generates much less revenue on a per unit basis compared to TV. The advertising business model is a problem not only for broadcasters, but for the media industry as a whole, with the terrestrial networks trying to recoup costs through a strategy of selling TV and online slots in combined packages. However, this will not end their problems, given the decline in the all-important TV viewers.
　When it comes to advertising models, the question needs to be asked: Where do the online platform providers, the so-called tech companies of Amazon, Apple, Google, Facebook, and so on, figure in the US media industry? In January 2018, Rupert Murdoch, the Executive Chairman of 21st Century Fox, and Andrew Lack, the Chairman of NBC News, said that the online platform providers should more fairly reward the network stations and other suppliers of the content that has helped them generate huge advertising revenues. Both believe there should be arrangements to reward the providers that produce high-quality content. On the other side of the coin, their comments were also a sign that the standing of broadcasting as a media sector is under threat from the growing power of the online platforms that send out information. The platform providers have repeatedly denied that they are part of the media, but the debate over this situation and the debate on regulation are likely to heat up in the US and also be intertwined with the FCC decision to repeal the rules for net neutrality.
　In the United States, competition is transcending the boundaries of broadcasting and telecommunications. Internet use is likely to grow further as the viewing habits of people change. Video streaming is common in all segments of the media owing to the spread of the internet and technical innovations. The traditional distinctions in the media between “television”, “newspapers”, “digital”, etc. have become almost meaningless, at least with regard to the internet. In such an environment, the broadcasters might lose their raison d’être if they cannot deliver the kind of high-quality content that viewers want. The television media sector in the United States is being compelled to evolve beyond the framework of broadcasts into multiple media transmitting information through a variety of routes on the internet.


(Notes)

• 1.See the author’s article, “2016 nen Bei-daitoryo Sen ni miru Amerika Terebi Medeia no Henyo: Saishin Hokoku Netto to Yugo shita Kyodai-joho-kukan” (The changing US television media as observed during the 2016 presidential election, latest report: Hyper competition over news in American digital information space) in Hoso Kenkyu to Chosa (NHK Monthly Report on Broadcast Research), June 2017. NHK Broadcasting Culture Research Institute. (Article in Japanese)
• 2.The Nielsen Total Audience Report: Q4 2016, The Nielsen Company (US), LLC (March 2017)
• 3.Kristine Lu, “Growth in mobile news use driven by older adults” in FACT TANK News in the Numbers, Pew Research Center (June 12, 2017)
• 4.Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 18th Report of the Federal Communications Commission (January 2017)
• 5.Dylan Byers,” CBSN: Wave of the future, or a money losing ‘pet-project’?” in CNN Money (11 August 2016)
• 6.Aya Fujito, op. cit.
• 7.Atsushi Ogaki, “Amerika no Kokyo Hoso no Maruchipurattofomu Tenkai: Firaderuphia no Kikitori-chosa kara” (Multi-platform strategies of public broadcasters in Philadelphia, USA) in in Hoso Kenkyu to Chosa (NHK Monthly Report on Broadcast Research), March 2018. NHK Broadcasting Culture Research Institute. (Article in Japanese)
• 8.Ibid.
• 9.Mike Berkley (Senior Advisor, The Diffusion Group), The Future of Direct-to-Consumer Video Services – Analysis & Forecasts, 2018-2028
• 10.Major Pay-TV Providers lost about 1,495,000 subscribers in 2017: Satellite TV services had more net losses in 2017 than in any Previous Year, Leichtman Research Group, Inc. (March 12, 2018 press release)