While online sales boom, closed retailers hits antenna maker profits
The largest TV antenna-maker in the U.S. is seeing a massive surge in online sales as the economy struggles.
“A lot more people are calling our phone lines saying, ‘I can choose between cable or groceries,’” Richard Schneider, president and founder of Antennas Direct said in an interview with The Cord Cutting Report.
But the surprise uptick in sales hasn’t been a windfall for the St. Louis-based company.
“It’s a mixed bag. A lot of stores we do business with have closed, so the replenishment orders at big retails have basically been shut off,” Schneider explained. “The online orders have been up about 200 percent.”
While the dramatic increase in online interest is encouraging, “it doesn’t replace what we’ve lost on big box retailers,” Schneider said.
In January, AntennasDirect became the largest TV antenna manufacturer in the U.S. after buying Mohu, its one-time competitor in Raleigh, North Carolina.
Much of Schneider’s company has been working from home since the COVID-19 outbreak.
The coronavirus impacted Mohu’s production schedule earlier this year. Parts manufactured in China arrived at the Raleigh assembly plant later than planned. And then, the pandemic reached the U.S. prompting many retailers to close, according to Schneider.
“We had to cancel some purchase orders in February and March,” he said. “As soon as the parts arrived, all the big box stores canceled their orders.”
In response to hearing about customer’s financial troubles, AntennasDirect issued a 20 percent discount on all products for the foreseeable future.
“It’s just a response to people who are struggling,” he said. “We are trying to marry up with the increased inquiries. This would enable a lot of people in terms of pushing people off the fence.”
The discount is only for AntennasDirect products, not Mohu antennas, Schneider said.
A new tipping point for cord cutting?
Schneider believes that a pandemic-stricken economy will be a tipping point for cord cutting.
“I think 2020 will be looked at as the year we turned into a normal mainstream thing instead of something just for the hardcore techies,” he said.
The largest pay TV providers lost about 4.9 million net video subscribers in 2019, according to a study by Leichtman Research Group, Inc. The top seven cable companies lost about 1,560,000 video subscribers in 2019, while satellite TV services lost about 3,700,000 subscribers, according to Leichtman.
Cable and satellite TV providers had their largest quarterly subscriber loss in the first three months of 2020. With COVID-19 ravaging the economy, those numbers are expected to get worse.
Schneider said economic circumstances may already be accelerating cord cutting strictly out of necessity.
“In the last six to eight weeks. it’s brought an entire new demographic into the cord cutting world,” he said, referencing his online sales. “This has been the shove that a lot of people needed. It’s made it more mainstream.”
He said that instead of just a predominantly male customer base, “Now, it’s trending more female and people who are worried about bills.”
ATSC 3.0 moving ahead
Even if TV antennas become mainstream again, the economic crisis raises new questions about whether ATSC 3.0 will be deployed as quickly as first expected.
In early April, a group of broadcasters announced that ATSC 3.0 would come to 40 markets by the end of 2020.
ATSC 3.0, or NextGen TV, will bring numerous upgrades to free over-the-air TV. Those improvements include 4K picture resolution, High Dynamic Range, Dolby Atmos and possibly video on-demand.
Once the pandemic struck the U.S., advertising dollars began drying up for major media companies and local broadcasters. The financial outlook raises new questions about how much local broadcasters will be willing to spend to upgrade.
“The stations aren’t flush with cash. If I was a general manager (of a TV station), I would probably hold off on capital spending right now,” Schneider said.
ATSC Chairman Lynn Claudy said in a memo last week that broadcasters are pushing forward with deploying ATSC 3.0 — despite the COVID-19 crisis.
He noted that the first ATSC 3.0 consumer receivers are now available for purchase. SiliconDust announced its first ATSC 3.0 tuner, the HDHomeRun Quatro 4K as part of a Kickstarter campaign last week.
“This crisis is proof that broadcasting is a critically important and resilient industry, and we hope that a fully deployed ATSC 3.0 system will deliver new capabilities and also new avenues to keep viewers informed and entertained,” he said in the memo.
Later this week, ATSC is expected to issue a comprehensive progress report ahead of the NAB Show Express.