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What�s Driving the HDTV Bandwagon?

BY RANDY SAVICKY

Since the introduction of the Compact Disc (CD) two decades ago forever changed how consumers would enjoy music, the whole entertainment industry has gone digital. Today, consumers around the world enjoy a myriad of digital media choices that go far beyond just music – from the Internet, cable and satellite television, video-on-demand and pay-per-view to CDs, DVDs, MP3s, GameCube, PlayStation and Xbox. And the list could go on and on ….

Now, driven by the intersection of two dramatic trends – the continuing decline in the cost of flat-panel televisions and the increasing amount of programming broadcast in High-Definition (HD), consumers are increasingly embracing digital television (DTV) and HD products.

THE FCC MEETS THE CEA

Helping to accelerate the transition to digital television, the Federal Communications Commission (FCC) announced the “plug-and-play” digital cable standard that last July, a standard that would deliver digital and HDTV to consumers via cable for the first time without the need for a cable set-top box.

Earlier this month (May 11), Gary Shapiro, president and CEO of the Consumer Electronics Association (CEA), sent a letter to Congressman Joe Barton (R-TX) regarding the state of the digital television (DTV) transition. In it, he urged the setting of a hard cut-off date for analog broadcasting. Both the debate and the actual setting of a firm date will have strong positive effects of moving this process along, he urged, by further publicizing the DTV transition and freeing up the analog broadcast spectrum for more significant public safety and new technology uses.

This new legislative initiative will further accelerate consumer interest in DTV, which surged to record levels during last year’s holiday season and prior to Super Bowl XXXIX. According to statistics released by the CEA, factory-to-dealer sales of DTV products increased to 927,000 units in December 2004, a strong 10% increase over November 2004 and a dramatic 45% increase over December 2003. For the full year, DTV sales reached 7.1 million units, an increase of 75% as compared to 2003. Of that amount, flat-panel displays accounted for 38% of DTV sales in 2004, reaching 2.7 million units.

A GROWING LOVE AFFAIR

These numbers indicate that digital television has been adopted twice as quickly as color television. It took color television ten years to achieve a 5% penetration rate in the U.S. from its introduction; since the first DTV products hit the market in late 1998, more than 16 million DTVs have been shipped.

And that trend shows no sign of abating. CEA Market Research originally projected that 9.4 million digital television products will be sold this year, 15.6 million will be sold in 2006 and 23 million will be sold in 2007. Now, the CEA projects that actual DTV product sales this year will actually jump to 14.8 million units – more than double the 2004 sales figures.

Increasingly, broadcasters are meeting the growing desire for digital content, specifically HDTV programming, as consumers upgrade their analog television sets to HDTV-ready and HDTV-capable televisions and flat screen monitors, by been increasingly embracing the hardware and software tools they need to feed this demand. This was never more evident than at the National Association of Broadcasters (NAB) Convention, which was held in Las Vegas, NV, last month. Interest in this show has surged in recent years, as some of the best-known names in consumer electronics, such as Sony and Panasonic, have introduced new digital and HD products for profession use, underscoring their long-term commitment to the professional market.

DIGITAL, DIGITAL, DIGITAL …

All of these trends play into the growing desire by content owners to meet all of today’s digital media choices by creating new content and repurposing more of their existing content in digital formats to generate additional revenues. Movie studios, for example, have been able to take a single feature film from theatrical release and then generate additional revenues via pay-per-view and then as separate releases on VHS tape and DVD as well as multi-platform video games.

Increasingly, these studios are digitizing their film archives in HD -- and the film archives of such major film studios as Metro-Goldwyn-Mayer (MGM), Time-Warner, Universal and Sony (which recently purchased MGM) are impressive in both size and scope. MGM has the deepest modern film library in the world, with 4,100 films and more than half of all Hollywood feature film produced since 1948, including the James Bond, Pink Panther and Rocky series. Time-Warner has more than 1,900, while Universal and Sony each have 1,500 feature films in their individual archives.

At the same time, more and more digital and HD content is being created and produced each year by television stations, the major networks and news networks – now more than 7 million hours -- with approximately 10% of it produced in HDTV. Television series are now being digitized for broadcast and issued on DVD for home release, from Sex in the City to The Simpsons, and individual television shows like Pokemon and SpongeBob SquarePants can be viewed on Nintendo’s GameBoy Advance.

In addition, approximately four percent of the worldwide video archive, estimated at 240 million hours, is being digitized each year, from old New York Yankees baseball footage to historical documentaries.

Add to this the explosion in live HD sports programming from a variety of sources and consumers have a myriad of digital and HD possibilities in every viewing genre. The opportunities will only increase in the years ahead as the bandwagon keeps speeding along faster and faster.

Randy Savicky is President of Strategy + Communications Worldwide Inc. (http://www.strategypluscommunications.com), a consulting firm that helps companies communicate better to their key audiences to achieve their business goals faster and more easily. With his unique "both sides of the editor 's desk" perspective, Randy’s advice and counsel on helping technology companies improve their communications has been called upon by some of America’s largest corporations and best-known brands, including IBM, Apple, Fujifilm, Motorola and Sony, as well as start-ups, early stage and pre-IPO companies. With extensive experience in public relations, marketing communications, web market and interactive/custom publishing, he welcomes your comments and questions on how to put his ideas to work for your company. He can be reached at (516) 467-4122 or at [email protected].

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