[opendtv] Re: News: No Motive for HDTV Rollouts
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 28 Jun 2004 08:08:53 -0400
At 12:08 PM -0700 6/27/04, John Willkie wrote:
>You are incorrect in the current time frame. HDTV is not a premium niche
>market TODAY. It is something that people consider when they replace their
>TV set. They know they can buy an analog set for $1000 or less; they also
>know that for a few bucks (or a few thousand bucks) more they can buy a TV
>set that will do their DVDs justice. Doing digital cable or digital OTA
>justice is just icing on the cake. I should note -- again and again -- that
>for a mere $300 more, these people can have a OTA stb, if their set does not
>offer one.
Whatever John.
The reality is that big screen sets are being sold into the Home
Theater market segment. I call this a product niche. You can call it
whatever you want. This has always been a profitable niche for CE
retailers and the percentage of homes that are buying at least one
set that fits into this category is growing - it was about 20% of
U.S. homes, and seems to be headed up to about 30%.
>
>These are medium income people -- okay, often with two household incomes.
>They do not buy a premium niche product (it ain't a niche); they buy the
>"next best thing."
They buy what meets their expectations and what they can afford. The
fat spot in the market continues to be 27"-32" direct view CRTs with
analog component inputs. Some people are buying the larger HD capable
displays, but the total penetration of these units is still well
below 10% of U.S. homes...
That's a market niche!
>
>Do you also consider DVDs to be a premium niche market?
Hell no. The penetration of DVD players is now well above 50% and is
headed to above the 90% level.
DVD is a major driver for the growth of the Home Theater market
segment. But it does not require an HD capable display to qualify as
a home theater installation. The CE industry counts ANY set that is
30" or larger in this segment, and as I mentioned above, direct view
4:3 displays that are larger than 30" are a much bigger market
segment than larger HD capable displays.
>
>How about high-speed internet access? (Here in San Diego, more than 55% of
>the internet connections are DSL or cable modems; in Boston, it's 51%)
Yup. Broadband is growing rapidly. It is most definetly not a niche
product anymore. When HD capable displays are in 50% of U.S. homes we
can drop the market niche designation.
>
>HDTV is a niche product. In Tijuana. If you want to go that route, all TV
>is a premium niche product in parts of the third world.
The other important thing you are missing John is that there are a
variety of services that are targeted at the homes that are part of
the HD market niche. You have three satellite services offering
Premium HD content (Voom, DirecTV and Dish). And virtually every
digital cable system is now offering a premium HD content package.
These are premium products that are targeted at the relatively small
percentage (<30%) of multi-channel homes that subscribe to premium
services. What these disctribution services have learned is that HD
is an important factor in getting and keeping premium subscribers.
In other words, HD is becoming the premium market niche.
Regards
Craig
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