Surmounting the High-Definition Divide - A Wide=20 Gap Exists Between the Number of HD Set Sales and=20 HD Subscriptions December 2, 2004 12:00am Source: Reed Business Information. All Rights Reserved. Multichannel News: While HDTV sets continue to=20 fly off retail store shelves, convincing=20 consumers to buy a high-definition programming=20 package remains a huge challenge for both cable=20 and satellite companies. There are about 8 million to 9 million U.S.=20 households that have at least one HDTV set, but=20 only 2.3 million households subscribe to an HD=20 programming package from cable operators or=20 satellite providers, according to Leichtman=20 Research Group. Cable and satellite companies have focused much=20 of their HD marketing efforts on joint campaigns=20 with consumer-electronics companies looking to=20 push more TVs, but some analysts say more needs=20 to be done to sell programming packages to=20 consumers who already have HD equipment. "I think the low-hanging fruit is the 6 million=20 people today, the early adopters who have an HD=20 set and are not watching HD from anybody," says=20 Leichtman Research head Bruce Leichtman. He says=20 the HD proposition offers cable and satellite=20 services an opportunity to induce customers to=20 switch to a new multichannel provider. Educating consumers about the differences between=20 standard and high-definition TV is also key.=20 About half of the 5 million to 6 million U.S.=20 households with an HD set but without a cable or=20 satellite HD programming package think they are=20 watching HDTV, Leichtman says, citing the results=20 of a consumer survey his firm recently conducted. "It's tragic that these phenomenally expensive=20 pieces of hardware are ending up in people's=20 living rooms, yet the reason they bought them is=20 not being realized. It's nuts," says Jimmy=20 Schaeffler, an analyst at the research and=20 consultancy firm The Carmel Group. "It's like=20 buying a luxury car because you want to go=20 faster, but they don't sell you the right gas to=20 take it any faster than 40 miles per hour." Schaeffler believes cable and satellite firms=20 need to team up with broadcasters and=20 consumer-electronics companies to educate=20 consumers on HDTV. But don't expect the Consumer Electronics=20 Association to aid that cause. When recently=20 asked what the CEA was doing to help educate HDTV=20 buyers on the need for cable or satellite=20 programming packages, CEA president Gary Shapiro=20 commented that the organization believes that=20 consumers get a compelling proposition when they=20 hook up their HD sets to DVD players. But the Cable & Telecommunications Association=20 for Marketing is of the same mindset as=20 Schaeffler. In October, the association kicked=20 off its "Go for 2" HDTV marketing campaign=20 designed to emphasize that consumers need an HDTV=20 programming package in order to take full=20 advantage of the capabilities of their new HD=20 sets. The campaign is a joint effort with Sony=20 Corp., which markets cable as the best way to=20 watch football games in HD. The campaign comes at a time when the gap between=20 the number of HDTV sets sold and the number of=20 consumers that subscribe to cable or=20 direct-broadcast satellite is growing, according=20 to CTAM CEO Char Beales. "We're both [cable and=20 satellite] fighting a common enemy, and that is a=20 lack of consumer knowledge about buying an HD set=20 and service as a two-step process," she says. But figuring out exactly how good -- or bad --=20 the HDTV situation is for multichannel platforms=20 is hardly an exact science. For example, EchoStar=20 Communications Corp. and DirecTV Inc., which are=20 both pitching consumers HDTV receivers that also=20 contain a digital video recorder, haven't=20 released HDTV subscriber numbers. And cable=20 operators are also reticent to reveal their HD=20 progress with customers. One exception is the Rainbow DBS subsidiary of=20 Cablevision Systems Corp. The company recently=20 reported that it counted a paltry 26,000=20 customers for its Voom HDTV programming service,=20 which includes several exclusive, niche HD=20 channels. After its October 2003 debut, Voom did not begin=20 charging customers for its programming package=20 until March 31. As a consequence, it has lost=20 2,000 customers since the end of August. Comcast Corp., the country's largest cable=20 operator, also doesn't release its HDTV=20 subscriber count. But Comcast CEO Brian Roberts=20 told analysts in October that Comcast systems=20 nationwide are adding about 15,000 HDTV=20 subscribers weekly. At that pace, Comcast is=20 doubling Voom's total subscriber count every two=20 weeks. Leicthman says that at this time last year, DBS=20 companies were winning a greater share of new=20 HDTV customers than their total share of the=20 multichannel video market. But he believes the=20 HDTV battle between cable and satellite is=20 "drawing a lot closer." A survey of HDTV=20 consumers Leichtman conducted this fall found=20 that 8% of cable subscribers and 8% of DBS=20 customers say they bought an HDTV programming=20 package. Regardless, "it's too early to say who's winning=20 the war for HD, because I think people are still=20 lining up their armies," says Joe Rooney, senior=20 vice president of marketing for Cox=20 Communications Inc. Rooney maintains that cable has the advantage in=20 the HD war because operators have the ability to=20 carry every local HD broadcast signal in any=20 given market, while satellite providers don't=20 have the bandwidth capacity to do the same.=20 DirecTV Inc. hopes to eliminate that advantage=20 next year, when the company launches two=20 additional satellites that its says will allow it=20 to carry 500 local HD channels. Of course, viewers can also receive HD signals=20 from local ABC, CBS, Fox and NBC affiliates with=20 an over-the-air antenna and receiver. But=20 analysts note that few customers own HDTV=20 broadcast receivers, which cost at least $300=20 apiece. "Frankly, the [HD] consumer is watching regular=20 digital cable with a DVD player, and what we as=20 an industry need to do is convert those customers=20 who already have HD to our high-definition=20 service, and make sure that we win the battle of=20 the HD covert," Rooney says. <<Multichannel News -- 11/29/04, p. 28>> << Copyright =A92004 Reed Business Information. All Rights Reserved. >> ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.