That’s a Great Picture, But It Isn’t HDTV
By Kevin Downey -- Broadcasting & Cable, 12/5/2004 7:00:00 PM
Half the people who think they’re watching HDTV really aren’t. So says a new study just released by Durham, N.H.-based Leichtman Research Group.
On the consumer side, the general understanding of HDTV apparently is forgotten once consumers enter the big-box appliance stores, see the array of choices, and get blasted with facts and terms they don’t understand.
They may end up walking out with digital TVs that have clearer pictures than their old analog models, or sets that could get high definition if the buyer acquired the right accessories. But that great picture is just that, and not the real deal.
“People go to their friends’ homes and say, 'Hey, isn’t this incredible?’ But they’re really not watching HD,” says Bruce Leichtman, LRG’s president and principal analyst.
LRG based its findings on telephone surveys conducted with consumers, which were matched with data on the number of HD set-top boxes manufactured by companies like Motorola and installed by cable TV and direct broadcast satellite (DBS) services. LRG and other research companies estimate that only a small number of homes receive HDTV through an HD antenna.
Breaking Down the Data
“You add that up, and the reality is that about 3 million [households] are receiving HD programming from cable TV or DBS,” says Leichtman.
The Consumer Electronics Association says 13.3 million digital television sets have been sold to dealers since 1998. The CEA says only 87%, or about 10.6 million, of those sets are HD-ready. Then LRG discovered that 15% of HD homes have more than one set, which means high-definition sets are in only 9 million homes.
When LRG factors in the deployment of equipment needed to transform an HD-ready set into a set so that it actually receives an HD picture, the number tumbles down to 3 million homes. But twice as many households report they are watching HDTV.
Nielsen Media research says that there are nearly 109.6 million television households, which means, if LRG’s data is right, HD is being seen in just 2.7% of all U.S. homes. To put it another way, the number of real HDTV households out there equals the total number of television homes in Chicago.
As with most new technology, HDTV will become less confusing for consumers and less challenging for advertisers as it becomes more commonplace. That will likely happen in a few years as HDTV becomes more widespread—the CEA estimates that more than 50 million homes will really be receiving HD signal by 2007—and as more networks offer programs in high-definition.
Not All Digital Is High-Def
“There are so many ways that people are confused,” says Laura Behrens, senior analyst of media industry research at Gartner/G2. “There are so many pieces to buy and so many things to consider. Not all flat-screen TVs are HD-ready, and not all flat screens are digital. And even screens that are high-definition may not have resolution that is very high.”
There’s also confusion among consumers about how to receive HD signals, according to Behrens. Most people who actually have HDTV get it through a cable TV or DBS service, which typically means installing an HD set-top box and paying a modest monthly fee for HDTV.
The FCC has a mandate that all TV sets larger than 13 inches come equipped with a digital receiver by the end of 2006, though that date has been a moving target. And that doesn’t mean those sets will receive high-definition signals or even be HDTV-ready. Nor does the FCC mandate mean all programming will be in high-definition.
“The mandate is not for HDTV, although that’s what gets talked about,” says Behrens. “The HD is the sizzle in the steak. But the steak is digital TV.”
While consumers are still largely confused when it comes to figuring out HDTV, media planners and buyers are faced with the challenge of figuring out how many people are watching HD networks and, demographically, who is watching.
There are a growing number of networks airing programs in high-definition. Among them are all the broadcast networks and nearly two dozen cable networks like Discovery HD Theater and NBC Universal’s Bravo HD+, which last week rebranded itself Universal HD. The revamped network will air movies, sports and television shows like Law & Order: SVU and Monk.
Still, determining the demographics and size of the audience watching HD programs requires some guesswork.
For one thing, Nielsen Media Research doesn’t yet release viewing figures for programs watched in high definition.
Not All Couch Potatoes...
“Nielsen doesn’t measure a lot of things, which is a big problem for the future of television,” says Tim Hanlon, senior vice president and director of emerging contacts at Starcom MediaVest Group. “The traditional advice [to advertisers] would be, 'Until it’s Nielsen-rated, don’t bother.’
“The progressive answer is, 'Don’t wait for Nielsen to divine how consumers are watching television; just open your eyes to penetration numbers and recognize where your audiences are.’”
Several research companies are conducting surveys to create a psychographic profile of the HDTV user. That wouldn’t seem so hard if you think about it. “They’re early adopters of technology products,” says LRG’s Leichtman.
But they’re not necessarily couch potatoes. “It has more to do with getting new things than it does with [watching] more TV. People constantly try to link HDTV with digital video recorders, but they are not necessarily the same audience.”
...But Usually Affluent
Moreover, the high cost of high-definition television sets—typically well above $1,000—means most HDTV homes are on the affluent side, according to Aditya Kishore, senior analyst at the Yankee Group.
“It’s not a handful of really rich people who have HD,” he says. “But as for the majority of buyers, you’re probably looking at a minimum $75,000 household income.”
The affluence of HD households makes them of particular interest to some advertisers, says Starcom’s Hanlon.
“Today, the early adopters who can afford expensive sets are probably exceedingly attractive audiences for high-priced cars, TV sets or high-priced whatever,” he says.
Although someday the whole nation will watch television in high-def, Hanlon says, “for programmers and advertisers right now, HDTV is a leap of faith.”
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