Understanding high-definition television, admit programmers and MSOs alike, requires an education. Many consumers can't grasp it. Some think they already receive it with digital cable. And others buy a pricey HD set only to learn they still can't receive HD.
So, with television critics gathered in Los Angeles two weeks ago, industry executives tried to offer a version of HD 101.
"We have to change the message," said Bryan Burns, ESPN vice president of business planning and development. "We're getting out of geeks' buying these things to Joe and Martha buying."
And average consumers like Joe and Martha, he said, don't care much about 720p or 1080i delivery formats: "The content, the picture is the story."
Of course, the cable industry wants consumer media to help tell that story. Every mention in the local paper helps. But that's just one element of a puzzling marketing initiative. How should programmers and distributors communicate high-def? Where to start?
"It's very difficult to communicate the benefits until they have an HD picture," admitted Comcast VP of Marketing for New Video Products Page Thompson.
Comcast runs commercials that tout the superb picture quality of HD. But the same ads also remind customers that, first and foremost, if they want HDTV, they will need a high-def set.
Cable operators say they're ready to deliver high-def service. According to the National Cable & Telecommunications Association, in 78 of the top 100 markets, at least one cable operator provides HD service. And 112 markets out of 210 total DMAs nationwide have some HD service. Satellite operators DirecTV and EchoStar also offer HD packages.
Subscribers "are hungry for anything at this point," said DirecTV Director of Marketing Mark Ryan. "There isn't a large menu of programming out there."
The menu is growing, though, with cable nets and broadcasters increasingly adopting high-def (see box, at right). Cable-industry consultant Steve Effros boasted to TV critics at their annual tour that, this month, "You could spend all your time watching HD on cable" with movies and sporting events on every day.
But only a fraction of U.S. homes actually possess an HD television set. There are currently between 2 million and 5 million HD sets in U.S. homes, depending on estimates. In contrast, nearly 90 million homes receive cable. And, among those HD homes, fewer than half have the tuner necessary for receiving the high-def signal.
That frustrates cable programmers, who say they've anted up for high-def content (which can run as much as $50,000 more per hour to produce) and launched such services as Discovery HD Theater and ESPN HD.
"People are all dressed up with no date to the ball," said Discovery HD Senior Vice President and General Manager Clint Stinchcomb. He'd like to see operators get more aggressive in rolling out HD-enabled set-top boxes.
Meanwhile, MSOs are tinkering with pricing models for hardware and programming. Each provider seems to favor a different model. Comcast charges a standard $5 for its box and gives the HD tier away for free. So far, though, Comcast's HD package comprises only broadcast networks, Comcast SportsNet HD, and, for subscribers, HBO and Showtime. Comcast and Time Warner Cable, which has a free but more extensive HD offering, want to use free HD to drive their digital cable businesses and ward off churn.
Other operators see direct revenue opportunity. In Las Vegas, Cox Cable charges an extra $7 monthly for an HD box and $6.99 for ESPN and Discovery services. Want just Discovery? That runs $5. DirecTV charges a flat $10.99 per month for its HD tier, which includes ESPN, Discovery and HD Net, but customers need to pony up for a pricey HD receiver, which can run as high as $500.
Against this backdrop, marketing efforts are heating up. Until now, say programmers and operators, they haven't had to do much. The first wave of users, the tech-savvy early adopters, haven't required much marketing: They know about the product and are willing to pay for it. But, with the price for an HD-capable set slipping below $1,000, HD is becoming more accessible.
Until now, "the price point was not a mass-consumer business," said Showtime Executive Vice President of Corporate Strategy Mark Greenberg. About 75% of Showtime's programming is in high-def, but marketing efforts have been mostly targeted, such as event promotions, direct mail and launch support for operators' new HD service. With HD sales likely to climb, "we'll step up our efforts," Greenberg said.
Retail stores are a prime target for marketing. Nothing befuddles a customer shopping for an HD set more than a salesperson who promises that HD looks fantastic but can't offer a programming demo.
And with high-def, said Discovery's Stinchcomb, "Seeing is selling really."
One way to get seen: Discovery, like HBO, ESPN, Showtime and the broadcast networks, works with Premier Retail Networks, which distributes HD programming demos to 2,500 Best Buy, Sears and Circuit City stores. Customers can watch HD and standard-def feeds of, say, Trading Spaces
side by side to see the difference. PRN even produces a "best of HD" segment with TV Guide
that airs in stores and highlights upcoming HD telecasts.
Big events help programmers and operators hype HD. They use, for example, sports events to drive awareness and sampling. Comcast tailored promotions to last February's NBA All Star Game, which TNT produced in HD at no charge to operators. Next fall, DirecTV will offer a few high-def NFL games to its Sunday Ticket
And, of course, there's plenty of more traditional marketing like direct mailings and cross-channel spots. But nothing, executives agree, measures up to consumers' watching HD with their own eyes.
Noted Showtime's Greenberg, "A 30-second spot that tries to show you what high-definition can do shown on a standard-definition set is kind of a contradiction."