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HD metrics

Dec 1, 2007 12:00 PM, By Phil Kurz

By any measure, HDTV is making its mark on the television landscape in the United States. Viewers, programming hours and sets sold are all up, and consumer desires this holiday season point to strong prospects for the future.

In fact, a new poll from the Consumer Electronics Association (CEA) found that when consumers were asked if they could have any gift this holiday season, what would they choose, “big screen television” — generally understood to be a synonym for a 40in or larger flat-screen HDTV — came in third, behind a new computer, and peace and happiness.

While there's general consensus among researchers that HDTV has gained strong momentum and will continue to proliferate and eventually dominate television viewing, Nielsen Media Research raised a few eyebrows in late October when it reported that only 13.7 percent of U.S. television households have an HD set and tuner and that 11.3 percent are actually receiving HD programming.

That's 15 million households with the gear needed to watch HD, a figure significantly lower than what's quoted by other industry authorities:

The CEA data from June 2007 shows 32 percent of U.S. households own an HDTV.
Leichtman Research released figures last month showing about 25 percent of U.S. households have at least one television set that can receive HD programming.
Strategy Analytics in October projected 40 percent of U.S. households would own a flat-panel TV by year's end, although it must be noted that not all flat-panel TVs are HD.

The difference between Nielsen's numbers and those generally accepted in the industry is significant — a disparity of between 10 percent and 18 percent. This raises the question: Who's got it right?

Click on image to enlarge.

That's more than an academic question. The difference between 13.7 percent and 32 percent is the difference between a market of early adopters and innovators and a market filled with mainstream adopters. With hundreds of millions of dollars on the line in capital investment and marketing funds, that's an important distinction.

Leichtman Research Group in Durham, NH, specializes in research and consulting on the broadband, entertainment and media industries. Led by Bruce Leichtman, the market research firm said in November that about one in four U.S. households owns an HDTV. Why are Nielsen's numbers so much lower?

“Plain and simple. They used the wrong denominator,” Leichtman says. “Their number is just wrong. Their denominator was households that had HD sets with a built-in tuner.”

According to Leichtman, the number of people Nielsen found who are actually viewing HD television is similar to his organization's number.

“But their actual number of HD homes, just based on sales, based on anything, is impossibly low,” he adds.

Nielsen methodology

However, Leichtman's characterization of what Nielsen used for its “wrong denominator” may not be entirely accurate. In announcing its findings, Nielsen did in fact define what it terms HD-capable households as being “equipped with an HD television and HD tuner capable of receiving signals in HD.” The research organization never said its universe of HD-capable homes included only sets with built-in HD tuners.

The CEA updates its estimate of HD households in the United States twice per year. The last estimate in June pegged the percentage of HD households at 32 percent, up from 26 percent in January. According to Tim Herbert, CEA senior director of market research, the association's research methodology is based on two prime components, telephone and on-line surveys and detailed sales data of manufacturer shipments into the retail channel.

“Nielsen's number appears to be quite a bit lower than everyone else,” Herbert says, referring to the general consensus about the number of HD households among independent researchers. “One thing we speculated, if you look at the number of households actually receiving HD — and that would be 44 percent — 44 percent of the 32 percent (CEA's HD household penetration) comes out much closer to the 13.7 percent figure Nielsen has (for HD-capable homes).”