You are here: Home Page » HDTV » Far fewer Americans receive HD service than own HDTVs, says researcher

Far fewer Americans receive HD service than own HDTVs, says researcher

Dec 12, 2006 8:00 AM

In-Stat senior analyst Mike Paxton says there’s a wide gulf between the number of U.S. TV homes with HDTVs and those actually receiving HD programs via broadcast, cable, satellite or other means.

Here’s a reality check: only 9.8 million TV households receive some form of HDTV programming out of the 25 million households that own HDTVs, according to In-Stat senior analyst, Converging Markets & Technologies Group, Mike Paxton.

Speaking last week in Los Angeles at the HD Technology Summit produced by Broadcast Engineering, Broadcasting & Cable and Multichannel News, Paxton said there are several reasons for the startling statistic.

HD Technology Update interviewed Paxton following his presentation to learn the reasons for this HD disconnect and to find out what the industry can expect in the future.

HD Technology Update: What accounts for the HD disconnect — the approximately 15 million owners of HD sets out of the 25 million in the United States with HDTVs who don’t receive an HD signal over the air, via cable, satellite, IPTV or some other means?

Mike Paxton: We see the HD disconnect existing today because of primarily three things: One, consumers who are buying HDTV sets are buying that set not because it can allow them to watch HD programming. They are buying it because it is a digital set that is an improvement over their older set.

Also, we are hearing from consumers that they really like the form factor. In other words, their purchasing decision is really being driven by non-high-definition-based attributes of the TV sets. That’s one reason that’s always very interesting to hear that.

We also find that consumers aren’t willing to pay additional fees for a digital set-top box or for a monthly HD service fee. That is something that really turns them off. So they are willing to buy the set, but when it comes to ponying up another $10 or $15 per month, they kind of draw the line and say it’s not quite worth it.

Finally, there still are a few people out there who are confused about what they are watching and whether it is actually HD programming. In other words, there are people who own an HD set and are watching standard definition programming while they think it is HD just because it says “SportsCenter HD” or whatever the case may be. In other words, they don’t know.

That number — the percentage of consumers — is getting smaller every year, so there is an educational process at work and it is succeeding. But in terms of the HD disconnect, that gap between installed base of HD sets and HDTV service users, those are the three primary reasons.

HDTU: What are major challenges to further growth of HD penetration?

MP: That disconnect also applies to why people are not signing up for HD services. In addition to that, I think the return on investment argument, not only in terms of money but also in terms of time or added value perceived by the consumer.

A lot of consumers that we talk to — many of them don’t have an HDTV set — but they just don’t think that the improvement is great enough from say a digital picture to a high-definition picture, to either go out and buy the set or sign up for the service. The added value question in their minds hasn’t been answered positively yet. That, in addition to the three issues we talked about before, always seems to pop up when we talk to consumers about why they’re not getting HDTV sets.

HDTU: A producer at the summit said that once viewers actually see HDTV, it’s like an addiction. They just want to have it and no other type of TV. How do you square that with your comments about some consumers not thinking the improvement is great enough to make the switch to HD?

MP: It tracks almost perfectly with what we hear and what we see come out of consumer surveys. The best advertisement for HD is actual HD. The best business model for improving HD penetration rate is showing people actual HD. Again, a lot of those people who question the added value either haven’t seen HD, or what they’ve seen isn’t true HD.

So yes, I agree totally with the comment made by that gentleman in the audience, where you see that seeing is believing in this case. In other words, that’s the best marketing vehicle for new HD customers, and the future of HD services is getting that picture in front of people.

That’s harder than it actually seems like it should be because if you are sitting at home and you’re happy with your TV set and happy with your picture, what’s the driver to move to HD? You have to see somebody — a friend or a relative — or go into Best Buy and see that. Something has to move you to make that decision.