DTV's Never-Ending Saga
By Steve Smith -- TWICE, 6/26/2000
Sony's recent announcement that it will not ship six next-generation fully-integrated digital TV sets this year is a disappointment for anyone who has a vested interest in the success of this technology or is just an out-and-out fan of HDTV.
It is also a setback for everyone who wants this category to develop quickly and become a mass market product.
Granted, as the Consumer Electronics Association has duly reported, digital TV sales in dollars have set records for any new category in the history of the business. But look at the average unit price. Those consumers who've heard of DTV and HDTV and would like to buy one continue to experience sticker shock. Another reason why unit sales of DTVs have not been more robust is that there are shortages of set-top boxes.
But price, for once, is not the issue here. Standards, or lack of same, are. Sony said it balked because it had problems with its chipset and software integration and, more importantly for all concerned, a still incomplete standard for digital copy-protection encryption. It's my opinion that Sony would have had a problem shipping those sets even if their software integration problems were solved. It all comes down to the fact that a complete standard for digital TV should have been set prior to the first set ever being sold at retail.
When you talk privately to manufacturers or retailers about the DTV stalemate, invariably someone says, "We still don't have a standard!" And we really don't. If we don't have an airtight, pristine standard to record all of those wonderful HDTV images that we will be seeing on our sets, what's the point?
As for Sony's decision, some might insinuate ulterior motives. However their executives are on the record saying that "revisiting" an established standard would be "terrible." Sony's sets would have been among the first to feature IEEE 1394 digital interfaces with 5C content protection. With its strong market share in the worldwide color TV business, Sony, like few others, could have used the rollout of the new line to force the issue.
But why should Sony take that risk? It can fall back on the strength of the FD Trinitron Wega line. In his recent press briefing Sony Electronics president Fujio Nishida said that Wega has 30 percent of the total U.S. TV business in units and more than 50 percent in revenue. He also claimed that Wega increased the average retail price of a TV by 5 percent -- the first time in history. And don't forget that Sony still has a 34-inch direct-view HDTV and a 65-inch rear-screen projection HDTV.
On the standards-setting front, battles continue between the usual suspects: consumer electronics manufacturers, Hollywood, cable TV and broadcasters. (In fact, some members of the latter group continue to drag their heels on upgrading their equipment to high-definition systems while challenging the standards already in place.) Last year was supposed to be "the year of HDTV." Then it was pushed to this year; now it is going to be 2001 or beyond.
The FCC must tell Sinclair Broadcasting, along with ABC and NBC, who last week voiced their opposition to the current standard -- deal with the existing rules of engagement. As TWICE has said before, the time for debate is over. If all the parties with their various vested interests are allowed to continuously tweak the ATSC standard, it won't be until 2006 (the year the FCC has mandated that all conventional TV broadcasts must cease in favor of DTV) that the first substantial number of sets will be sold.
Editorial Notes
Two changes to report in TWICE this week. The first is a new department called By The Numbers. From now on, that's the department in every print issue of TWICE where you will see our Video Industry Sales Scorecard and other key industry statistical reports. This week's coverage includes the AHAM major appliance shipments report for May and the Consumer Electronics Association audio sales report for April.
And also this week, we have the TWICE Personal Computer Retail Registry. For the first time we are ranking 100 retailers. Included on the list for the first time are a good number of e-tailers, a retail channel of tremendous importance to the industry. Kudos go to senior editor Doug Olenick and the Cahners Research Team based in North Carolina, under the direction of Kay Anderson, for the thoroughness of the report.
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