CES 2009: Retail Reaction Mixed To DTV Delay

By Alan Wolf and Steve Smith -- TWICE, January 10, 2009

www.twice.com/article/CA6627832.htmlLAS VEGAS — The proposed extension of the digital TV transition, as proposed by the incoming Barack Obama administration, garnered mixed reactions among retailers attending International CES, here.

Some merchants queried by TWICE feared that prolonging the changeover past the current Feb. 17 deadline would create consumer confusion. Several welcomed the delay as an opportunity to move additional converter boxes and HDTVs. Others said demand for flat panel would remain strong regardless of when the digital switch is thrown.

But all agreed with the Consumer Electronics Association that extending the cutoff is wholly unnecessary, especially given the extensive educational efforts long mounted by retailers and broadcasters.

“Confusion is bad, and this will confuse people,” said Gary Yacoubian, president/COO of MyerEmco Audio Video and newly seated CEA chairman. “The last thing you want to do in a recession is to confuse people. I can’t think of a positive aspect to it.”

Henry Chiarelli, president of DBL Distributing, agreed. “It’s a mistake to extend this another three or four months,” he said. “Everyone’s prepared, the consumer is well informed, and we just need to do it.”

Chirarelli suggested using this weekend’s planned changeover in Hawaii as a litmus test of the model, and to proceed with the national transition on Feb. 17 should the switch at the island state go smoothly.

Jay Buchanan, general merchandise manager and electronics director for Nebraska Furniture Mart, agreed with CEA’s position that the public is well-aware of the changeover, that converter boxes are plentiful, and that any delay will add to consumer confusion. “Gary [Shapiro, CEA’s president/CEO] was well-spoken on that point,” Buchanan said.

Phil Schoonover, former chairman/CEO of Circuit City, said, “It’s important to stay on target with the transition because digital TV and digital services provide Americans with educational opportunities and entertainment. We need some fun when times are tough and the economy is bad. I can’t for the life of me think why it’s in anybody’s best interest to delay this.”

Bjorn Dybdahl, principal of Bjorn’s Audio Video, commented: “It is a mistake to switch the DTV deadline at this point.”

But Jeannette Howe, executive director of Specialty Electronics Nationwide (SEN), the 500-dealer division of the Nationwide Marketing Group, saw both sides of the argument. On one hand, preliminary tests in several markets including Wilmington, Del., went “reasonably well”; the public is already well-informed about the cutoff; and the industry is reluctant to allocate further funds for consumer education. “Sooner or later it does have to get turned off,” she said.

However, Howe was troubled by the budget shortfall in the government’s converter box coupon program, and the impact it may have on low-income families. “I wouldn’t want to see financially strapped folks lose their TV reception on Feb. 17,” she said.

Eddie Maloney, president of Cowboy Maloney’s Electric City, acknowledged, “Many of our customers who are affected probably don’t know about the Feb. 17 deadline. But no matter what date you pick, some will not be prepared. As far we are concerned,” he said, “we are comfortable with keeping the deadline.”

Indeed, many dealers believe a delay will have few negative repercussions, and could actually help boost sales.

“If it is delayed it could probably help,” said Fry’s Electronics president Randy Fry. “It might be good for business.”

Tom Galanis, operations VP at Sixth Avenue Electronics, concurred. “I think the delay is a good thing. When you prolong the deadline, you get a little more play out of it and extend the window of opportunity [to sell more HDTVs]. Once you throw the digital switch it’s over. Either way, only a small percentage of consumers will be affected by the transition.”

According to Noah Herschman, home and mobile electronics director for Amazon.com, “There are a lot of reasons to buy a great-looking, high-tech, flat-panel TV independent of the digital broadcasting transition. People will buy HDTVs before, during and after the changeover.”

 Regardless of the outcome, the issue was clearly top of mind for the industry. During his opening address at the Leaders In Technology dinner Friday night, CEA’s Shapiro joked that this is the year of the “DTV transition … or not,” and later deadpanned, “You can tell my remarks were written a few days ago.” After playing a video of the development of TV from 1939 through the introduction of DTV, he quipped, “And we will probably be showing that video at next year's show.”