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Shapiro To DTV Summit: The Future Is Here

4/05/2004 02:00:00 AM Eastern

"The future has arrived" for digital television (DTV), declared CEA president Gary Shapiro in kicking off the ninth annual DTV Summit here by announcing more than 9 million DTV products are now seated in U.S. homes.

Consumer enthusiasm for digital television products is so strong that the CEA has upwardly revised its sales projections for the next several years, Shapiro announced.

"We now actually project that 5.7 million DTV units will be sold this year, 9.4 million in 2005 [1.4 million units higher than last forecast], 15.6 million in 2006 [4 million units higher] and 23 million in 2007 [7 million units higher]. And this is still for a fairly expensive product," Shapiro reported.

While the growth rate exceeds precedents set by other technologies, it will not reach the 85 percent penetration rate required to end analog TV broadcasting by the Federal Communications Commission's (FCC) Dec. 31, 2006 deadline. By 2007 the total installed base of DTV sets and monitors will reach about 62 million units, penetrating roughly 53 percent of U.S. homes, according to CEA market research director Sean Wargo.

In addition, Wargo said only about 33 percent of U.S. homes will be actually tuning and displaying DTV signals by the end of 2007. That is up from 2.3 percent of households at the end of 2003.

"That is not quite the 85 percent [needed for the end of analog broadcasting], but this is national and it is really only HDTV, which is where the rubber meets the road in the transition," Wargo said.

The numbers were a fairly clear indication that the government's current timeline will have to be adjusted by Congress or the FCC shortly.

The FCC's Media Bureau recently proposed counting cable and satellite subscribers as part of the 85 percent of the population capable of receiving DTV. But FCC chairman Michael Powell, who attended a portion of the Summit ceremonies, did not announce a decision to commit to that plan.

Still, Shapiro said the transition to digital TV is coming along at twice the speed of color TV in the 1950s and 1960s. He pointed out that the CE industry reached the 1 million-unit DTV milestone in five years — a feat that took 10 years for color television to accomplish.

Wargo added that the DTV adoption rate is also running roughly twice as fast as the adoption of cable TV.

The key driver in DTV's success has been high-definition television (HDTV), which accounted for 87 percent of the DTV products sold to date, according to CEA.

Shapiro added that the expansion of HDTV programming has directly led to the increase in sales of HDTV products.

"Each week, cable provides more than 700 hours of HDTV programming, and you are seeing increases as well in satellite and over-the-air broadcasts," he said.

Retailers have also contributed significantly to the uptick in DTV enthusiasm, Shapiro said.

According to Shapiro, hurdles that still need to be cleared to continue the success of the DTV transition include the following:

  • All broadcasters must be required to deliver their DTV broadcasts in full transmission power. "Today, some two-thirds of broadcast stations transmit at low power levels," according to Shapiro.

  • Cable operators should be required to retransmit broadcast DTV signals in the same format in which they were delivered over the air. "HDTV signals should be delivered in HD, not a lower-quality format," Shapiro declared.

  • Consumers' fair-use rights of digital content must be protected, "keeping an equitable balance between the legitimate rights of copyright owners on the one hand and consumers' fair-use rights to record programming on the other," Shapiro said.

  • All parties involved in the digital television transition should use all the resources possible — "including the media you own yourself — to extol the benefits of high definition."

Regarding the latter, Shapiro announced that CEA has developed an Internet-based DTV Retail Training Program for people on retail sales floors.

The program is modeled after a wireless marketing tool CEA developed to help retailers market and sell cellular phones. The program offers a technology primer, correct uses of terms and a guide on how to correctly sell products so consumers understand what they are buying.

As for DTV revenue, Wargo reported that total cumulative DTV sales from inception through 2007 would account for $75 billion in factory dollar volume.

At the consumer level, consumers had invested over $20 billion in DTV products by the end of 2003, Wargo said.

Using time-adjusted figures, Wargo said DTV revenue in 2007 will more than double the $12.3 billion peak of analog color TV sales volume set in 1973.

Among the DTV display types growing in consumer demand are flat-panel models [LCD TV and plasma], which are slowly growing in acceptance and will eclipse CRT direct-view and projection TV (PTV) in dollar volume by the end of 2007.

Despite the trend, "we don't see tube-based sets going away anytime soon," Wargo said. "They are hanging around as the affordable alternative for the consumer. Projection TV will stay pretty much the same as a percentage of the market."

By 2007 flat-panel TV unit volume should pass 8 million, Wargo said. Digital micro display-based [DLP, LCD and LCoS] rear-projection products represent another up-and-coming segment. He said about 250,000 micro-display PTVs were sold in 2003, and that is expected to grow to about 2.7 million by 2007.

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