By Lisa Johnston
New products on display at the American International Toy Fair, held in N
HDTV will continue to be a shining light for CE retailers for the balance of the year. Besides hardware, retailers stand to reap the rewards of ancillary revenue streams from new video services and applications that will benefit from the salesmanship that CE dealers deliver best.
Direct broadcast satellites (DBS) and cable operators will be the key drivers of advanced services, although ongoing competitive skirmishes in the U.S. multichannel video (MCV) industries, compounded by the entry of the telcos, will present both opportunities and challenges in the near future.
In general, cable is the MCV leader, and will continue as such for the foreseeable future. With its 63 million-plus subscriber base, cable holds nearly a 35 million-subscriber lead over DBS and telcos combined.
Cable has undergone a remarkable face-lift during the last 12 months, with a fresh look and more features to offer consumers than before. This year, expect cable to continue to win over the majority of American viewers, but without the monopoly it once had. Cable's national roll-out of 2-way broadband Internet, telephone and audio-video "bundles" has been its silver bullet.
The Carmel Group estimates that through 2008, cable's video subscriber base will remain rather flat at around 63 million subscribers, while its average revenue per unit (ARPU) will increase markedly as more and more become subscribers of cable's bundle.
With its 28 million-plus subscribers, and a projected 31 million by 2008, DBS has been nothing less than a spectacular success story for the U.S. government, the MCV industry and hordes of satisfied subscribers. Expect more of the same from DBS in the coming year, with more HDTV content, advanced interactive TV (iTV) programs, DVRs and set-top box advancements, as well as top-notch customer service.
As for telcos, the Baby Bells are at least 18 months away from being a true competitive threat for the satellite industry, with an estimated 2 million subscribers tuning into video by telephone providers by 2008, according to The Carmel Group.
Still, telcos have an uphill battle ahead, as it took DBS more than 13 years to pull away less than 27 percent of the total multichannel video market. DBS did it with more channels, digital quality, lower capital costs and technological superiority over cable, which goes to show that even with a better product and service, it's tough in the MCV industry to switch and retain consumers.
The telcos will aggressively push and sell broadband. The xDSL service has been a boon for telcos, especially when it comes to generating a strong new revenue stream. It's the one area that continues to be a solid profit center compared with other services, such as the lagging telco voice businesses.
The telcos have hands-down beaten satellite when it comes to broadband performance and price. The longer the satellite industry stays behind on the field of broadband technology, the better the telcos' chances to capture new subscribers.
Additionally, services like broadband offer CE retailers additional opportunities to sell hardware and software built around this technology. A Cisco Linksys wireless router is one example of this kind of revenue stream. AT&T's Homezone technology represents another of possible CE sales opportunity.
Meanwhile, HDTV will only get better for consumers, with greater amounts of local and premium content and lower hardware prices (averaging an estimated $750 per unit).
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.