Although consumer sales of HDTV-ready monitors have done relatively well since the first products rolled out last summer, sales of the set-top decoders these sets require to actually view off-air digital broadcasts have been less than 10% of DTV product sales.
The good news is that this is what most manufacturers and retailers expected. The bad news is that some believe a rapid adoption of DTV set-top gear may still be two or more years away.
The main obstacle thus far has been the relative dearth of HDTV broadcasts in most markets, making it hard for consumers to justify paying the high price for set-top equipment. Additionally, the lack of industry standards for some critical elements such as a digital interface, two-way data-casting capability, and even a broadband analog output connection, has wary shoppers waiting for more complete solutions.
Unfortunately, the delivery of a compelling set-top solution may be what's needed to spark the burgeoning DTV marketplace.
"We've sold a couple of pieces of the Sharp and Mitsubishi DTV set-top boxes," said Franklin Karp, president of New York City-based Harvey Electronics. "Right now, the prices are a little high, and people are holding off because they don't see much HDTV programming available for them to watch. I believe that sales for this category will increase later in the year as broadcasters begin their expanded HDTV programming schedules."
Karp added that his chain has done well selling HDTV-ready monitors, and his sales staff has effectively stepped up customers looking at quality big-screen analog sets.
Tom Campbell, San Diego-based Dow Stereo & Video director, said that most customers who have purchased HDTV-ready sets from the chain "are waiting on the set-top box because broadcasters in our market are not scheduled to offer digital broadcasts until November."
Sony consumer television marketing director John Revie said, "We are now shipping our set-top box, and it is an important part of our strategy. For the customer who wants to access any special digital programming, they can do it with our set-top box and an analog set, such as one of our analog FD Trinitron Wega sets."
"But we expect most of our devices to be used by dealers," Revie continued. "It's an ideal device to do A/B comparisons showing the quality of our analog Wega models to an HDTV set. It's hard to tell the difference from a normal viewing distance."
A market for set-top decoders is gradually developing, said Revie, citing CEMA sales numbers that show sales to dealers of 13,176 HDTV units in 1998 and another 12,518 through the first quarter of 1999. Intelect ASW research data shows about 75% of those sales were HDTV-ready monitors that will require an external decoder to view digital broadcasts, he noted.
Intelect ASW said HDTV has been selling at an average rate of 2,600 units per month for 1999, and 15,604 DTV sets have sold through since November. In the January-April period, 9,748 of those sets have been HDTV-ready models, 787 were DTV-ready, and 132 were Samsung's fully integrated HDTV.
Josh Bernoff, Forrester Research television technology principal analyst, forecasts a limited market for set-top converters used primarily to view digital broadcasts on conventional analog sets.
Forrester's numbers call for 10,000 households using a DTV set-top for analog sets in 1999, 20,000 in 2000, and about 100,000 in 2001.
The following is a look at what some manufacturers are planning for the DTV set-top category this year:
Mitsubishi marketing director Bob Perry said sales for the HD-1080 set-top box his company introduced last year have been predictably slow, but the company expects momentum to pick up in the next 12 months behind the delivery of its next-generation device - which will be priced some $2,000 lower than the current model.
The unit will also offer connectivity with multiple brands of DTV-ready displays and even analog sets.
Perry explained that the first box was designed before many standards had been developed, so the company opted to deliver a proprietary interface for its own DTV-ready monitor line.
The new unit (model SR-HD500) will carry a $999 suggested retail price when it ships in November. It will receive terrestrial ATSC broadcasts, analog NTSC signals, and standard local-to-local and HD DirecTv services.
The new HD-capable set-top is a departure from the "proprietary" nature of Mitsubishi's current HD-1080 DTV set-top decoder, which carries a $3,500 suggested retail. That unit, which is being phased out, connected only to Mitsubishi "HDTV- upgradable" displays via a proprietary HD RGB via SVGA interface. That output is included on the new set-top boxes for purchasers of Mitsubishi's first-generation HDTV-upgradable sets.
Mitsubishi's second-generation HDTV-upgradable monitors and new set-top box also add HD component video (Y-Pr-Pb) connections - which means that customers buying Mitsubishi's new HD sets can connect DTV set-tops from a number of brands, some with just ATSC decoding and others adding DirecTv/HD support.
Like Panasonic, Mitsubishi will also add an IEEE-1394 interface on the new set-top box to connect with a future D-VHS recorder Mitsubishi plans to market.
The company's new price structure for HDTV-upgradable monitors and the new set-top reflect a considerable reduction over the first generation. Consumers will be able to buy a complete Mitsubishi HDTV system starting at $4,800 - including a 46" widescreen tabletop rear-projection set, plus the new set-top.
A setup system, including a 55" widescreen display and set-top, will sell for $5,500. The entry price for the 1080i Mitsubishi "system" last year was $7,800, including a 50" 4:3 set ($4,299) and set-top ($3,500).
Sharp Home Digital Division associate VP Bob Scaglione said his company has sold out of its first allotment of set-top decoders, and most sales went to broadcasters and DTV encoder manufacturers looking for digital receivers to monitor their systems.
Sharp expected a "slow rollout" for the set-top devices, Scaglione said, but dealers have made good use of the devices for in-store demonstrations in markets where DTV broadcasts are available.
The TU-DTV1000 outputs signals in 1080i, 480p or 480i formats, making it compatible with HDTV, SDTV and analog monitors. It currently carries a $1,995 suggested retail price.
Panasonic currently offers its TU-DST50 set-top decoder at a $1,699.95 suggested retail price. The box has the distinction of outputting ATSC signals in their native form, including 720p. It will also convert signals to 480i (for analog sets) and 480p for progressive scan SDTV monitors. Additionally, the set-top adds a proprietary version of the IEEE-1394 digital interface, designed to connect to Panasonic's forthcoming D-VHS VCR, which is still delayed due to copy-protection issues.
Of all the boxes on the market, this has been one of the most popular, due to the fact that Panasonic is delivering a variety of HDTV-ready monitors, including a 56" rear-projection set, and direct-view multimedia monitors in the 36" and a 32" screen sizes.
Additionally, custom installers have found the decoder attractive for those customers who have purchased multi-sync front projectors that are capable of displaying the 720p and 1080i HDTV formats.
Pioneer has found sales of its two set-top decoders to have been exceptionally strong, said home electronics senior marketing manager Matt Dever.
"The attachment rate [of set-tops to HDTV-ready monitor sales] is limited due to availability," Dever said. "The key reason [for the success rate] is the way that our retailers position the HD product. Set-top sales are strongest in areas where there are digital broadcasts. My estimate is that they would be almost one-for-one with an HD-ready set if we had the product available."
Pioneer currently sells two set-top models, each at a $2,500 suggested retail price.
The Pioneer SH-D500 will connect to an DTV-ready monitor via component video Y-Pb-Pr outputs. The Pioneer SH-D07 is considered a "tuner pack" designed expressly for the Elite PRO-700HD HDTV set. It connects via a dedicated set-back expansion slot.
Sony is shipping its DTR-HD1 ($1,599 suggested retail) set-top decoder that outputs signals in either the 480i or 1080i scan rates and connects to DTV-ready monitors via HD component video Y-Pb-Pr outputs.
Sony expects strong sales to dealers and through its custom installation division, which markets a line of HDTV-capable front projectors. But currently, the consumer television group does not offer a DTV-ready set. Both the HD Wega direct-view model and the 65" widescreen HDTV rear-projection set now on the market have their own ATSC decoding circuitry.
Additionally, the Sony device will connect to other manufacturers' DTV-ready displays via the HD component outputs.
"In the period of November through April, 75% of HDTV sets sold were HDTV-ready sets," said Revie. "Consumers are buying the future-ready set with the hope that at some point in time, when there is programming and when there is a reasonably priced set-top box, they'll buy something to plug in.
"But essentially, they are buying TVs for analog with a built-in migration patch to digital."
Thomson will market its RCA DTC-100 and ProScan PSHD105 DTV set-top boxes in August, each at a $649 suggested retail price. Both will receive off-air ATSC digital signals in addition to DirecTv standard, HD and local-into-local service.
Offering the lowest priced set-top box in the market, Thomson's new HDTV-ready rear-projection monitors and multimedia direct-view monitors will give consumers the chance to enjoy the HDTV experience for prices starting at $3,648, including the set-top decoder and a 52" 4:3 RCA HDTV-ready set ($2,999).
Thomson is offering consumers who buy a complete system a free 24" DirecTv dish, and potentially, free installation, depending on the dealer.
Toshiba will deliver in the fourth quarter a set-top box capable of receiving off-air ATSC digital signals, DirecTv standard, HD, and local-to-local broadcasts and NTSC analog signals. Priced at $999, the box is designed to offer a low-cost solution to HDTV adoption when combined with one of Toshiba's seven new HDTV-ready sets, including a 36" 4:3 direct-view model.
In fact, Toshiba has priced its sets so that the system purchase (a separate monitor and decoder) is less expensive than purchasing one of the company's two all-in-one integrated HDTV sets.
Scott Ramirez, Toshiba television product planning director, said his company is bullish on sales of the Toshiba set-top decoder during its first year in the market, forecasting sales of between 50,000 and 100,000 units.
Ramirez attributed that expectation to a greater availability of terrestrial HDTV programming in 2000 and the addition of DirecTv HD service, which will give purchasers virtually a 24-hour selection of HDTV content.
Zenith is selling its $5,995 suggested-retail-price IQADTV1W HDTV-decoder primarily as a professional product, targeted to broadcasters and digital system developers. It is also a tuning source for the company's PRO-900X 1080i-capable front projector.
Zenith plans to market two fully integrated HDTV sets later this year.