A new consumer study released by Cambridge, Mass.-based market analysis firm Forrester Research indicates the embryonic digital television system will ultimately fail if manufacturers and broadcasters don’t do more soon to promote the system to the public.
“DTV’s short-term prospects are limited by high prices and low awareness,” according to a Forrester announcement of the study. “Faced with a saturated market for TVs and lack of consumer pull, manufacturers and broadcasters will need to make a concerted effort to ensure DTV’s success.”
Last year, Forrester issued a controversial report based on industry surveys that said the high-definition television portion of the DTV system would eventually lose out to digital standard definition models. The Consumer Electronics Manufacturer’s Association (CEMA) criticized that study for failing to take consumer surveys into consideration.
Following the release, Ekaterina Walsh, Forrester technographics analyst, said that so far consumers don’t see an obvious need for the new television system and they “don’t understand why the product costs so much.”
Forrester said the findings were based on more than 17,000 consumer surveys and reflected the knowledge and attitudes of respondents toward the new digital system. The firm used the findings to develop an adoption quotient reflecting the rate of diffusion, size of initial target market, technology innovation and product characteristics.
“Out of 50 possible points, DTV scored just 15,” Forrester said. The study concludes that “poor promotional efforts and a lack of consumer awareness have hindered the acceptance of DTV,” and the technology “will not spread quickly into the U.S. marketplace.” The study apparently found more than 30% of consumers know nothing about DTV.
Michael Petricone, CEMA’s technical policy director, questioned the validity of the study’s conclusions.
“You can’t use a telephone survey to capture the high-definition TV experience,” Petricone stated. “In all of our consumer studies, we’ve found that overwhelmingly people who see it, want it.”
Other factors working against DTV adoption is the already high saturation level (99.4%) of televisions in the U.S. market, following sales of 22 million color television sets in 1998. Eighty-four percent of those were priced less than $700, Forrester said.
The report concludes that less than 21 million households will buy new sets over the next three years.
Using the adoption curve of color television, VCRs and CD players as a measuring stick, Forrester stated that acceptance of DTV “will sputter until prices fall to 5% of today’s household median disposable income — around $2,000” or what Forrester said is 60% below current first-generation product prices.
The study was conducted prior to recent manufacturers’ announcements of significantly lower prices for HDTV-capable products. Some sets will be available for as low as $3,000 later this year. Additionally, broadcasters plan to contribute significantly more programs in HDTV format beginning later this summer.