To consumer electronics retailers, the digital television (DTV) glass is either half empty or half full, depending on their distribution channel and whether they see growing sales of HDTV monitors but trickling sales of fully integrated HDTV sets and set-top decoders as the mark of a successful transition.
A number of consumer electronics specialty retailers say they continue to enjoy a windfall from the popularity of higher-end high- and multi-scan digital television monitors. But the customer is still very much an early adopter, and many of the nation's higher volume retail accounts-especially mass merchants-have yet to begin selling HDTV sets and monitors or digital enhanced-definition television (EDTV) products in a meaningful way.
In a familiar pattern to those who have not pushed digital television products to date, the launch of the new digital television system is caught in a chicken-and-egg conundrum. A majority of broadcasters are refusing to step up transmission of HDTV programs because they say there are not enough DTV tuners in the marketplace to receive them.
Manufacturers in some cases are cutting back models of fully integrated HDTV receiver sets or DTV set-top tuner/decoder boxes, fearing they could be rendered useless or inadequate if ongoing inter-industry standards debates result in alterations to the FCC-sanctioned Advanced Television Standard Committee (ATSC) DTV broadcasting system.
This market uncertainty has resulted in shortages of DTV products to sell (particularly any form of set-top tuner), added confusion for salespeople and consumers, and necessitated a temporary sales strategy promoting HDTV monitors that improve standard-format programming to the exclusion of digital receivers.
"Overall, the digital television transition is still a slow go at retail, except as a percentage of rear-projection television sales," said NPD Intelect senior analyst Tom Edwards, who tracks DTV sell-through sales for the market research firm. "Digital-ready and integrated HDTV sets [rear projection] are running just over 20 percent of the mix. The limiting factor is still a lack of programming availability."
The good news, he said, is that the percentage of DTV sales in electronic/ appliance chains vs. high-end specialty stores and custom installers is growing every month, and some mass merchants are starting to appear on the radar screen.
Observers say high-traffic retail accounts had trouble early on because they are more focused on high-turning SKUs. Many of these dealers put off digital television promotion because the average sale takes considerably more time to explain than heavily price-promoted analog products.
Observers note that sales staff in some higher-volume retail chains, particularly in outlets that lack off-air DTV broadcasts, have steered customers toward analog products and away from HDTVs.
Although the average tickets and commissions are higher for digital sets, some salespeople in higher-traffic stores recognize that comparable analog set sales are easier to close.
"Where DTV is selling is in the audio/video specialty stores vs. the mass merchants, which do next to nothing," said Edwards. "The big chains like Best Buy and Circuit City are selling some, but specialty stores are doing 40 to 50 percent of the rear-projection DTV monitor business, where they would normally do between 10 to 15 percent."
Also limiting sales of DTV receivers and monitors is the absence of a quality HDTV demonstration in many of the larger chains' outlets. Mitsubishi, Samsung's Tantus Digital department and Sharp's SharpVision team have provided dealers with special hard-drive bitstream playback devices that present HDTV images for in-store demonstrations, but as one observer noted, some of the higher-volume stores don't carry those lines.
DirecTV offers HDTV sources through a readily available RCA set-top decoder, but some stores fail to keep the demos running at various times of the day when HDTV programming is unavailable.
Not surprisingly, where HDTV demonstrations are available and highlighted, the average rate of sale for HDTV and EDTV monitors is much higher.
Gary Yacoubian, Myer Emco VP, says his Washington, D.C.-area specialty audio/video chain is doing well with HDTV monitors due to educated sales techniques and compelling demonstrations.
"The sales staff of some of the higher-volume chains don't know the technology as well as they should," Yacoubian maintained. "They are more intimidated when trying to explain these new technologies to shoppers. The problem is that a lot of the bigger stores don't have the staff continuity and don't make the training investment to have the story told on the floor in any compelling fashion."
He said that nine out of 10 sales in Myer Emco stores of 50-inch-and-larger televisions are HDTV monitors. However, for every 10 HDTV monitors sold, the chain is selling only one set-top DTV tuner.
"We tell our HDTV customers not to buy the set-top box unless they plan to change it or upgrade it at some time in the near, near future," he explained. "We have always advocated taking a modular approach and getting an HDTV-capable display now, and adding the set-top box later, unless you understand you will likely be replacing or upgrading it soon."
Myer Emco doesn't dwell on issues surrounding standards controversies over the 8-VSB-modulation scheme in the DTV broadcasting standard or digital copy protection.
"We see those other issues being relevant to the delivery standard and not these people buying new television displays," said Yacoubian. "For those customers who want to know when they should start receiving HDTV broadcasts, we say that some of the boxes with DirecTV tuners in them coming out this fall will make good first set-top boxes. They aren't overly expensive, they should receive terrestrial digital broadcasts without much trouble, and they will receive both standard and HDTV satellite programming."
Although the Washington, D.C. market "supposedly has four digital TV stations broadcasting HDTV," he added, "I don't think people are buying these TVs today to watch DTV broadcasting."
Yacoubian credits two primary factors for Myer Emco's success with HDTV:
"The first is that customers want their next big-screen purchase to be somewhat future-proof, and they want the comfort of knowing this is going to work with these emerging technologies.
"The second is that conventional programming looks really good on these TVs. We will show the customer how great a satellite-TV or DVD picture looks on one of these sets. Then the product becomes even more compelling, because not only are they making a purchase that is a good investment for the future, but they can see they are going to enjoy the heck out of it today as well."
As with many higher-end electronics merchants and custom electronics installers, Myer Emco recognized the importance of the new digital television system early in the transition stage and views it "as a competitive opportunity" against larger more volume-oriented electronics chains, Yacoubian said.
Myer Emco makes a point to "premiere" breakthrough digital television products in its market. The arrival of an advanced TV display or set-top decoder is typically heralded with advertising spots on local TV and radio stations and inWashington Post display ads. The exposure has earned the chain a reputation among early adopters and technophiles as Washington's digital television destination point, Yacoubian said.
"We do a lot in advance of the customer walking in the door to get them interested in HDTV," he added. Among those efforts are regularly presented HDTV seminars held during the day in a Myer Emco store. The site of the seminar rotates throughout the nine-store chain, and each session is prominently advertised.
While the seminars generate a lot of interest in HDTV and in digital television products, the VP said, once in the store, Myer Emco has invested heavily in ensuring its sales associates are up-to-date on the new equipment, the availability of digital programming in the area, and issues surrounding the arrival of extensions to the DTV standard.
Con Maloney, founder of the Jackson, Miss.-based Cowboy Maloney's Electric City chain, which caters to a wider range of consumers, said HDTV sales have done pretty well "in stores where we are properly showing the consumer what is available to them."
Cognizant that the technology takes a qualified salesperson, the chain has designated special sales teams to handle DTV transactions whenever an interested customer comes in to see an HDTV demonstration.
"The key is understanding the products you are selling and properly motivating the consumer," Maloney said. "One of the things that has been a plus for us is setting the first payment off six to 12 months so the customer is assured that he has plenty of time to see that the product is working properly." Support after the sale is one of the key concerns of DTV customers, he added.
Cowboy Maloney stores are located in a market where only one public broadcasting DTV channel is available, so DTV business is based on selling sets that will upconvert conventional video to a higher-quality picture and receive DirecTV's two HDTV channels.
In describing the chain's strategy, Maloney said, "We do not go into any great detail today because of the lack of digital signals in our market. We will step it up a great deal once the broadcasters begin their digital broadcasts."
Grand Rapids, Mich.-based Classic Stereo and Video also lacks much in the way of terrestrial HDTV programming, "with the exception of Jay Leno, " but more than 80 percent of its projection TV business is HDTV monitors, reported Chris Davis, Audio/Video buyer for the chain. Of that, 16:9 widescreen models are "the driving trend."
Currently, the store does not carry fully integrated HDTV receiver sets and only sells a few set-top DTV decoders with either EchoStar or DirecTV capability. Davis said that Classic customers are impressed with the forward compatibility with DTV signals and services, adding that Mitsubishi's current promotional "promise" that its sets can be upgraded to any forthcoming standard for less than $1,000 has been a winning proposition.
Although he couldn't say how successful the digital transition has been so far, Davis feels optimistic "it will all work eventually."
"I think everyone right now is a little frustrated at how we seem to have taken three steps forward and then three steps back and then two steps forward," he said. "But on the bright side, if standards continue to change, that just means people will continue to buy new product."
Video Industry Sales Scorecard: Factory and distributor sales to dealers, as reported by the Consumer Electronics Association:
WEEK TO OCT. 20
WEEK TO OCT. 27
43 WEEKS 2000
43 WEEKS 1999
Total Direct View
Total Home VCR*