Half of US Homes Have DTVs

Are you a “glass is half full” or “half empty” type of person? This story may mean different things to you, depending on your perspective.

The Consumer Electronics Association – CEA — put out a release on Friday trumpeting the good news that more than 50% of U.S. households now have “digital televisions”. The group points to the “record pace” of adoption as an important part of the transition to digital broadcasts in 2009.

Okay, so much for the “half full” Polyannas. Let’s see how the Grinch might spin this one. A bit more than 50% of the US households now have televisions with digital tuners; what about the other half? Since only about 25% of the US households only get their programming over the air, three out of four homes probably don’t have any need for the digital tuner; they connect their TVs to cable or satellite service. I may be going out on a limb here, but somehow I expect that there’s a correlation between lower income levels and a household falling into that 25% who rely on the free over the air broadcasts. And it’s also probably a safe bet that a large portion of this 25% are among the nearly half of US households that don’t have TVs with digital tuners yet. So I expect that the “good news” from the CEA may not be quite as rosy as they suggest.

While I’m at it, note that the statistic is for “digital television”, and not HDTVs. Almost all HDTVs now have digital tuners, but certainly not all TVs with digital tuners are high definition. So don’t jump to the conclusion that half the country has HDTV. We’re not there yet.

Wireless Networked HDTVs

The Danish TV-maker Zepto has reportedly released a new line of LCD HDTVs that can connect wirelessly to Windows Media Center computers on a local network. The Helios LCD line includes a 720p 32″ model and a 1080p 40″ model. They are only available in Europe, with ticker-stopping stickers of more than $3,000 each.

For that price, you could buy a 1080p 42″ LCD HDTV and a Media Center PC and all the trimmings, but this isn’t about the money. It’s about connecting to sources other than the Big Three — over the air, cable, and satellite — to get content. You can access locally developed and stored content, such as your photos, digital music collection, or movies. You can also access content streamed over the Internet.

Is this a bellwether or a dead branch on the home technology tree? Only time will tell, but I believe that consumers want a greater variety of choices. And adding these features should cost less than a couple hundred dollars, so they shouldn’t have to pay a big premium to get them. Once they discover the breadth and depth of programming available on the Internet and the convenience of accessing locally stored content, I expect that wireless network connections will become standard features on most HDTVs.

More Talk about 32″ Plasma TVs

Concerns about short supplies of 32″ LCD panels for HDTVs continue to grow, and plasma panels are hoping for the opportunity to fill the gap with inexpensive plasma models. Original intended for the growing consumer markets in China and India, some brands including Proview are reportedly eying the U.S. market for low cost plasma sets.

This development is not surprising, but I fear that it will lead to a lot of disappointed consumers. 32″ is not large for a wide screen television in the first place. But one detail that is lost in many of these reports is that the 32″ LCD models are high definition, but the 32″ plasma models almost certainly will not be HDTVs. It is difficult and expensive to make high resolution plasma panels, and the costs and complications increase as the panels get smaller. As a result, the new plasma models are almost certain to be EDTV resolution: a wide version of the standard resolution. LG’s 32PC5RV that was recently released in Brazil has 852 by 480 pixel resolution.

I expect that a lot of buyers only will see “flat” and “plasma” and “TV” and not look any further. I suppose that since about half the people with HDTVs still don’t have any HDTV content to show on their sets, perhaps most of the people who buy these 32″ plasmas won’t notice that they aren’t getting an HDTV. But they are likely to be disappointed when they discover that they got a lot less than their neighbor’s truly HD 32″ LCD TV.

Gravity Exerts Control over LCD HDTV Production

This item starts with what has to be one of the strangest press releases ever published in all of 2007. On December 19, Matsushita – the parent mega-corporation of Panasonic — released the following statement, repeated here in its entirety:

The Company has not decided anything in regards to the alliance in LCD Panel Business with Hitachi, Ltd. and Canon Inc.

Maybe it’s like the old Sherlock Holmes story about the dog not barking, but this non-decision seemed a bit strange at the time. All became clear, however, as Matsushita, Hitachi, and Canon have now announced an alliance to cooperate in the production of LCD panels, large and small.

This is important news on a number of counts. First, it shows signs that the LCD HDTV market is continuing to consolidate, as economies of scale are the gravitational force that pulls these larger bodies together. Sony and Samsung have had a long-standing arrangement, and Sharp and Toshiba have agreed to pool their efforts. It makes sense that Matsushita, Hitachi, and Canon would join together to forge their own alliance.

This is also interesting for the individual players in the group. Matsushita — through Panasonic — is the world leader in plasma displays. This new arrangement helps the company hedge its bets; LCDs continue to take market share from plasma at almost all size ranges. Hitachi is hurting, and having a giant friend like Matsushita may offer some welcome protection in the display industry playground.

The competition in the flat panel HDTV market is getting hotter, and not everyone will make it. Choosing up sides and joining forces with some teammates could be an essential step for survival.

Happy Holidays!

My family celebrates Christmas, and that’s what I’ll be doing today. I will take this time to send out my best wishes to everyone who reads the HDTV Almanac, and hope that you enjoy a wonderful holiday season, whatever holiday holds special meaning for you.

I also want to thank you for your support, and that you’ll continue to help grow the Almanac readership. The increase has been swift and steady, and I am grateful for your part in that growth.

2008 promises to bring a number of interesting changes to the HDTV market, and you can count on the Almanac to help you make sense out of them as they come along. So I also send my wishes for a healthy and successful new year, filled with high definition.

Alfred

By the way, tune in to “Into Tomorrow” with Dave Graveline this weekend to hear my interview about HDTV.


The Sony RPTV Shoe Drops

Many were surprised last week by Sony’s announcement that the company will shut down production of its rear projection HDTV models, and sell out existing inventory. One reason that this was a surprise is that by some measures, Sony was in second place for this market segment. Why would the company abandon this market?

As I’ve said before, the rear projection HDTV market defies gravity. If you’re in the market for a 1080p display in the 50″ to 70″ size range, you can save thousands of dollars and get excellent image quality by choosing a rear projection model over an LCD or plasma flat panel. Yet studies repeatedly show that consumers will pay the extra money to get a flat panel, even though they are not likely to hang it on the wall.

So Sony’s departure leaves the game to Samsung, Mitsubishi, Panasonic, and a handful of smaller companies such as JVC. It’s finally time to get pessimistic about the future of rear projection. Thinner cases have not made a difference, solid state lighting sources have not made a difference, and tiny bezels have not made a difference. The last shot in the locker would appear to be the LaserTVs that we hope to see at CES 2008 in Las Vegas next month. If that doesn’t spark interest in rear projection, then I don’t think anything will. Apparently this is one type of water that we can lead the American consumer to, but they still won’t drink.

So watch for the closeout sales of the Sony SXRD (LCoS) models; these are some of the best HDTVs available, and you may find an opportunity to get a great bargain.

Thin is In

Okay, we’ve done flat. What next? According to Sharp, the next step will be thinner flat panel HDTVs. The company hopes to trim set thickness in half or so, to create a sexy, svelte display. The other part of the strategy is that these panels will be able to command a premimum in the marketplace, and stave off the fierce competition that keeps driving down prices 20% to 30% per year.

It’s a nice idea, but I’m not sure if it will fly. The problem is that as the market for HDTVs grow, the new buyers become more price sensitive. A thinner panel really doesn’t make much difference to most consumers. Yes, they may be lighter, but most people don’t hang their sets on the wall, and even if they do, the reduced weight isn’t going to make a difference. You spend most of your time looking at the front of the set, so the reduced thickness won’t be apparent from that angle.

One needs look no further than the automobile market of 20 years ago to find the formula for success in the HDTV market. Offer a product with all the features your customer might want included in the standard model. Create a quality product that will perform well with good reliability. And offer it a price that undercuts the premium products while delivering everything but the premium brand name. That’s how the Japanese automakers dealt a body blow to the entrenched Detroit car makers, and the same approach is working today for companies like Vizio, Olevia, and Westinghouse.

Gamers Get HDTV

A new survey by Nielsen shows that game console buyers are indeed buying HDTVs in order to get the maximum performance from their systems. According to the results, 71% of the PS3 owners have their consoles connected to an HDTV, while 66% of XBox 360 and 65% of Wii systems are hooked up to HDTVs.

It’s not surprising to me that the PS3 has a slight edge here. It’s a higher end system, and the only one that comes with a high definition DVD player built in (and it’s a Blu-ray, since it’s a Sony system). The margin is small, however, indicating that overall, video gamers apparently have access to the cash needed to get an HD display to go with their game systems.

High Def DVD for Your PC

Disc drive maker Addonics has announced its Zebra Blu-ray/HD DVD Player external drive. Not only will it read both high definition formats, it can also read and write to most DVD and CD media as well. The drive comes in two models. One version has both USB 2.0 and external SATA connectors, for a list price of $429. You can also get a version without the USB connection for $20 less.

This should be an appealing announcement for those who are planning to roll their own media center PCs, which at this point is probably the most practical and affordable way to get a digital video recorder for HDTV content. It’s still a bit more expensive than a stand-alone player, but if you’re interested in creating your own solution, this looks like an attractive building block.

FCC Gets Ready for DTV Converters

The first 100 retailers have been certified by the National Telecommunications and Information Administration (NTIA) in preparation for the federal discount program for converter boxes. These retailers represent about 15,000 individual outlets, which will be eligible to accept the $40 coupons for converter boxes. Some of the approved chains include Best Buy, Circuit City, K-Mart, Radio Shack, Sears, Target, and Wal-Mart.

These converter boxes will allow older televisions with only an analog tuner to receive the digital television broadcast signals when most stations stop analog broadcasts on February 17, 2009. Consumers will be able to apply for the $40 discount coupons starting in early 2008. You can get up to two coupons per household; there are no eligibility requirements. You will be able to request coupons between January 1 and March 31, 2008, and you’ll have 90 days to redeem the coupons. If the initial funding allocation is used up, then a second round of coupons will be issued, but only to households that only have over-the-air television service (in other words, no cable or satellite service). The details are available at http://www.ntia.doc.gov/dtvcoupon/index.html.

Most people don’t need the converter box at all. If you have purchased a television since March this year, it almost certainly has a digital tuner. If you have cable or satellite service, your television will continue to receive television programming exactly as it does now. Only if you get your programming with an antenna, free over the air, and you have an older television, will you need a converter. Note that the converter box will not make your old television an HDTV; it simply lets your set receive the digital broadcasts. If a show is broadcast in high definition, it will be scaled down to match your television’s resolution.