As if sales growth for DTVs and flat-panel displays hasn’t been impressive enough, several factors are now combining to make this accelerate. According to a recent market report by iSuppli, DTV shipments will more than triple over the next three years, for a number of reasons. Consumer preferences for flat-panel TVs are increasing, as image quality for digital content is significantly improved and LCD panel prices continue to decline. In addition, consumer awareness of the DTV transition, up until now rather poor, should see a dramatic upswing.
On the other hand, reports from the National Retail Federation and TNS Retail Forward offer a different picture for the Holiday selling season. These reports see a weak housing market, credit crunch and a focus on low-to-middle income consumers as producing the smallest gain in spending in five years. This view is in-line with the thinking at Circuit City, but the downside looks even bleaker if the US economy does not stabilize.
Supporting a rosier outcome, an upcoming media blitz will increased public awareness of DTV, which should cause a spike in the purchase of sets this year and next, as more consumers learn of the DTV transition, and as many consumers feel the need to upgrade their sets. In addition, as analog broadcast end in 2009, consumer will need some sort of TV upgrade, be it a converter or a new TV. If broadcasters make enough of a pitch for free, over-the-air HDTV, it should result in new DTV buyers that had been postponing the decision until now.
Several factors should soon increase this consumer awareness. The National Association of Broadcasters (NAB) started its digital-TV-education public-service-announcement (PSA) campaign last week, releasing several of the PSAs to TV stations nationwide. NAB estimates that 60% of TV viewers with analog sets do not have any idea that, unless they have a converter box, their TVs won’t work after the 2009 switch. And among the balance that have heard of the upcoming change, most are somewhat misinformed. The broadcaster group is hoping that this campaign will change that.
On the government side, the Department of Commerce’s National Telecommunications Information Administration (NTIA) will hold a Digital Television Transition Public Meeting and Expo this week. "This meeting is one example of leaders in government, industry and advocacy groups working together to educate consumers on the transition to digital TV," said NTIA Chief Administrator John Kneuer. Also this week, the FCC will hold a Digital Television Consumer Education Workshop, providing an opportunity for interested parties to jointly discuss the upcoming transition and to develop coordinated consumer education activities.
Both broadcasting and cable groups will advise accessing several Internet sources for information, which describe options to continue receiving free, over-the-air broadcasting:
- Purchase a DTV converter box that will convert the digital signal into analog for an existing television set;
- Purchase a new television set with a built-in digital tuner; or
- Subscribe to cable, satellite or a telephone company television service provider.
By some estimates, about 20M homes will be "negatively affected" by the digital transition, and an even larger number of TVs could be affected, because of multiple sets in each home. These sets will require an upgrade to avoid being mothballed (or converted to another use, such as games or DVDs-only). While one can argue that pay services are more likely in a higher-affluence home, one can also argue that the number of sets per household is related to income.
With about 49% of U.S. households having a yearly income of more than $50,000, there could easily be at least 10M affected sets in the more affluent households. Add to that the total number of affected sets in all 110M households, and the number could be large, indeed. Certainly, some of these TV viewers will opt for converters, but isn’t it compelling to consider that many might go for a new DTV?