HD TV sales up, driving subs to E* & D*

[Tom Bombadil]

Satellite services look to HDTV for a boost
Providers set to battle with cable for customers who buy the pricey sets

By YINKA ADEGOKE
Reuters News Service

NEW YORK - Cable and satellite television providers will fight for upscale subscribers on a new battlefront this holiday season: the local electronics shop.

Pricey flat-screen high-definition televisions are expected to be one of the hottest items in the United States this season, when an estimated $21 billion will be spent on consumer electronics products alone.

Cable and satellite companies regard the advanced functions of the new TVs, such on-demand interactive services, as essential to their efforts to drum up new revenue.

The more upscale customers interested in such services are also viewed as less likely to switch providers.

"There's a very strong correlation between higher-end customers and lower churn," said Jon Gieselman, senior vice president for advertising at DirecTV Group.

And because national retailers such as Best Buy and Circuit City display HDTVs using satellite service from DirecTV or EchoStar Communications Corp., analysts say that relationship alone could give satellite companies an edge over rival cable operators.

"If this is a flat-panel Christmas — and it looks like it's going to be one — every time you go into a store the salesperson is going to say: Have you thought about getting DirecTV or DISH?" said Todd Mitchell, an analyst at Kaufman Bros.

Pacific Media Associates forecasts that more than 3.2 million HDTV sets will be sold in the United States in the fourth quarter of 2006, more than twice the number sold a year ago. But when customers plug in their new high-tech TVs, they may not realize they need upgraded service to get the sharp pictures over a full screen that looked so good in the store.

There also is an incentive for retailers and HDTV makers to promote a service because it reduces the number of disappointed customers returning sets, analysts say.

According to a recent Leichtman Research survey, as many as one in six U.S. homes has at least one HDTV set. But nearly half of those do not receive HD signals through their provider.

Cable ready
But cable operators, who have attracted record numbers of new subscribers recently by combining telephone, Internet and television service, say the battle is far from over.

"There are a few times in a customer's life to consider who their video provider is — maybe when they move to a new home," said Page Thompson, senior vice president of video services at Comcast Corp., the largest U.S. cable company.

"For a customer right now, when they buy an HD set is a time when they make that evaluation."

With that in mind, Comcast and other cable operators are working more closely with local and national retailers to explain to consumers how to sign up for high-definition services.

Some of them are even offering free HD services plus extra features. Comcast provides more than 100 hours of HD on-demand programming, while New York-based Cablevision Systems Corp. advertises HD as "free" for its digital cable customers.

Yet DirecTV and EchoStar's DISH network see HD as important in the battle for subscribers because they cannot provide the same kind of Web and phone services cable operators offer.

DirecTV has long-standing ties with retailers, including Best Buy and Circuit City, and is now working with HDTV set makers such as Sony Corp. and Samsung Electronics Co. Ltd to explain the service to customers. But that is no easy task.

Phil Abram, Sony vice president of TV marketing in the United States, said making consumers aware they need an HD service is a major hurdle.

Abram said it's the one thing that is confusing customers most.

 

[Tom Bombadil]

And related information about HDTV sales. This is good news in that it will drive E*, D* and channel providers toward more HD.

HDTV sales headed for a breakout year
Sales up 30 percent from 2005, with deep price cuts ahead for the holidays.

By Anya Sostek
PITTSBURGH POST-GAZETTE
Thursday, November 23, 2006

Eric Carlisle is engaged to a woman whose birthday is within days of Valentine's Day. Rather than give her flowers, chocolates or jewelry, he surprised her this year with a 42-inch plasma high-definition television for their bedroom.

The gift was a hit, and two weeks ago, the 36-year-old invested in another HDTV, this one a 61-inch rear-projection model for their Coraopolis, Pa., living room.

"Our living room is so big that a small TV would just look like a family picture," said Carlisle, standing outside a Best Buy store. "This is the thing to do."

Across the country, consumers such as Carlisle are making 2006 a breakout year for high-definition televisions. Spurred by rapidly falling prices, this year's sales of HDTVs already have surpassed all of last year's by more than 30 percent, with the holiday season still to come.

"I was just looking at the numbers," said Matt Swanston, director of business analysis for the Consumer Electronics Association. "It's been incredible."

So far this year, wholesale prices on HDTVs have fallen 8 percent from last year, he said, averaging $1,400 compared with $1,526 a year ago. Retail prices on televisions between 40 and 45 inches have fallen even more, dropping between a quarter and a third in just the past six months, said Paul Gagnon, director of North American TV market research for Austin-based DisplaySearch.

TVs in that size range are now sold in both plasma and liquid crystal displays, causing manufacturers of each screen type to offer steep price cuts in the battle for dominance.

"There's a real rush to see who can take the majority of the market the quickest," Gagnon said.

The price on a 40-inch Sony LCD model, for example, has fallen 33 percent since it debuted in February, from about $3,000 to $2,000. The price of a Panasonic 42-inch plasma model, which has been slightly upgraded from year to year, dropped from $6,000 in the 2004 holiday season to $3,500 last December and to about $1,600 this year.

Of course, even with prices dropping, the biggest and highest-quality HDTVs don't come cheap. That 40-inch Samsung retails for about $2,300. The 61-inch rear projection model purchased by Carlisle, also a Samsung, retails for about $2,900.

Or there's the new model by Panasonic: a 103-inch behemoth that costs a cool $75,000.

Most Americans, though, are considerably more frugal. The top-selling HDTV size, said Gagnon, is 36 inches, and the cheapest fully equipped HDTVs can be had for about $550.

The popularity of HDTVs has also set up fierce competition between retailers, who have been prominently advertising the sets during televised sporting events and have featured HDTV price cuts among their "Black Friday" sales.

In Central Texas, Home Depot is advertising a 32-inch LCD HDTV for $478 through Sunday. Wal-Mart is selling the same size HDTV for $598 on its Web site. Office Depot is advertising a 42-inch plasma screen version for $799.

First introduced in 1998, HDTVs are now in about 30 percent of American homes, Swanston said.

Lower prices aren't the only lure. Viewers also are attracted by the variety of programs now available in high definition.

When they get into the stores, consumers are confronted with so many HDTV options that buying a computer seems simple by comparison. To help shoppers sort out types of screens, sizes and resolutions, Wal-Mart produced an instructional video that plays on a loop on in-store televisions.

And unlike the stereotype from years past, it isn't just the men who are tuning in.

"The flat panel has changed the battle of the sexes around television," said Brian Lucas, a spokesman for Best Buy Co. Inc., noting that some women now see them as wall art. "It used to be men trying to up-sell their wives, and now wives are up-selling their husbands."

Indeed, it was comments from his fiancee about wanting to hang a television on the wall that planted the seed for Carlisle to buy her an HDTV as a present.

Carlisle's microdisplay rear-projection model, however, cannot hang on the wall.

 

[Poke]

Well this should be really good news for Dish! Since they have more HD than anyone if folks are smart they will get on the Dish!