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DTV: They'd rather fight than switch

As broadcasters prepare to throw the switch, IDC says the market for digital TV will creep along until about 2007, when the segment could take off.

As broadcasters prepare to throw the switch on digital TV broadcasts early next month, International Data Corporation says the market for DTV will slog slowly through a period of consumer confusion and technical hang-ups--but finally boom in 2007 in an unexpected way.

With issues ranging from high costs of digital TV sets--$5,000 and up--a lack of high definition (HD) content, to technical issues such as whether or not cable operators will carry HDTV signals, the move to digital broadcasting will be a difficult one.

"The key reason [for the stalled market acceptance] is hardware costs, but limited coverage and content availability," will limit the appeal of digital television initially, said Kevin Hause, a senior analyst with IDC. Indeed, true HDTV broadcasts will be few and far between for the first two years or so. A limited selection of network programs, such as NBC's Tonight Show, and a smattering a sports programs will be the only true HDTV broadcasts.

Whatever the obstacles, broadcasters will boldly begin broadcasting at 41 stations from a wide range of U.S. markets starting November 1.

Sorting out the digital TV offerings
•  HDTV: high definition television is a subset of digital television formats offering over 1,000 lines of resolution, measured vertically. All HDTVs are capable of displaying material in wide screen or "letterbox" format.

•  SDTV: standard definition television offers essentially the same or slightly improved picture resolution as today's TV, but the picture quality is better because digital transmission eliminates snow and ghosts. Doesn't offer wide screen viewing.

•  Converter boxes: Most HDTVs are initially going to ship with separate set-tops that receive and decode HDTV signals. Set-tops for displaying signals on regular and SDTVs will account for the majority of hardware shipments in the coming years, IDC said.


Source: CNET research, IDC

"Next week...most broadcasts will be [traditional low resolution] content that is 'upconverted' to the high definition digital formats," said Hause, but the resulting image will fall short of a true high definition image. Eyeing this nascent market for upconverted images, Mitsubishi yesterday announced that it is shipping an HDTV.

True HDTV pictures have to be filmed with high resolution cameras in addition to being sent over the airwaves in its original, digital state. It will takes years to get these high-definition cameras into the hands of the hundreds of camera people out in the field, according to Peg Murphy, an executive at NBC Interactive, speaking at a recent forum in Silicon Valley.

The good news for consumers is that broadcasters will expand their DTV content offerings by 2004, and "in that timeframe the planets start to align in terms of consumer momentum, awareness and purchases," Hause predicted.

By 2007, IDC is estimating that 138 million HDTV sets and "converter boxes"--devices that can take a digital signal and send out images to either a digital TV or traditional "analog" TV--will be sold.

With digital technology, broadcasters can offer a high-definition digital TV signal with significantly greater picture clarity and sound quality than traditional TVs allow.

Relatively few people will wind up enjoying HDTV "in all its glory," the report said, but there are still significant advantages that will drive interest in the technology.

So-called "SDTVs," or standard definition digital televisions that don't display content in the wide-screen format and display lower resolution pictures than their costlier HDTV cousins, will increase in popularity because they still offer greater resolution than today's TVs. They will also be affordable enough to become a replacement for a consumer's aging TV set.

More popular still will be converter boxes that translate the digital signal and display it on a regular TV, in a fashion similar to how satellite programming services such as DirecTV work.

"This is probably going to be the most economical solution for many people," according to Hause. "They can take advantage of digital signal without spending money to replace that TV," he notes, because an over-the-air signal transmitted digitally will offer better picture fidelity than an analog signal. In fact, many cable operators are already offering similar benefits by sending a digital signal through their coaxial cable wires into homes with special set-top receivers.

In the future, Hause said, more of the receivers shipped by cable companies will be able to decode the new digital TV formats and display those on regular TVs, accounting for a large portion of the predicted growth in the market.

"It's a guard against obsolescence until the market settles on what signals are being provided," Hause said. There are 18 different ways a signal can be sent to a digital TV receiver.

Broadcasters are saying that 41 stations from a wide range of U.S. markets are set to begin broadcasts in November. Affiliates of the four networks in the 10 largest markets are required to begin their digital broadcasts by May 1, 1999, and in the top 30 markets by November 1999, as mandated by the government.

But a government mandate alone is not going to be sufficient to smooth out the transition to digital television. Digital TVs sold today come with a separate set-top receiver that can cost between $1,000 and $3,000 that can interpret and display all 18 formats. The cost of the TV and the receiver is $5,000 and up, a factor which is going to severely inhibit the growth of the market to around 13 million units by 2002, Hause notes. This will only be overcome when more digital programming becomes available.

Currently, broadcasters are banking on high definition signals-those with line resolution of 720 or higher-to drive interest in digital television. But by 2007, more broadcasters will have firmed up plans for sending out content in lower resolution SDTV formats, sometimes even sending multiple channels in the place of one HDTV signal.