Hdtv Dvd

Sales of digital TVs are heating up even as the economy continues to cool. And while it's hardly safe to say the units are flying off store shelves, the shift toward digital sets and away from analog is definitely on.

"More than 60% of our business [at this store] is digital," said Neil Taylor, manager of a Tweeter store in Braintree, Mass., an upscale suburb of Boston. Taylor was careful to point out the numbers are not indicative of the entire chain. They do, however, reflect changing consumer purchasing patterns regarding this growing category.

"As far as the Consumer Electronics Association (CEA) is concerned, HDTV has been an unqualified success," said Todd Thibodeaux, research director for the association. "No other category has generated $5 billion in sales in its first three years on the market."

This may be due, in part, to the high price tags HDTV originally carried. Averaging close to $10,000 at its introduction, prices have steadily dropped in the past three years; by this holiday season, units can be had for a relatively modest :premium over similarly sized analog units.

According to RCA spokesman David Arland, HDTV sales have doubled year over year even as prices have come down. Going into the fourth quarter, consumers can now purchase an RCA 38-in. wide-screen direct view HDTV for $2,500, down from $3,500 a year ago. A 60-in, projection unit, which once sold for $8,000, is now $3,999. "It's the one shining light in the industry," he said.

Although falling prices have had a lot to do with the rise in sales, another technology might have more to do with it. The rapid acceptance of DVD has sent consumers in search of better modes on which to view the discs. With on-air content limited and growing more slowly than anticipated, consumers are buying digital sets for the better picture and sound it affords recorded DVD entertainment.

Beyond DVD and a handful of satellite and network TV shows, there is little content to drive adoption rates. More than two-thirds of Americans are cable users, points out Arland, a fact that limits the audience for digital TV buyers simply based on distribution. Nearly everyone involved in this technology's rollout agrees: Until the cable industry agrees on a standard for signal distribution and increases the content being broadcast in high-definition (HD), penetration levels will remain negligible.

Because content providers are lagging in programming, the burden of marketing HDTV has fallen to manufacturers and retailers. According to Thibodeaux, approximately 50% of consumers say they became aware of digital TV after seeing it in a store, either specialty or mass merchant.

Displays have been much improved since, the technology's introduction. At that time, many retailers had little more than a single unit typically displayed next to an analog model with prerecorded content to show the difference between the two.

Today, digital sets comprise a large portion of most store displays, and specialty retailers receive live digital signals via a satellite dish. At a recently remodeled Circuit City store in Chicago, company spokesman Bill Cimino took care to point out new displays showcasing HDTV units with both broadcast signals and DVD images. Sales associates, said Cimino, are taking care to show the difference between the two pictures to ensure consumers know just what kind of picture quality they'll find in their own homes.

"It's important to really explain the capabilities as well as the limitations," agreed Tim Alessi, director of TV marketing at Sony. "Good retailers are using an HD source or Progressive Scan DVD," a format specially designed to work with digital TV to maximize picture quality. "Training, sales material and merchandising all kind of go hand in hand to tell the whole story," he said.

But for many consumers, this difference is enough to qualify a step up to digital TV. "A lot of people realize within two seconds that HD is both visual and audio," said Tweeter's Taylor. "Most are open to doing it right." This means upgrading audio and home theater systems, as well. Attachment rates of audio systems at Taylor's store run between 40% to 50%, but this number is difficult to quantify as many consumers make additional purchases up to several months later, he said.

The majority of sets now being sold do not have integrated digital receivers and require the additional purchase of a set-top box to receive them. Satellite systems with integrated receivers are widely available, but manufacturers again point to the cable industry as a roadblock to HDTV's success. Given current events, Congress clearly has more pressing matters to attend to besides pressuring the cable industry to get on board with digital programming. Still, manufacturers and retailers are hopeful the issue will be resolved soon. Said RCA's Arland, "Momentum is building, prices are dropping, but we could still use more coal to stoke this fire.

COPYRIGHT 2001 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2001 Gale Group

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