Consumers eye low digital costs

New networks, HDTV set up Black Friday

With this week’s annual rite of “Black Friday” — the day after Thanksgiving, when big sales supposedly push the nation’s retailers into profitability for the year — prices on high-definition and digital TVs are set to once again plummet.

That, of course, will likely lead to another record year of HDTV and DTV sales. By the end of 2007, the Consumer Electronics Assn. forecasts that digital TV sets will be found in more than half of the nation’s households for the first time.

That’s a tremendous leap vs. the end of 2006, when 26% of the country owned a DTV set.

“We’re already hearing that digital TVs are once again the buzz item for Black Friday,” CEA spokeswoman Megan Pollock says. “It’s one of the hot-button items that are driving people to stores at 6 a.m.”

One website that claims to have scored leaked copies of Black Friday circulars from major retailer says Best Buy plans to sell a 42” plasma HDTV from Panasonic for $899, while Circuit City supposedly has a 42” LCD HDTV from Sharp that will go on sale for $799.

Most DTVs are sold in the fourth quarter, the CEA says. By the end of 2007, 85.2 million digital TVs will have been sold since sets first hit the market in 1998; 60.6 million of those sold are high-definition.

Potentially fueling some HDTV sales this winter: an explosion in new high-definition cable channels have come on line in the past few months, including high-def versions of FX, USA, Bravo, CNN, TBS and HGTV. Additionally, several networks have bowed in recent weeks directly into the HD landscape, including MGM and Smithsonian Channel services.

Satellite providers DirecTV and EchoStar have taken advantage of transponder space to load up on the new channels; DirecTV in particular has made the promise of “up to 100 channels” in high-def a cornerstone of its marketing campaign.

Whether that translates to HDTV set sales is less certain; the CEA says it doesn’t play as big of a role as one might expect.

Biggest factor driving digital set sales isn’t the rise in HD programming options, the org says. Instead, it’s DVDs.

Indeed, according to the CEA, consumers most often tell retailers that they’re purchasing a digital or high-definition television set in order to watch their DVDs more clearly. The sets do provide a sharper picture — but those images aren’t in high-definition.

Interestingly, watching high-definition telecasts doesn’t rate as high, and despite all those new HD channels, Pollock says it doesn’t push the sales needle the way other things do.

Speaking of DVD, the new high-def BluRay and HD-DVD formats also haven’t made an impact on set sales yet.

“But over the next couple of years, you may start to see that,” Pollock says.

Also not making a major impact in digital TV set sales: the government-mandated transition of broadcast signals from analog to digital.

Nonetheless, the drop in prices comes as the switchover looms, just a little more than a year from now.

According to the CEA, household penetration of digital TV will hit 67% by the end of next year, when analog broadcast signals are shut down.

That doesn’t mean the rest of TV owners will be affected, however; cable and satellite users won’t see a disruption in service, even if they only own analog TVs. And a percentage of viewers who only watch over-the-air TV may purchase or already own a digital set.

For the remaining few, converter boxes (around $60 a pop) are available; and starting in January, consumers can apply for two $40 rebates to be used toward the purchase of one. Congress has allocated $990 million to the program.

Once the rebate system begins, the CEA expects to see an increase in awareness over the digital transition — which could also impact set sales.

“While the converter box impacts a small percentage of consumers, as the message comes out that will be huge,” Pollock says.

As for retailers, Pollock says the org believes the information coming from sales associates about digital TV, as well as the digital transition, is more accurate.

“We’ve worked with retailers for years on some of these issues,” she says. “More and more retailers are engaged in this issue. They realize it bodes well for them to educate their customers. And that education will spike again as retailers get converter boxes in their stores.”

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