Santa probably should have included tech support with those TVs he dumped under the tree this week.
U.S. consumers were high on high-def this holiday season, purchasing digital TVs (particularly plasma and LCD models) in record numbers. But that doesn’t mean they understand how those pricy sets work.
“People know what ‘digital’ means, but they’re being asked to remember all these obscure terms,” says Matt Swanston, director of business analysis at the Consumer Electronics Assn. “They could learn so much more about HDTV.”
Like how to actually watch HDTV on those HD sets. It’s not as easy as you’d think.
Many owners don’t realize that they need to erect an antenna — or subscribe to HD service from their cable/satellite provider — in order to pick up high-def signals.
Otherwise, they’re still watching a regular picture on their $2,000 TV. And probably thinking to themselves, “Huh? The screen looked so much better in the store.”
“People understand why they want an HD or digital set, (but) relatively few understand everything that needs to happen from the source to their set,” says Swanston, who notes that consumers are used to bringing home new electronics devices and simply plugging them in.
“Unlike the cell phone or DVD player, they tend to need more,” he says. “Your CD player had everything on board. But a high-def display is dependent on external sources. And that’s where consumer understanding drops off.”
More of that confusion starts Dec. 26, as the dramatic drop in price this season means a huge jump in household penetration for HD and digital sets. The average digital TV set now costs just over $1,043 — the lowest price yet — and will dip to $800 next year, the CEA reports.
This summer the CEA estimated that the industry would end 2006 by selling 19.7 million digital TVs to dealers (worth $20.5 billion), up from 11.4 million in 2005. But Swanston thinks the org underestimated the growth this holiday season and that the number may wind up much higher.
“The prices can’t be beat,” he says. “It sure seems (like a landmark year), going from recent seasons where we had shortages of sets, and prices were higher, to now, with Wal-Mart declaring early that they’ll put downward price pressure on the sector.”
Price wars have taken a toll for electronics sellers, as Circuit City posted an unexpected third-quarter loss one week after its larger rival Best Buy also reported weaker-than-expected third-quarter results.
Meanwhile, retail has a mixed record when it comes to educating consumers.
“There’s a lot of room for misinterpretation and misunderstanding when dealing one-on-one with consumers and sales people,” Swanston says.
That’s especially true with the 2009 analog cutoff. On that date, broadcasters will shut off their analog signals and continue broadcasting only in digital. But contrary to popular belief, the switchover won’t make your existing analog TV set obsolete — and it doesn’t even mean that TV will suddenly go all-digital, all-the-time.
The cutoff will mostly affect just the 10%-15% of the population that still gets its signals over-the-air, rather than via cable or satellite.
“They’re the target that we have to make sure understands what’s going on and why,” Swanston says.
The massive amount of attention devoted to the switchover will probably force some stragglers to finally move to a digital set.
But right now, beyond the dropping price of digital TVs, it’s the continuously growing availability of programming in high definition that’s fueling a surge in set purchases.
Not only is most of primetime now broadcasting in high-def, but the nets are looking to round out coverage in other dayparts — particularly sports. The nets early on went high-def with football, but lagged behind in other sports. CBS, for one, is looking to change that this year, adding high-def coverage of events including golf.
Another key selling point: Once you go high-def, it’s hard to even watch standard definition anymore.
“Once they’ve seen it a certain amount, they’re spoiled,” Swanston says. “There are folks here who refuse to watch anything in standard definition anymore.”