HDTV Present: a PPV Channel

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As the high-definition television market launch celebrates
its first birthday, the infant is still taking its first baby steps towards consumer
acceptance.

Recent programming initiatives by major broadcast networks,
including additional digital broadcasts of CBS primetime shows and high-definition Monday
Night Football NFL games on ABC have helped spark new interest, if not mass-market demand.

DirecTV Inc. last week announced that its second channel
dedicated to HDTV will launch today (Nov. 1). The nationwide direct-broadcast-satellite
service will devote the additional channel to pay-per-view movies selling for $4.99 each,
rather than the $2.99 it charges for an analog-format PPV movie.

Home Box Office's East Coast HDTV feed is DirecTV's first
HDTV channel. Both are broadcast from the 119 degrees west longitude orbital spectrum and
require receiving equipment separate from DirecTV's core system.

PPV movies to be aired on the new DirecTV channel within
the first three months include Forces of Nature from DreamWorks Pictures (starring Sandra
Bullock and Ben Affleck) and Austin Powers: The Spy Who Shagged Me from New Line Cinema
(starring Mike Myers and Heather Graham).

To date, dealers have sold about 66,000 digital
televisions, according to the Consumer Electronics Manufacturers Association. One industry
executive estimated consumer sales would total 80,000 by the end of the year.

Whether that's seen as a good first step or a sign of
market malady depends largely on perspective.

Recent consumer polls indicate that average TV owners have
little interest in paying $5,000 to $10,000 for a new TV set, and predict the transition
from an analog to a digital broadcast standard is doomed to fail.

But those close to the television industry aren't ready to
throw in the towel just yet.

"It's way too early to say it's never going to
happen," said DirecTV senior vice president of programming Stephanie Campbell.

Michael Petricone, director of technology policy for the
CEMA, said the methodology used in many of the recent consumer polls on digital television
is flawed, because the surveys are conducted by telephone and don't give people the chance
to experience HDTV first-hand.

"It's an inherently visual experience," he said.

With manufacturers now shipping additional new
digital-television models to stores, more consumers should start to notice the displays,
leading to greater visibility for the category.

"It's been a slow build-out for us," Best Buy
Stores senior buyer for digital television Allen McClard said. The chain just recently
began stocking all of its stores with three to six digital televisions.

McClard said greater consumer awareness, along with the
availability of more digital television models and increased HDTV content, has helped to
drive sales exponentially each month.

But not all early adopters are waiting for HDTV programming
before buying digital television sets. McClard said improvement in picture quality is
driving sales even in areas where local broadcasters haven't introduced HDTV signals.
High-definition sets have particular appeal for digital video-disc players, he added. MCN

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