Boston -- Some 20 years after its introduction, high-definition television
may finally be poised to begin fulfilling some of its promise, industry
executives said during a Cable & Telecommunications Association for
Marketing CTAM Summit general session here Monday morning.
Speaking after the 'HDTV: The Consumer Challenge' session, Discovery
Communications Inc. cofounder John Hendricks predicted that Discovery HD Theater
-- which launched June 17 with 200 hours of HDTV library fare -- could break
even in four to six years.
That time frame depends on consumer penetration levels, subscriber fees,
attendant sponsorship revenue and expected reductions in HDTV-programming
Hendricks told the CTAM audience HD Theater's business plan is gauged on the
service -- currently melding enhanced programming from five of Discovery's
analog services -- operating within a 10 million HDTV-home universe.
From that group, Discovery HD hoped to nab 50 percent penetration as an a la
carte service, with a $4 monthly wholesale rate (distributors would get a 50
Subscriber fees would represent 80 percent of revenue, while sponsors --
through PBS-style opening and closing billboards and long-form intermission
messages -- would contribute the balance. Together, that would offset the $100
million annual programming budget.
Hendricks said the model's dynamics would change if HD Theater were packaged
with other HDTV-programming suppliers -- a sentiment that was shared by panelist
Mark Cuban, chairman and president of HDNet.
Cuban said HDNet -- available to DirecTV Inc. subscribers since last
September -- is expanding its service to three networks, which are being offered
to MSOs for $5.50 wholesale.
He believes an HDTV package of services could prove attractive to viewers at
a monthly price of between $9.95 and $16.
For its part, CTAM released study results indicating that 60 percent of
consumers are aware of HDTV on an unaided basis. But the survey also found that
57 percent of consumers were unaware that they needed special equipment to watch