New-Set Sales Key for HDTV Adoption - Multichannel

New-Set Sales Key for HDTV Adoption

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A new, highly detailed research study from Leichtman Research Group shows how far HDTV has come in terms of America's consumer consciousness — and how far it needs to go before it becomes a mass medium.

In a survey of 1,250 homes where cable is available, there was both a high level of HDTV awareness and a crying need for further explanation of the service.

A sizable number of people — 13% — planned to buy a new TV set in the next year, presenting a great target opportunity. But only 3% expressed a strong willingness to buy HDTV.

Large numbers of people were unclear as to what equipment was necessary to receive HDTV signals, the survey found. At the same time, a sizable part of the population planned on buying a TV set in the next year, making them a good target for HDTV sales.

"We are very much in a nascent stage," said Bruce Leichtman, president of LRG Research Group. "There is a lot of education for it to be mainstream. However, the early adopter gets it and to some degree, that is all that matters.

"It doesn't have to be mainstream today. What's going to propel the market in the next two years is the price of the TV sets."

The average price of an HDTV set is $2,100, he said. "That's a lot of money," Leichtman said. "But as the price drops, it becomes a de facto choice. The key is getting HDTV in the hands of the right people, getting the programming to back it up and keeping that train rolling."

Stories about HD in the consumer press seem to have spread into the American consciousness. Some 73% of adults have heard of HDTV, the survey found. That number climbs to 83% for those earning more than $50,000 a year and 89% among those earning over $75,000 a year.

But DBS subscribers are more familiar with HDTV than cable subscribers. Some 9% of DBS subscribers said they had an HDTV set and another 13% professed they were "very familiar" with the format.

Only 6% of digital-cable subscribers in the survey said they had HDTV sets and only 8% said they were "very familiar" with the product.

Education will be critical to making HD a widespread reality. Some 18% of those surveyed said you can get HDTV without buying a new TV set, and another 42% didn't know, leaving only 40% of the population correct in their assumption that a new TV set was required to see HDTV.

Another 55% didn't know if their cable company was offering HDTV. Some 14% said no, while 30% said yes.

On the other hand, half of the DBS subscribers in the survey knew their operator carried HDTV.

The number of people in the market for a new TV set is a key selling opportunity for HDTV proponents. The survey found that 18% of consumers who spent $50 or more on cable service planned to buy a new TV set in the next year. That figure was 23% for DBS subscribers.

Of those who planned to buy a new TV set, 26% were willing to spend more than $1,000, which would put them in the market for an HD set. Another 16% said they'd spend $600 to $999, a level into which HDTV sets could fall by next year.

Given that background, 6% of all homes said they were "very interested" in buying HDTV in the next 12 months. Going a bit further, 29% of DBS home and 20% of cable homes expressed "some" interest in getting HDTV.

Some 3% of cable subscribers said they would be "very likely" to buy an HDTV set for over $1,000 in the next year, while some 6% of DBS subscribers expressed the same willingness to buy at the $1,000 price point.

Consumers also expressed some willingness to pay for HDTV content. Some 43% of those who have an HDTV or were likely to buy one soon said they would likely pay $9.95 for a package of high-definition programming, while another 36% said they were somewhat likely to pay for HD programming at that price.

"That's very good news for the operators, because there is money to be made here" Leichtman said. "Consumers say: I just spent $1,500 on a TV and I want to watch programming."

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