"Making Sense of Digital TV"
mediacentral.com
(Cable World Staff) While cable operators last week claimed digital TV penetration rates of 5-13% in communities where they've marketed the service, Hollywood studio executives began registering their displeasure with 12:1 compression ratios, saying they undermine picture quality. The quandary: Studio contracts with operators specify that the integrity of the picture must be maintained. If the studios enforce those contracts and force cable TV operators to drop compression ratios to 8:1, a marketing nightmare could ensue as operators are forced to reconfigure and re-price digital packages.
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Most operators said they're cautious about widespread deployment of digital services until the technology's bugs are worked out and as such have confined digital services to one or two test markets. However, Tele-Communications Inc., the nation's largest cable TV operator with some 14.4 million customers, has fully committed to digital service with a $10.95 tier it's rolling out across the U.S. Some sources have estimated that TCI has upwards of 100,000 digital TV subscribers across its subscriber base.
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Cox offers three basic digital packages -- movie, sports/information and variety -- for $5.95 each in Orange County, where 170,000 of the system's 230,000 subscribers have access to digital TV. All three packages can be bundled together for $10.95. In another Cox market that executives declined to identify, the company is charging $8.95 for the individual packages and $12.95 for the entire group, according to Lynne Elander, Cox's director of product development. In both systems, she said, 70% of the digital subscribers are taking the more expensive package.
Not surprisingly, TCI is bullish on digital, with Tom French, TCI's senior VP of marketing, saying cable's entire 30% addressable subscriber base is ripe for digital TV.
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