DTV is a marathon................................................
January 05, 1998, Issue: 196
Section: News
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DTV Success Won't Be Cheap
Kristen Kenedy
Las Vegas-Digital television will strut its stuff at the Consumer Electronics Show here later this week, but industry executives predict that it will be years before the technology wins mass acceptance.
Consumer electronics manufacturers, including Sony, Zenith, Thomson and Sharp, will be unveiling large-screen digital TV products that cost in excess of $5,000. Three local television stations will relay digital broadcast signals to demonstrate the technology.
Intel will be pitching its Pentium II processor as the brains of the new consumer electronics DTV set-top boxes and other receiving devices.
But at this stage, it's unlikely either DTVs or the PC-based variation will generate enough excitement among consumers to get them to shell out the dollars required to receive a limited number of broadcasts. The largest network stations plan to start airing digital broadcasts at the end of 1998.
"The race to high-definition TV is a marathon. It's not going to be a sprint," said Tom Mykietyn, national sales manager of the LCD consumer products group at Sharp Electronics.
In the first of a series of focus-group tests, Access Media, a multimedia research firm in New York, found that while consumers are impressed by the crisp, clear digital picture, there is a limit to what they are willing to spend.
The focus group participants, all of whom own a home theater system, weren't willing to pay more than $3,000 for a new large-screen DTV, said Access Media analyst Richard Frazita. Access also held focus groups of consumers who owned home PCs and accessed the Internet. Their reactions were similar, Frazita said.
The Consumer Electronics Manufacturers Association is expected to announce the findings of its own focus group tests at CES later this week.
Regardless of the test results, industry executives agree that only the top-tier early adopters will be attracted by the high-priced large-screen, high-resolution DTV systems shown here and shipping by mid- to late 1998. Like 1997, many retailers will try to persuade customers to purchase analog television sets now and not wait for the low-priced DTV set of the future.
"I hope we don't see a repeat of last year," when consumers came back from CES with visions of digital television, said Mark Sykes, a television buyer at Fred Meyer, Portland, Ore. "It killed sales for a while."
Warren Mann, the NATM Buying Corp.'s group director, expects retailers will receive more DTV queries than sales this year. "The biggest problem that retailers face with this is you can have a lot more talk than you have action," he said.
But there is a bright spot, he said. Existing digital technologies, such as satellite broadcasting, allow for an instant upgrade opportunity for some customer segments. "All those people who bought those [satellite] dishes suddenly have access-and bunches of it," he said.
At the San Diego-based Dow Stereo chain, sales associates will be steering digital television-hungry customers toward affordable digital technologies that are available now, said Tom Campbell, a Dow Stereo director.
DVD movie players will continue to take center stage in these stores. "We demonstrate VHS next to DVD on an analog television to show" the increased clarity that digital video can offer on a standard TV set, he explained.
In the meantime, manufacturers are developing a wide variety of products expected to become available as digital broadcasts become prevalent. In addition to home-theater television sets, digital-to-analog set-top boxes are expected to appear at retail in 1999. These boxes-which could cost anywhere from $250 to more than $1,000-will improve clarity on analog sets and probably contain additional functionality such as Internet access, industry experts said. (Cable companies are also readying their own digital set-top boxes and are pushing for the eventual sales of these devices through retail.)
"There will be a whole range of devices and lots of choices for consumers," a Zenith spokesman said. Among the possibilities:A DVD player built into a DTV set or a television set with its own CPU. With 250 million analog TV sets in the United States, a digital-to-analog converter box will probably be a high-demand item, he said.
Also on tap are a regimen of PC-powered digital TV receivers and set-top boxes. One look at Microsoft's Web TV service or NetChannel from RCA, and it's easy to see the transition from a combination of data services with analog broadcasting to synchronized data and digital broadcasts.
Most PC manufacturers agree that content that takes advantage of digital media-seamlessly combining data and video-is needed to spur digital television's acceptance in the PC space. Beyond electronic program guides, companies with an interest in DTV, such as NCI and Intel, have been demonstrating ultrafast data downloads, TV shows with a chat element at the top of the screen, and creativity applications for kids directly from the television set.
"People don't like to watch TV from a two-foot distance," said Tom Galvin, director of market development for television and broadband content at Intel. But digital broadcasts will bring a paradigm change in content, he said. Intel envisions fast Internet access via an unused portion of the digital spectrum, with custom content sent to consumers while they sleep.
Nevertheless, many in the consumer electronics and computer industries say such services are years away, at best.
Brian Connors, vice president of IBM consumer systems, said digital TV service doesn't mean convergence-it is an issue of coexistence between consumer electronics devices and the home PC.
"There is a fine line in pushing a PC to be a TV and the whole concept of convergence...We have to respect the consumer electronics tradition and how television evolved, and you have to do the same thing with computing."
IBM had planned to ship the Broadcast PC, a computer that can access programming from satellite provider DirecTV this quarter, but postponed the product. Connors said high-speed Internet/data access via DirecTV and enhanced television programming will be the key to that product's success. The lack of compelling content at this stage, along with the delay of Windows 98, which supports enhanced broadcasting, factored into IBM's reticence, he said.
Similarly, a Sony Computer spokesman said his company's PC group doesn't have any immediate plans to add DTV functions in PCs, opting to wait and see how the market shakes out. This executive said in the near term that a set-top box is probably the first digital device that would receive large-scale consumer interest.
On the consumer electronics side, Sharp's Mykietyn reiterated that the digital TV switchover in the consumer electronics and PC markets will be slow going. "It's going to happen in stages," he said. "People will start receiving a DTV signal, then a high-definition TV signal [known as 1,080 interlaced in a 16 x 9 aspect ratio], and then in the third stage, they will look for [enhanced television services]. It's kind of like walking before you learn to run."
Copyright (c) 1998 CMP Media Inc. |
