Forrester Research says we're going to get SDTV, not HDTV, because it's a better business model.................................
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Forrester Research Predicts HDTV Will Fail
Business Wire - December 08, 1998 08:40
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CAMBRIDGE, Mass.--(ENTERTAINMENT WIRE)--Dec. 8, 1998--While digital television offers a variety of ways for TV manufacturers, broadcasters, and cable operators to make money, high-definition television (HDTV) doesn't. A new Report from Forrester Research, Inc. (Nasdaq:FORR) predicts that standard definition digital television (SDTV) will succeed where HDTV fails by offering an affordable digital TV experience for consumers and viable business models for TV makers, broadcasters, and distributors.
The benefits of HDTV -- high resolution, wide-screen pictures, and six-channel sound -- have been widely touted. To deliver these features, the consumer electronics industry has invested nearly $1 billion to create new digital products. But these investments, along with the cost of producing the components to receive and display HDTV broadcasts, will keep the price of HDTV sets at or more than $2000 for another 10 years. As a result, only 1 million U.S. households will own HDTV sets in 2003.
In contrast, SDTV delivers the same benefits as HDTV without the high-definition picture. By eliminating the need for a high-resolution display, the price of SDTV sets should fall to less than $1000 by 2002. This price point, combined with picture and sound that is far superior to today's analog broadcasts, will draw consumers to SDTV in large numbers. As a result, Forrester expects SDTV to be in 4 million households by 2003 and capture more than 80% of the market by 2008.
"Consumers will be dazzled by HDTV's picture and sound, but the sets will remain economically out of reach for 90% of consumers," said Josh Bernoff, principal analyst in New Media Research at Forrester. "By comparison, SDTV delivers all the benefits of digital at a small premium over today's prices. SDTV's affordability will deliver the audience that the industry needs to make digital television a reality in the United States."
In addition to attracting consumers with affordable digital TV sets, SDTV offers a variety of profitable business models for TV producers, broadcasters, and distributors. Chief among these is multicasting -- sending multiple simultaneous signals on a single broadcast. Multicasting will improve revenues by creating new broadcast carriage options and expanding viewership. Local broadcasters and cable operators will use multicasting to offer time-shifted program repeats, bring cable shows to new audiences, and introduce network programming into new areas.
Broadcasters will also experiment with datacasting -- sending interactive data like stock quotes, related Web pages, and program enhancements along with broadcasts -- as an alternative to multicasting. Because datacasting can reach receivers other than televisions, broadcasters could use their spectrum to provide real-time data feeds to industrial customers or consumers. By offering both potential new revenue streams and an audience, SDTV will entice the industry to make the investments necessary to deliver digital television.
"No one can sit out the digital transition -- it's a game the whole industry must play," added Bernoff. "TV makers should concentrate on building affordable TV sets, and cable operators need to partner with broadcasters to create a variety of digital programs that viewers will appreciate."
For the Report "HDTV Dreams, SDTV Realities," Forrester spoke with leading networks and station groups, cable and satellite operators, and program producers. Forrester also interviewed more than 50 TV manufacturers, retailers, and software and equipment vendors to assess the impact of digital television on the industry.
Forrester Research, Inc., is a leading independent research firm offering products and services that help its clients assess the effects of technology on their businesses. Forrester provides analysis and insight into a broad range of technology areas such as new media, computing, software, networking, telecommunications, and the Internet, and it projects how technology trends will affect businesses, consumers, and society. Forrester recently expanded its research coverage to address the impact of digital technologies on the television, motion picture, and music industries. Additional information about Forrester's Television and Entertainment Technology Research can be found on the Web at www.forrester.com/tv.
CONTACT: Forrester Research, Inc.
Michael Shirer, 617/806-6025
press@forrester.com
www.forrester.com
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