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HDTV reaches mainstream

December 2003

HDTV reaches mainstream

Prices drop as TV buyers move toward sharper image

By Steve Gelsi, CBS.MarketWatch.com
Last Update: 6:20 AM ET Dec. 6, 2003

NEW YORK (CBS.MW) -- After years of development by consumer-electronics makers and TV programmers, high definition television is finally reaching the mainstream this holiday season.

While projection sets that show HDTV have been available for several years, the prices had been well into the thousands of dollars.

A top-of-the-line plasma flat-screen TV with HDTV resolution is still pricey at $10,000 or more, but overall costs have come down about 50 percent in the past couple of years.

It's possible nowadays to buy an HDTV set for as little as $500, but average prices are usually in the low $1,000s.

HDTVs come in three types: flat plasma screens, flat LCD screens and projection TVs. LCDs offer longer screen life, but for now plasma screens offer the larger sizes.

The result is a TV picture that's as much as 10 times sharper than the best analog TV.

At Best Buy in New York City, Manhattan dwellers scoop up the flat panel TVs not only for the picture quality but also because they take up much less room than traditional big screen TVs with huge picture tubes.

"It's flat, it's comfortable, it's convenient, it's very stylish, and the quality is fantastic," Best Busy sales associate Anthony Rivera said when asked to sum up his pitch to prospective buyers.

Digital TVs aren't necessarily high def

Remember not to confuse HDTVs with digital TVs. All HDTVs are digital by nature, but digital TVs won't necessarily produce high-definition pictures -- you need an HDTV for that.

You also need to have an HDTV tuner, which can be bought or in many cases rented from a cable TV or satellite TV provider. And don't forget the home-theater system, which can set you back hundreds or thousand of dollars more.

In 2002, there were 2.5 million digital TV sets sold, mostly HDTVs. That number is expected to grow to 4.3 million in 2003.

For the next 18 months, nine million digital TVs are expected to be sold; 30 million will be purchased in the next three years, according to the Consumer Electronics Association.

By 2004, digital TVs will draw about $5.8 billion in sales, as they surpass analog TV sales for the first time. Traditional TVs will ring up $4.6 billion in sales during the same period.

Ken Marlin, of investment bank Marlin & Associates, said the rise of HDTV sales is "great" for consumer-electronics manufacturers and retailers in the short run.

Media companies may see a financial benefit if future high-definition programming contains more transactional features such as shopping or games, he noted.

Biggest transition since color TV intro

Overall, the transition to HDTV has been more complex, in many ways, than the move from black-and-white to color, said Carl Goodman, curator of digital media at the American Museum of the Moving Image.

Back in the 1950s when color first emerged, only three networks commanded the airwaves, and the same companies such as CBS and NBC were part of conglomerates that also built the TV sets. While the transition took a couple of decades, the media business was much less complex.

Now, a bevy of broadcasters, TV affiliates, cable TV operators, computer makers, film and TV makers, software makers, contract manufacturers and satellite distributors are involved.

Meanwhile, the Federal Communications Commission has also been a factor by requiring all TVs to be digital ready by the end of 2006.

The government wants eventually to phase out analog TV signals so it can sell the bandwidth in what it hopes will be lucrative billion-dollar auctions.

"The process (of moving to HDTV) reminds me of changing the engine to an airplane while it's still flying," said Goodman. "There's no way it could have been a simple process."

Given the complexity and the competing interests, Goodman said the HDTV transition has gone relatively well, although it's taken longer than some of the rosier projections from the1990s.

One future motivator to buy HDTVs will be the coming debut of high-definition DVDs, which will prompt movie goers to buy the sets to see TV pictures as sharp as they appear on the big screen, he said.

Programming expands

Even if you buy an HDTV, you won't get high-definition pictures unless the signal itself is broadcast in that format either on the air or via satellite and cable hookups.

HDTV offerings have multiplied in recent months to include most prime-time programming and cable TV networks such as HBO, ESPN, HDNet, and Discovery. For a list of HDTV programs in your area, visit TitanTV.com.

The Discovery Channel launched Discovery HDTV Theater in June, 2002 as the first 24-hour channel in the high-definition format.

"It's inevitable that we're going to transition to high-definition TV," said Clint Stinchcomb, general manager, Discovery HD Theater.

"The only debatable thing is the timeframe. We're in it for that reason. We've had our eye on it for several years. We began producing content six or seven years ago and also our content lends itself to that format."

Steve Gelsi is a reporter for CBS.MarketWatch.com in New York.
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