CONSUMER ELECTRONIC EXECUTIVES SAY MULTICASTING IS A MUST
Several consumer electronic executives joined broadcasters that claimed multicasting, rather than just high definition, is essential to the DTV adoption. “For any new technology like HD, content is king and consumers need to understand their programming options,” said Frank Sadowski, Amazon.com vp-consumer electronics (CE) merchandising, during an audioconference Thurs. sponsored by Communications Daily and Consumer Electronics Daily. In order to sell HDTV to consumers, they must understand they have more options, he said.
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“We're the only ones multicasting in our market,” said Randy Wright, vp-gen. mgr. of KMIZ (Ch. 17, ABC) Columbia, Mo. Consumers want new programming choices and a higher quality signal, he said. The station’s multicast carries Fox, UPN and a local weather channel. “We find this is a great use of the spectrum,” Wright said.
But HDTV hasn’t reached the tipping point toward a mass market acceptance. The DTV transition has been moving at a snail’s pace. “We messed up. We believed the government that a transition would take place,” said Jim Hefner, vp-gen. mgr. of WRAL (Ch. 5 CBS) Raleigh, N.C.,the first station to broadcast HDTV. Hefner also said dual must-carry is a “fundamental component” in the transition and that broadcasters need to enter partnerships with their local cable operators. Through a deal with Time Warner the station was able to air multiple simultaneous NCAA basketball games, including one in HD.
Hefner hasn’t seen a return on investment for being an earlier adopter of the technology. “But what do we do as broadcasters if we don’t do this?” Hefner asked. The station soon must replace an HDTV production switch, because it realized it can’t do as much from a production standpoint it could in analog. “Profitability is more immediate on the retail side of it,” said Dave Workman, CEO of Ultimate Electronics.
For the consumer, price is no longer an issue, Workman said. Sets can now be purchased for under $1,000. The biggest concern is the continued lack of consumer education and confusion in the marketplace. “I don’t think the retailers or suppliers have done a great job,” Sadowski said. “I expected a more rapid introduction,” he said. Color TV was embraced more quickly because it was easier to explain. “People adopt new technology not because they see it in the stores, [but] because they see it at a friend’s home,” Sadowski said.
The scheduled July 1 implementation of plug-&-play typifies an area of HDTV that retailers will need to manage carefully, owing to possible consumer misconceptions about what the technology can and can’t do, Workman and Sadowski said. Unidirectional plug-&-play might be a case of “overpromise and underdelivery,” Workman said, adding that consumers won’t be happy until the arrival of bidirectional interactive capability. He said unidirectional plug-&-play represented “a huge opportunity but one that has to be very carefully explained.” Sadowski agreed, but cited a risk: “It’s a step backward in technology and could backfire. The cable industry is ambivalent about giving up set-top boxes and 2 way programming. But it’s just a first step in doing away with confusion, even if it causes some confusion itself.”
DTV has been a boon to retailers, including online stores such as Amazon.com, Sadowski said: “You see HD’s contribution to profit immediately. High-tech means higher margins and average selling prices.” DTV also eases “piggyback sales” of audio equipment and DVD players, he said. “[DTV] prices will compress, but there’s still an awful lot of gas in the tank.” Workman agreed: “First there’s the HD sale, then the ancillary sales. HD is the number one driver in CE now and probably in the future.”
Access to HD signals was “the number one issue for [DTV] buyers,” Workman said: “The potential of most sets sold is probably underutilized. There’s confusion about levels of HD” from various digital program sources. Sadowski agreed on consumer confusion about signal sources. “Any new technology with new and multiple formats is hard to fathom” and cable will be the key to break the logjam, he said. “Cable is the path of least resistance for the average consumer.” Asked by an audience member why consumers should be forced to pay for FCC-mandated ATSC tuners in sets if cable and multichannel signals are available to 85% of U.S. households, Hefner said cable wasn’t passing through DTV in his market, and Wright said only one operator was aggressive in his. -- Tania Panczyk-Collins, Steve Booth
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