The future of digital TV–often maligned as being overhyped and too expensive–is beginning to come into clear focus.
Digital televisions, which deliver ultrasharp pictures and CD quality sound, are gaining retail momentum, with sales up fivefold since Panasonic unveiled the first high-definition set in Los Angeles in August 1998. The industry expects sales to exceed 1 million sets this year.
Some analysts predict it will catch on more rapidly than color television, which took 13 years to replace black-and-white sets in most American homes.
More Top Picks Best Electric Standing Desks
“There’s a slow tide that’s rising,” said Richard Doherty, entertainment analyst for the Envisioneering Group in Seaford, N.Y. “Since you now have one in seven American households with DVD, people start getting used to the quality. And they wonder, `Can my TV get better?’ DVD has been a slow elevator. It’s been greasing the rails for HDTV.”
Digital TV remains far from a mass-market phenomenon. The consumer electronics industry estimates 625,000 digital monitors were sold to dealers last year. That brings the number of sets sold in America to 760,000–less than 1 percent of U.S. households.
But signs suggest consumers are tuning in to digital TV. High-end audio and video retailers are devoting at least half their inventory and sales space to digital sets, according to NPD Intelect, a market tracking firm in Port Washington, N.Y.
Big-name manufacturers such as RCA, Mitsubishi, Toshiba and Pioneer say they are increasing production to keep pace with demand.
“We can’t keep it in the barn,” said Bob Perry, marketing director for Mitsubishi Digital Electronics, the nation’s leading manufacturer of big-screen TVs. “We have been selling at record pace. As we ratchet up production, consumer demand ratchets up even further.”
What’s changed?
Prices, while still expensive, are dropping from what the rich can afford to what homeowners might expect to pay for a big-screen TV. Perry said the typical high-end projection TV goes for around $3,000. Panasonic plans to introduce the first wide-screen, high-definition monitor selling for less than $2,000 later this year.
“The manufacturers are making an effort to get the costs down,” said Michelle Abraham, a converging-markets analyst for Cahner’s In-Stat Group in Phoenix.
But sales will remain limited until viewers find a wealth of programming, Abraham said.
Broadcasters bristle at the suggestion that they’re not providing enough content. The National Association of Broadcasters said 173 stations now beam digital signals in 61 cities on the way to reaching the entire country by the congressionally mandated deadline of December 2006.
Of course, you’ll need a digital TV set, a tuner and an antenna or satellite dish. Even then, programming in the lush, nearly three-dimensional high-definition TV format is paltry. But it’s coming. CBS broadcasts its entire prime-time lineup in high definition (except “Walker, Texas Ranger”). And showcase sporting events such as the U.S. Open and the Masters golf tournament will be beamed in HDTV.
Industry observers say the transition to digital TV is inevitable. Even skeptics like Mark Snowden, a media and entertainment analyst for the Gartner Group, who describes digital TV as “stillborn at this point,” say it will eventually happen–certainly by 2006.
That’s because the federal government plans to auction off the analog spectrum in 2006, once stations convert to digital transmission. The sale could reap as much as $70 billion for the government.
“That $70 billion is part of budget forecasting,” Snowden said. “If that doesn’t pan out, that’s a big hole in all these rosy budget forecasts. So it shifts the potential for budget surplus to a deficit. That, in turn, could cascade into any number of political issues.”