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Survey: HDTV Penetration to Top 20 Percent

20 Jan, 2005 By: Erik Gruenwedel

The number of U.S. households with a high-definition TV is expected to double in 2005, despite retail prices exceeding $1,000 and general consumer indifference regarding perceived improvements in picture quality, according to a new study from Lyra Research in Newtonville, Mass.

More than 60 percent of male and female respondents, respectively, said it would take the breaking of their current TVs to motivate them to investigate HDTV. Forty-nine percent of respondents said their TV sets were less than three years old -- about 20 percent of the average TV lifespan.

About 9 percent of respondents said they would purchase HDTV this year.

Other factors prompting purchase of HDTV in 2005 include sizable tax refunds (up to 32 percent) and family gifts (7 percent).

Only 2 percent of respondents said next month's Super Bowl telecast — typically a catalyst for TV purchases — would prompt them to buy HDTV.

“The majority of respondents do not feel compelled to purchase an HDTV set in 2005,” said Steve Hoffenberg, director of electronic media research at Lyra. “It is nice-to-have, not a must-have item. The people who currently have HDTV are, by definition, early adopters.”

Principle challenges affecting most consumers include retail prices exceeding $3,000 for most big-screen plasma and LCD high-definition TVs, and a general level of satisfaction with their current sets.

“The industry has spent the past two decades tweaking the quality of standard-definition pictures, so to get people to buy HDTV the industry has to persuade customers that there is a higher level of satisfaction out there,” Hoffenberg said.

He downplays comparison between the nascent HDTV market and DVD players years ago, saying the latter, including VHS, represent mechanical devices that are prone to breakdowns compared to a solid-state TV picture tube.

Hoffenberg sees the rise of HD-DVD and Blu-ray Disc as a direct correlation with the rise in HDTV. Once people own a high-definition TV, they will naturally gravitate toward the high-definition entertainment formats.

“What drove such rapid adoption of DVD was very low-priced players,” said Hoffenberg. “They have become commodity items that make it literally a no-brainer for households to buy one or more.

“Even when HDTV becomes commoditized, which isn't going to happen this year, they will still be relatively expensive. In a couple of years they could range from $300 to $500, but they won't be less than $50, like a DVD player. It will still be a fairly sizable purchase.”

Still, Hoffenberg said market penetration of HDTV is expected to reach 20 percent this year, a level that moves HDTV from the early adopter market and into the mass market.

“Manufacturers are assuming the volume will be there and to some extent it is almost a self-fulfilling prophecy, because when they make those commitments it enables them to lower prices, which drives [market] penetration,” he said. “But that only works when the market is ripe for it. And it looks like the consumer market will be ripe for HDTV.”

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