Surmounting the High-Definition Divide (1 Viewer)

Bruce

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December 1, 2004 10:53am
Multichannel News

While HDTV sets continue to fly off retail store shelves, convincing consumers to buy a high-definition programming package remains a huge challenge for both cable and satellite companies.

There are about 8 million to 9 million U.S. households that have at least one HDTV set, but only 2.3 million households subscribe to an HD programming package from cable operators or satellite providers, according to Leichtman Research Group.

Cable and satellite companies have focused much of their HD marketing efforts on joint campaigns with consumer-electronics companies looking to push more TVs, but some analysts say more needs to be done to sell programming packages to consumers who already have HD equipment.

“I think the low-hanging fruit is the 6 million people today, the early adopters who have an HD set and are not watching HD from anybody,” says Leichtman Research head Bruce Leichtman. He says the HD proposition offers cable and satellite services an opportunity to induce customers to switch to a new multichannel provider.

Educating consumers about the differences between standard and high-definition TV is also key. About half of the 5 million to 6 million U.S. households with an HD set but without a cable or satellite HD programming package think they are watching HDTV, Leichtman says, citing the results of a consumer survey his firm recently conducted.

“It’s tragic that these phenomenally expensive pieces of hardware are ending up in people’s living rooms, yet the reason they bought them is not being realized. It’s nuts,” says Jimmy Schaeffler, an analyst at the research and consultancy firm The Carmel Group. “It’s like buying a luxury car because you want to go faster, but they don’t sell you the right gas to take it any faster than 40 miles per hour.”

Schaeffler believes cable and satellite firms need to team up with broadcasters and consumer-electronics companies to educate consumers on HDTV.

But don’t expect the Consumer Electronics Association to aid that cause. When recently asked what the CEA was doing to help educate HDTV buyers on the need for cable or satellite programming packages, CEA president Gary Shapiro commented that the organization believes that consumers get a compelling proposition when they hook up their HD sets to DVD players.

But the Cable & Telecommunications Association for Marketing is of the same mindset as Schaeffler. In October, the association kicked off its “Go for 2” HDTV marketing campaign designed to emphasize that consumers need an HDTV programming package in order to take full advantage of the capabilities of their new HD sets. The campaign is a joint effort with Sony Corp., which markets cable as the best way to watch football games in HD.

The campaign comes at a time when the gap between the number of HDTV sets sold and the number of consumers that subscribe to cable or direct-broadcast satellite is growing, according to CTAM CEO Char Beales. “We’re both [cable and satellite] fighting a common enemy, and that is a lack of consumer knowledge about buying an HD set and service as a two-step process,” she says.

But figuring out exactly how good — or bad — the HDTV situation is for multichannel platforms is hardly an exact science. For example, EchoStar Communications Corp. and DirecTV Inc., which are both pitching consumers HDTV receivers that also contain a digital video recorder, haven’t released HDTV subscriber numbers. And cable operators are also reticent to reveal their HD progress with customers.

One exception is the Rainbow DBS subsidiary of Cablevision Systems Corp. The company recently reported that it counted a paltry 26,000 customers for its Voom HDTV programming service, which includes several exclusive, niche HD channels.

After its October 2003 debut, Voom did not begin charging customers for its programming package until March 31. As a consequence, it has lost 2,000 customers since the end of August.

Comcast Corp., the country’s largest cable operator, also doesn’t release its HDTV subscriber count. But Comcast CEO Brian Roberts told analysts in October that Comcast systems nationwide are adding about 15,000 HDTV subscribers weekly. At that pace, Comcast is doubling Voom’s total subscriber count every two weeks.

Leicthman says that at this time last year, DBS companies were winning a greater share of new HDTV customers than their total share of the multichannel video market. But he believes the HDTV battle between cable and satellite is “drawing a lot closer.” A survey of HDTV consumers Leichtman conducted this fall found that 8% of cable subscribers and 8% of DBS customers say they bought an HDTV programming package.

Regardless, “it’s too early to say who’s winning the war for HD, because I think people are still lining up their armies,” says Joe Rooney, senior vice president of marketing for Cox Communications Inc.

Rooney maintains that cable has the advantage in the HD war because operators have the ability to carry every local HD broadcast signal in any given market, while satellite providers don’t have the bandwidth capacity to do the same. DirecTV Inc. hopes to eliminate that advantage next year, when the company launches two additional satellites that its says will allow it to carry 500 local HD channels.

Of course, viewers can also receive HD signals from local ABC, CBS, Fox and NBC affiliates with an over-the-air antenna and receiver. But analysts note that few customers own HDTV broadcast receivers, which cost at least $300 apiece.

“Frankly, the [HD] consumer is watching regular digital cable with a DVD player, and what we as an industry need to do is convert those customers who already have HD to our high-definition service, and make sure that we win the battle of the HD covert,” Rooney says.


I posted this here not just because it brings up Voom a little,but maybe to understand the low sub numbers,maybe most people just don't care about more HD(I want more,I just want it done right)and that number about comcast is ....wow.

http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200411293020.33_2b7b0029d8284980
 

vurbano

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HD recievers cost 300 bucks? I dont think so, the price is much lower. Cable has an advantage with local networks? NOT He must not know how HD channels are being withheld from the cable companies do to the must carry fight
 

Bruce

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vurbano said:
HD recievers cost 300 bucks? I dont think so, the price is much lower. Cable has an advantage with local networks? NOT He must not know how HD channels are being withheld from the cable companies do to the must carry fight

That's not the point,how is Comcast getting the word out(15,000 a week is a lot)that sales-people selling the HD-ready sets,D*,E* and V* are not.
 

DarrellP

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vurbano said:
HD recievers cost 300 bucks? I dont think so, the price is much lower. Cable has an advantage with local networks? NOT He must not know how HD channels are being withheld from the cable companies do to the must carry fight
Ditto! Here in Portland, Comcast does not carry 2 of the major networks due to pi$$ing wars between the local network owners and comcast. :( Meanwhile, I am happily receiving all of my local digital channels via antenna. :yes
 

andrzej

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bruce said:
That's not the point,how is Comcast getting the word out(15,000 a week is a lot)that sales-people selling the HD-ready sets,D*,E* and V* are not.

Comcast, D* and E* sign up people for TV, period. HD is just an exotic addition for most of those customers. I bet that 99% of those 15k a week are current Comcast customers who decided to ADD HD to their lineup.
 

Bruce

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andrzej said:
Comcast, D* and E* sign up people for TV, period. HD is just an exotic addition for most of those customers. I bet that 99% of those 15k a week are current Comcast customers who decided to ADD HD to their lineup.

I agree,but the story is not about new subs,it is about getting the word out to new(and old) set owners.

Educating consumers about the differences between standard and high-definition TV is also key. About half of the 5 million to 6 million U.S. households with an HD set but without a cable or satellite HD programming package think they are watching HDTV, Leichtman says, citing the results of a consumer survey his firm recently conducted.

And this I blame on the sales-people selling the HD-Ready sets,have you read any of the stories from Gary Merson in the Perfect Vision, about when he goes to the places like Best Buy and Circuit City,and he acts like he is a customer buying a set,its laughable and sad at the answers he gets.

There are about 8 million to 9 million U.S. households that have at least one HDTV set, but only 2.3 million households subscribe to an HD programming package from cable operators or satellite providers, according to Leichtman Research Group.

All you guys keep talking about how great Voom is,but you are only 30,000,there is about 6 million set owners out there with no HD,they need to get the word out,one way is maybe give the service away with purchase of a new HD set for six months to a year,XM and Sirius is doing it when you buy a new car,maybe Voom should make deals with TV manufacturers(buy a TV,get Voom for free)and figure out how to get people that already have the sets(3 months free)

Voom is already losing money,can't stop that right now,well lose a little more,give things away,if they say give away Voom to 2 million HD-set owners for six months,and half stay and half go, that is still 1,000,000 new subs,yes they will lose more money in the short run but they are gaining something,market share,D* and E* lost a lot a money for a while,but what they had that was good for them was getting a lot of new subs,Market Share,which does look good to investors because they see growth and then invest,but this is what is happening:

But Comcast CEO Brian Roberts told analysts in October that Comcast systems nationwide are adding about 15,000 HDTV subscribers weekly. At that pace, Comcast is doubling Voom’s total subscriber count every two weeks.

Someone is getting the word out to the Comcast Customers,if that number stays the same thats 780,000 yearly,but as more and more sets are sold,I don't think they are going to be hitting that breaking point(upgrading customers to HD boxes)anytime soon.

There is lot of potential customers out there,but they are either not caring,or sticking with what they have(Comcast for one),or don't know.
 

Bruce

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vurbano said:
Their job is to sell sets. Nothing else.

And not explain how they work?
 

ElginCon

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May 21, 2004
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bruce said:
And not explain how they work?
No one in retail is paid to know anything more than they are told in training. The few that actually care about knowing what they are selling or have an interest in the stuff outside of their work don't last long - they're too smart for sales.

Prices in retail stores are too high as it is and I don't want to pay a dime extra for a knowledgable salesman just so John and Jane Doe can hear from him what they can learn from google in twenty minutes.

:D

What I'm trying to say is if you have to count on the idiot at BestBuy to tell you how your TV works and what you need to buy then you deserve whatever Hell you get into.
 

Couch Patato

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Ya know. I think HD & not knowing what it's like is like cable broad-band V's dialup internet. People have no idea untill they see it for themselves on THIER OWN TV'S. I have known several people that never knew how great broad band was untill they saw & used it with my computer. Once that happened I heard nothing but complains from them about thier dialup conection untill they got it from themselves. & once you have it you can never go back.
 

andrzej

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bruce said:
And not explain how they work?

bruce, are you suggesting that people who buy HD-capable TV sets and paying significantly more than for analog sets are morons who don't know the difference? Even if this occasionally happens, they should blame themselves, don't you think?
 

DarrellP

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Sad to say, I worked with someone who had a gorgeous 65" Hitachi Ultravision RPTV and though he subbed to the Dish HD Pack, rarely watched it because he thought the stretched picture that the Hitachi gave him on Dish SD was great. (Now puking my guts up).
 

davekendra

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Dec 4, 2004
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not sure but...

bruce said:
That's not the point,how is Comcast getting the word out(15,000 a week is a lot)that sales-people selling the HD-ready sets,D*,E* and V* are not.

Bruce, I don't frankly know, but I know the VOOM is not taking advantage of all forms of marketing right now. I REGULARLY receive presorted "junk" mail of Comcast ads on a card stock paper with colorful photos with emphasis on any area they choose. I HAVE received such presorted ads from them specifically about HD subscriptions. This is something I (& I doubt anyone else) have ever seen from VOOM. Voom is beginning to advertise in magazines more now, but initially it was only on cable channels and their website. They are beginning to diversify their marketing strategies, but they need to be certain they aren't missing anything. That's how Comcast does it... with the only caveat being they spend a hekuva lot more in sheer investment on marketing. Ads in TV Guide might be a good move. Marketing NEEDS to improve markedly. Technical/Customer support needs to likewise continue its improvements. Lastly, they MUST get those local channel national feeds on satellite asap.

Respectfully,
 

stockymd

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Speaking of advertising....I called Verizon, my local telephone company yesterday for telephone services issues. Before I got off of the phone with them, they were trying to sell me a direct tv system. The rep told me they have some deal with Direct TV to offer special deals. WELL, I was sure to educate him on VOOM and all the great HD channels offered ( he had never heard of VOOM --imagine that). But this is an example of how they get so many subscribers. VOOM needs to make some partnerships like this.
 

keno

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Feb 17, 2004
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DarrellP said:
Ditto! Here in Portland, Comcast does not carry 2 of the major networks due to pi$$ing wars between the local network owners and comcast. :( Meanwhile, I am happily receiving all of my local digital channels via antenna. :yes

Here in Northern Idaho, and Spokane area, it's difficult to get all the local channels on Voom. This is because of several reasons, including transmitters in different directions, mountainous terrain, etc. I went with cable because all the local stations are offered in HD, including PBS (which never came in with Voom). So, I have Voom and Cable for that reason. Don't have to worry about the antenna on the roof, and if rain fade occurs (and it does with Voom), I just switch over to cable. Plus my cable company offers a discount with high speed internet when you have cable, carries INHD1 and INHD2, HDNet and HDMovies, and provides a HD DVR. Very happy with my arrangement with Voom and Cable.
 

davekendra

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Dec 4, 2004
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stockymd said:
Speaking of advertising....I called Verizon, my local telephone company yesterday for telephone services issues. Before I got off of the phone with them, they were trying to sell me a direct tv system. The rep told me they have some deal with Direct TV to offer special deals. WELL, I was sure to educate him on VOOM and all the great HD channels offered ( he had never heard of VOOM --imagine that). But this is an example of how they get so many subscribers. VOOM needs to make some partnerships like this.

EXACTLY right.
 

SeattleVoomer1

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Dec 13, 2003
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Hey, Dave, we got VOOM because we were "targeted"...

by junk mail last December. Basically, they promised the moon and only fell a bit short but more than made up with the addition of more channels along the way.
Likely, we were targeted as we were already subscribing to 4 A/V mags.

A videophile and audiophile (and I thought one "disease" was bad!) watching HDTV under cloudy Seattle skies, Gill
 

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