HDTV UPDATEHDTV UPDATE

Brian MarkwalterColumbus, OH

November 13, 2002

Brian MarkwalterColumbus, OH

November 13, 2002

Consumer Electronics Association (CEA)

Consumer Electronics Association (CEA)

• More than 1000 corporate members

• Producer & Sponsor of the International Consumer Electronics Show (CES)

• Industry’s voice in Washington

• Market research

• More than 1000 corporate members

• Producer & Sponsor of the International Consumer Electronics Show (CES)

• Industry’s voice in Washington

• Market research

CEA’s DTV FocusCEA’s DTV FocusCEA’s DTV FocusCEA’s DTV Focus

• Policy issues

• Education programs» Retail training seminars» Partnership programs» Consumer outreach

• CEA» DTV Subdivision» DTV Awards» DTV Summit

• Policy issues

• Education programs» Retail training seminars» Partnership programs» Consumer outreach

• CEA» DTV Subdivision» DTV Awards» DTV Summit

Consumer DTV Expectationsper Chairman Tauzin

Consumer DTV Expectationsper Chairman Tauzin

• DTV sets should receive broadcast signals• DTV sets should work with all cable systems• Cable-ready DTV sets should be available at

reasonable prices• New DTV sets should bring consumers "exciting

new content“• Home recording still should be available• HTDV sets should have high-quality

programming• Consumers should be able to make informed

decisions on new equipment

• DTV sets should receive broadcast signals• DTV sets should work with all cable systems• Cable-ready DTV sets should be available at

reasonable prices• New DTV sets should bring consumers "exciting

new content“• Home recording still should be available• HTDV sets should have high-quality

programming• Consumers should be able to make informed

decisions on new equipment

The HDTV TransitionThe HDTV Transition

• Over 3.8 million DTV Products Sold

• Prices Down 50 percent since ’98

• DTV 36.8% of total TV Revenue

• DTV More Than 60% of Projection Sets

• DTV Units Up 83% in ’02 - $$ Up 69%

• Over 3.8 million DTV Products Sold

• Prices Down 50 percent since ’98

• DTV 36.8% of total TV Revenue

• DTV More Than 60% of Projection Sets

• DTV Units Up 83% in ’02 - $$ Up 69%

Digital TV ProductsDigital TV Products

• Over 40 manufacturers

• 366 HDTV monitors

• 27 integrated HDTV sets

• 19 HDTV set-top

decoders

• 38 EDTV monitors

• Over 40 manufacturers

• 366 HDTV monitors

• 27 integrated HDTV sets

• 19 HDTV set-top

decoders

• 38 EDTV monitors

Digital Television Sales TrendsJanuary 1999 to July 2002

Digital Television Sales TrendsJanuary 1999 to July 2002

0

50,000

100,000

150,000

200,000

250,000

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Units

Dollars (In Thousands)

DTV Unit SalesDTV Unit Sales

1.46 million in 2001

1.58 million in first nine months of 2002

1.46 million in 2001

1.58 million in first nine months of 2002

DTV RevenueDTV Revenue

Dollar volume of Digital TV products has surpassed

analog for the past three months (July, August,

September).

Dollar volume of Digital TV products has surpassed

analog for the past three months (July, August,

September).

HDTV Product ChoicesHDTV Product Choices

• Direct View• Projection TVs

» Front and rear

• Flat Screens» Plasma, LCD

• New Technologies» DLP, LCOS, etc.

• Direct View• Projection TVs

» Front and rear

• Flat Screens» Plasma, LCD

• New Technologies» DLP, LCOS, etc.

HDTV – Entry Level Now Under $1,500

HDTV – Entry Level Now Under $1,500

The Rapid Fall of Prices

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

1 2 3 4 5 6 7 8 9 10Year on Market

Avg

. P

rice

in

Do

llar

s (a

dju

sted

fo

r in

flat

ion

)

DTV Color TV

Average price

based on DTV

sales through

July 2002.

Digital HDTV – What Owners Are Saying

Digital HDTV – What Owners Are Saying

• 95 percent of HDTV owners would buy it again

• Two-thirds of HDTV owners are watching MORE TV

• 1 in 5 HDTV households earn less than $75,000 – Middle Class Purchasers!

• Quality of HD programming is good to excellent – but they want MORE

• 95 percent of HDTV owners would buy it again

• Two-thirds of HDTV owners are watching MORE TV

• 1 in 5 HDTV households earn less than $75,000 – Middle Class Purchasers!

• Quality of HD programming is good to excellent – but they want MORE

HDTV User Focus GroupsConnie Bock, Ph.D., Elon University

HDTV User Focus GroupsConnie Bock, Ph.D., Elon University

• HDTV owners gravitating towards

programs in HD, even if not a favorite

• One viewer “Rediscovered CBS”

• “Reduced Analog Pleasure”

• Most satisfied early adopters – those

with cable HDTV

• HDTV owners gravitating towards

programs in HD, even if not a favorite

• One viewer “Rediscovered CBS”

• “Reduced Analog Pleasure”

• Most satisfied early adopters – those

with cable HDTV

CEA ConsumerMarket ResearchCEA Consumer

Market Research

• Online consumers showing greatest familiarity with HDTV – more than twice the general population

• 80 percent of online population like the better picture

• Nearly 30 percent of online consumers believe their next TV will be HDTV

• Online consumers showing greatest familiarity with HDTV – more than twice the general population

• 80 percent of online population like the better picture

• Nearly 30 percent of online consumers believe their next TV will be HDTV

Rather Fight Than Switch?

NOT!Rather Fight Than Switch?

NOT!Eight out of ten likely HDTV buyers would

likely switch between cable and satellite providers in order to get HDTV

programming

Eight out of ten likely HDTV buyers would likely switch between cable and satellite

providers in order to get HDTV programming

Importance of Factors to OwnershipPercent listing factor as “very” or “somewhat” importantImportance of Factors to OwnershipPercent listing factor as “very” or “somewhat” important

91%

89%

67%

70%

48%

55%

41%

38%

38%

82%

81%

67%

57%

41%

37%

36%

32%

35%

Favorite programs in HD

Satellite and cable carriage

Ability to record HD on VCR

Ability to record HD on DVD

Ability to share recordings

Ability to record HD to DVR

Videogames in HD

HD programs on PC

Ability to record HD to PC

Short-termLikely BuyerShort-termPotential Buyer

Update from the Broadcasting Community

Update from the Broadcasting Community

Transition numbers / station updates• 509 stations in 147 markets, reaching 90% of

U.S. TV households• Newest stations include:

» WADL, Detroit, MI » KNVA, Austin, TX» WRBL, Columbus, GA» KALB, Alexandria, LA» WHLT, Hattiesburg, MS» KPXF, Fresno, CA» KAIL, Fresno, CA» KMAS, Steamboat Springs, CO» KTVL, Medford, OR» WSBK, Boston, MA» WYOW, Wausau, WI» WCDC, Springfield, MA» WMEA, Portland, ME

Transition numbers / station updates• 509 stations in 147 markets, reaching 90% of

U.S. TV households• Newest stations include:

» WADL, Detroit, MI » KNVA, Austin, TX» WRBL, Columbus, GA» KALB, Alexandria, LA» WHLT, Hattiesburg, MS» KPXF, Fresno, CA» KAIL, Fresno, CA» KMAS, Steamboat Springs, CO» KTVL, Medford, OR» WSBK, Boston, MA» WYOW, Wausau, WI» WCDC, Springfield, MA» WMEA, Portland, ME

Source: NAB10/8/02

Source: NAB10/8/02