Challenges in HDTV marketing and consumer adoption

¶ … Marketing HDTV

HDTV was introduced into the U.S. market many years ago, though broadcasters and viewers alike have been slow to adopt the new technology. Within the European and UK market, a mass marketing campaign has generated much interest and impetus to adopt HDTV in the last couple of years, though industry experts expect full adoption and implementation of HDTV to be slow in coming.

Unlike the introduction of color television which far exceeded black and white sets in capacity, many consumers fail to find adequate reason to justify the high cost of expenditure associated with HDTV.

Likewise broadcasters have been reluctant to adopt the technology for fear that revenues will not catch up to the expense necessary to implement HDTV within a reasonable time frame. There are many benefits of owning HDTV however, and marketing strategies revolve around playing up these benefits including high resolution picture capability and real life, wide screen action.

Unfortunately for a majority of consumers to utilize HDTV investment in expensive equipment and receivers will be necessary, as most televisions currently on the market have not been adopted to facilitate HDTV programming. By and large the most resistance against HDTV is evident within the United States, where the FCC has been slow to urge broadcasting agents to adopt the new technology. Like consumers, broadcasting companies have fought bitterly against adopting an expensive technology without much indication that they will retrieve adequate revenues from their expenditures within a reasonable time frame.

What will it take for HDTV to be successful? It seems as though HDTV is doomed before it has even begun in a majority of markets, unless a change in strategy and focus is implemented. One that is geared toward educating consumers is most likely to be successful in spreading consumer interest in HDTV particularly in the states. These ideas and more are examined below.

History HDTV

HDTV was developed by the Japanese in the early 1970s (Macinnes, 1970). In its earliest forms HDTV was no more than "an improved resolution version of the existing National Television Systems Committee standard" (Macinnes, 1970, p. 67). Since that time HDTV has been improved and is now touted as the industry 'standard' among marketers and sellers for consumers looking for real life quality programming.

In modern society HDTV is capable of enhancing the quality of picture on the television screen and the sound (Berry, et. al, 1998; Brown -Kenyon, Miles & Rose, 2000). HDTV exceeds traditional television by offering higher picture sharpness and a larger picture, more color options, a wider picture and "multi-channel digital cd quality sound (Berry, et. al, 1998). This is vastly appealing or so it would seem in a world that is visually based, with modern technology making real to life images increasingly popular and desirable.

HDTV in the United States

The development of an HDTV standard has been of interest in the United States since 1987 (Berry, et. al, 1998). Despite this interest, there have been no decisive moves to standardize adoption of HDTV in recent years. In fact for many there is still an 'interest' in HDTV but relatively little impetus behind mass marketing of HDTV and adoption among traditional households.

The very first demonstration of HDTV occurred in 1981 when several Federal Communications Commissions officials gathered for a Japanese demonstrative of HDTV (Sterling, 2003). The idea that television could be life like rather than simply flat screen seemed initially of great interest to broadcast agents and consumers alike. Limited HDTV service is now available in "most U.S. television markets" but very few people are capable of seeing it, in part due to the large cost of HDTV television sets and receivers which generally cost thousands of dollars (Sterling, 2003).

Station owners in the United States that might host HDTV have complained that they would have to spend millions of dollars in order to convert to HDTV capability, but say they can't justify the expense because there won't be enough increased revenues to cover the cost (GAO, 2002; Sterling, 2003). Cable television systems, by far the most popular in the United States feel that carrying HDTV signals is generally a waste of "channel capacity though satellite carriers do provide some digital channels" (Sterling, 2003, p. 146).

Networks have also resisted adding HDTV programs because they feel this would be a waste of time unless receivers become more widely available and used by consumers (Edwards, 2002; Sterling, 2003). They feel that only an elite segment of society presently would be willing to spend as much on their television systems as they might another major household purchase (Sterling, 2003). The longer it takes for consumers to widely adopt use of HDTV within the household, the longer it will take broadcasting companies and networks to recover expenditures aimed at acquiring the equipment and signal strength necessary to broadcast using HDTV.

HDTV, while a promising technology, is largely failing within the U.S. market. Sterling (2003) draws a comparison of the U.S. innovation of analog color television saying the introduction of color service was facilitated because it was (1) backed by a major domestic manufacturer with a "huge investment to recoup" (2) was developed under "a firm set of industry developed and FCC blessed technical standards" and (3) offered consumers something new and exciting" in this case color TV vs. black and white (Sterling, 2003, p. 146).

When color TV was first introduced receivers were expensive much as HDTV receivers are today, and their was little programming available; in addition stations also complained about the conversion prices they would pay to change over their equipment (Sterling, 2003). However despite these obstacles there are nothing but color televisions and telecasts available in modern society.

It did take a full 20 years for color television to become the norm rather than the exception in most households however (Sterling & Kittross, 2002, p. 864; Sterling, 2003). No matter how favorable the conditions in fact, a transition this major for any type of programming would take some time (Sterling & Kittross, 2002).

Looking at these factors one may assume that HDTV would face similar obstacles but still come out ahead. However, HDTV seems to be struggling much more than the introduction of analogous color television. Sterling (2003) suggests that HDTV has failed because policy planners "presumed too much" believing that a conversion to full HDTV could be mandated over a shorter period of time (Sterling, 2003). This should have been evident however given the 20 years it took broadcasters to widely accept the introduction of color television.

Congress and the FCC have generally adopted a "hands off approach" when it comes to HDTV, in part due to the immense protestations from the broadcast industry (Sterline, 2003).

Most American households that have adopted cable televisions carry a common kind of HDTV signal, but do not have the receivers necessary to obtain true HDTV signals without purchasing additional tuning devices, and usually still require a secondary satellite, because the signal can't come through their cable connection (Sterling, 2003).

Part of the problem also lies in the fact that there does not exist any current line of standards that are being adopted or in line for discussion among broadcast and cable service companies alike; different networks are adopting what they refer to as 'enhanced digital television' which is "sometimes only marginally better, or even worse, than existing analog signals" (Sterling, 2003, p. 146).

In mid-2002 the FCC did begin pressuring broadcasting agents to more speedily adopt HDTV technology, including outlining specific actions that networks, stations and cable systems could adopt to make HDTV happen for all households (FCC, 2002a; Sterling, 2003). The FCC also adopted a policy of phasing in digital tuners for large screen televisions despite protestations from manufacturers (Sterline, 2003).

However the steps taken have been according to many not enough and coming too late. Many viewers still do not see enough reason to spend thousands of dollars on receivers and broadcasters are still struggling to justify the expense on equipment when there is not much that is 'really new' that HDTV is adding, unlike the introduction of color television (Sterling, 2003; Everitt, 2002).

HDTV Marketing

Marketing HDTV requires heavy reliance on promotion of the features of HDTV and the benefit of HDTV for consumers and broadcasters alike. Unfortunately for many consumers the perceived 'benefits' of owning HDTV are minimal compared with the costs associated with purchase of a system. Nonetheless, marketing moguls in the world of HDTV are targeting elite populations and avid sports fans and other enthusiasts looking for real life programming from the comfort of their homes.

The primary strategy has been on emphasizing that HDTV can provide a "physically higher quality TV experience" than traditional standard TV (Brown-Kenyon, et. al, 2000, p. 71). The idea from a marketing standpoint is that such images are a dramatic technological improvement over the standard color TV most consumers are utilizing in their homes today.

The problem with this marketing model however is that research suggests that it is not enough to simply impress consumers; HDTV has to overcome several problems before consumers will actually become buyers.

High resolution television fro example may cost anywhere from $6,000 to $10,000, though the primary marketing strategy with regard to price is to emphasize that with time price will decrease (Brown-Kenyon, et. al, 20000).

Japanese HDTV which is now more than 10 years old has still failed however largely due to price limitations from consumers (Brown-Kenyon, et. al, 2000).

Heavy emphasis has been put on the select benefits having HDTV would do for sports broadcasting which is vastly popular throughout many regions of the world, and cable and satellite companies are targeted because they can make high definition broadcasts of special sporting events to those willing to pay for them (Brown-Kenyon, et. al, 2000).

There is also a push to promote HDTV as film like image quality that would promote 'outdated' modes of delivery from traditional cable services. The major push is bringing a virtual home theater system into consumer households, which for many avid TV enthusiasts might be enough to generate sufficient interest.

Challenges of Marketing HDTV in America

American consumers are slow to adopt new technology. Only 1% of households adopted color television in the first five years it was introduced, and only 8% had adopted it 8 years later (Brown-Kenyon, et. al, 2000). It took a full 20 years for color television to be adopted fully. HDTV also seems expensive for low income and even middle income households, as was color television when it was first introduced, part of the reason it was slow to catch on (Brown-Kenyon, et al., 2000).

Adoption of HDTV in American where for the most part most consumers are satisfied with the quality of television they obtain from mid-level television systems is particularly difficult. In addition, within the states HDTV proponents have little to no backing from broadcasters and networks that are slow to adopt HDTV systems and programming due to the perceived cost to benefit ratio. It would literally take these agents' years to re-coup the expenses they put out from their initial investments.

Most middle class homes fail to see the significant benefit of owning an HDTV system vs. A traditional set as well, due in large part to a failure of marketing campaigns to adequately educate the consumer about the benefits of HDTV (Brown-Kenyon, et. al, 2000).

Failure of HDTV in America

Preliminary studies suggest that the cost to benefit ratio for most households simply doesn't make sense when it comes to HDTV. 20 to 30% of U.S. consumers have admitted that they will stick with traditional sets even if HDTV sets were more widely available because it isn't clear to them what the benefits are of paying so much more for minimal changes (Brown-Kenyon, 2000). Broadcasters are also not able to subsequently justify the cost expense of obtaining the new equipment for HDTV, because unlike color television and other dramatically different new introductions, they don't see the revenues picking up substantially as a result of their adopting HDTV technology. The services look interesting but aren't compelling enough yet to hook both viewers and broadcasters.

The content of HDTV also has some drawbacks including the fact that everything on the screen is rendered very lifelike, which is usually beneficial for certain programming such as sports or wildlife shows but may be "ghastly for news programs and soap operas" for consumers using cheaper sets (Brown-Kenyon, et. al, 2000, p. 71). TV sets currently being used in most homes would also have to modify wide-screen images causing a distortion or loss of some of the picture; a single HDTV channel also takes up much more space than a traditional one, as much as six to ten standard definition channels, so HDTV would use up "all of the capacity gains conferred by digitization" (Brown-Kenyon, et. al, 2000, p. 71). Yet another reason consumers and broadcasters re less willing to adopt HDTV technology.

Marketing HDTV UK / Europe

Momentum for HDTV is building in the UK and throughout Europe, despite heavy protestations from American consumers; broadcasters in Europe have recently announced "definite deployment plans" now that the 2004-year is approaching (Datamonitor, 2004). Research forecasts suggest that 4.6 million consumers in Europe will be using HDTV by the year 2008 (Datamonitor, 2004). This is an increase from the 50,000 consumers that were using HDTV by December of 2003 in Europe (Datamonitor, 2004).

The UK and France are most heavily involved in HDTV rollout and marketing strategies (Datamonitor, 2004).

The marketing technique in Europe has been emphasis on improved picture quality and reminders to the public that when color TV came out the costs were also relatively high, but subsided as time progressed (Datamonitor, 2004). European consumers are being told they will benefit from improved picture clarity and movie like quality surround sound (Datamonitor, 2004).

In addition, televisions in Europe currently display 576 lines, but HDTV will improve line count and subsequent picture quality to between 720 and 1080 "depending on the standards selected by the broadcaster" (Datamonitor, 2004).

Research suggests that Germany, the UK and France will lead the HDTV trend in Europe, though it is still a relatively rare phenomena throughout Europe, and researchers do predict that it may take a good 20 years for HDTV to be fully implemented despite a massive marketing campaign (Datamonitor, 2004).

Part of the trouble a marketing campaign will have in Europe is the confusion over how to use competing technologies, and the possibility that consumers will purchase televisions that are expensive but not actually HDTV ready (Datamonitor, 2004).

Overcoming this will require consumer education not just in Europe but also within the United States, where technology upgrades will also be essential for complete HDTV adoption.

Conclusions

Though HDTV does have some benefits to offer the mass marketplace, there are still many obstacles HDTV manufacturers and promoters have to face in upcoming years. Governments in the United States are particularly slow in adopting legislation that will help promote more widespread adoption of HDTV technology. Marketing tactics aimed at promoting the benefits of better quality picture and sound have largely failed, in part because they have not adequately satisfied consumers cost to benefit ratio analysis.