Defining the appeal of HDTV
Channel players are expecting big things from the high-definition TV (HDTV) market. However, while consumer uptake of HD-compatible devices has been spectacular, there is a shortage of HD content available. Martin Lynch investigates
It is hard to avoid all the publicity currently surrounding high-definition TV (HDTV). It has been somewhat of a consumer phenomenon over the past 12 months, an occurrence all the more puzzling since there is actually very little in the way of HD content. This shows how the marketing blitz has succeeded and people want HDTVs whether they fully understand what that means or not. It has become the most desirable home accessory since DVD players and, hype aside, HDTVs really look to be the future of TV and movie viewing.
Darren Lewitt, divisional director for audiovisual (AV) at distributor Midwich, says: “Once you’ve seen HD content on an HDTV and you go back to standard TV, you can really see the difference. For instance, going back to watching football on a standard TV is shocking. You ask yourself ‘what is this rubbish I’m watching?’.”
However, there is more to HDTV than just amazing pictures, and the combined factors have captured the attention of a growing number of businesses. HDTVs are now popping up in a wide range of locations, from boardrooms and sports stadiums to schools and call centres. Thanks to the hype, clever marketing and plummeting prices, HDTVs are no longer just a consumer luxury.
Darren Ambridge, group product manager for TV and home video at Sony UK, says: “Prices are making HDTVs more of a viable business option. For many businesses, professional displays were seen as the first flat-panel option, but now the wider variety of HDTVs and better pricing are making them a more suitable choice for many.”
In the past year, prices have tumbled significantly on the most popular panel sizes, ranging from 32in to 40in. Unlike consumers though, price is less of a factor for businesses, but the fact they have tumbled so noticeably has not hurt HDTV business sales either.
Lewitt says: “2006 was phenomenal – our business was up by more than 400 per cent in the consumer space. On the business front, it was less, but was still significantly higher than in 2005. HDTVs are very affordable now. Going back a year it was more than £2,000 for a decent HDTV brand in the 32-36in range, but we are now already at the pricing level that similar-sized standard TV prices were at just 12-18 months ago.
“For businesses, price is an issue, but it’s not near the top of the purchasing criteria,” he adds. “There’s a whole raft of market places opening up in the SME and corporate space, and quite a few vertical markets, such as home builders and AV integrators. The education sector is a good area to increase focus on moving forward. LCDs and plasma TVs will be the successors to interactive whiteboards, once the price points become more attractive.”
Peter McParland, country manager for IT products at Samsung, adds: “There is a major upturn in HDTV sales to businesses. From a business point of view there are more business applications being delivered through HDTV. A lot of the driving force behind the uptake is coming from the solutions – digital signage, presentations and multimedia applications.”
What is important to realise about HDTVs is that they are here to stay. The CRT is finally on its last legs. It has been said before, but looking at the manufacturing plans from most of the world’s big TV makers, CRTs are getting a lot harder to find. One only has to hit any high street retailer to see which way the wind is blowing. The majority of TV makers have now committed to making mainly flat panels and, to a much lesser extent, rear-projection and slim CRT TVs. What’s more, many have promised that most or all of their new TVs will be HD as standard.
It is no longer a matter of if HDTVs will dominate the market, just when. LCD TVs overtook CRT TVs for the first time in Europe in the third quarter of last year, research from DisplaySearch has shown.
“All manufacturers are going HD – none of the big names are producing non-HD Ready TVs, just the smaller LCD panel makers and cheaper brands,” Lewitt says.
McParland agrees: “What is being produced is mainly HD now. All of our large format displays are HD compatible. Our consumer and commercial ranges are all HD-Ready while our output of CRT TVs is now on a downward trend.”
In the UK last year, market analyst Gfk said that over 82 per cent of all plasma TVs and nearly all LCD TVs were HD-Ready. By the end of 2006, it estimated that there would be 2.4 million HDTVs in UK homes, representing about 10 per cent, up from just two per cent at the start of 2006.
According to market watcher DisplaySearch, rapid price declines are driving the explosive growth in flat-panel sales, thanks to cut-throat price competition between the major brands.
There is still some confusion in the market about what HD actually is, but this is less of a problem in the business environment. Beyond knowing that the picture quality is better, many get confused by terms such as 720p, 1,080i and 1,080p as well as HD multimedia interface (HDMI) and high-bandwidth digital content protection (HDCP). In basic terms, an HDTV can display HD content – either broadcast or movies – with a picture quality that is roughly twice as good as standard resolution DVD and up to four times better than broadcast TV.
It is all down to pixels. A standard DVD movie, which most people will admit offers great picture quality over regular TV, has a resolution of 720 x 576 (horizontal x vertical) pixels. There are three HD formats: 720p, 1,080i and 1,080p. A HDTV offering 720p quality can display content with a resolution of 1,280 x 768 pixels. Next up is 1,080i and 1,080p, which both offer higher resolutions of 1,920 x 1,080 pixels. The only difference is in how they deliver that image to the screen. The ‘i’ denotes interlaced and the ‘p’ stands for progressive scan, which refers to the way the display processes the video signal. Progressive scan is widely thought to be better than interlaced, but many find it hard to tell the difference between the two since both deliver stunning image quality. So, 1,080p is the highest resolution available and is often referred to as Full High Definition or True High Definition.
In 2006, the World Cup was expected to be the big driver for HDTV sales, especially with many TV stations showing all the main games in HD. However, while sales picked up, the gold rush failed to materialise. But it did get things moving, in certain leisure markets to begin with and now across a wider variety of commercial and public-sector segments. Unlike other technologies that appeal to just a few sectors to begin with, HDTVs have universal appeal. Despite their obvious appeal in the boardroom, HDTVs are being used widely in call centres, stadiums, retail outlets, leisure facilities and airports.
“Some market places, such as pubs and clubs, don’t really care too much about HDTVs at the moment,” Lewitt claims. “They’re slow adopters right now, more interested in getting the content than the quality of the content. I guess they figure after a few beers, who’s going to notice. But that sector will be a good opportunity going forward. We had a great year for the World Cup and it’s still going well.
“The digital signage market will be big over the next few years – there is a lot more affordable solutions out there now. Sony has pumped an enormous amount of cash in this for the next two years. Samsung also has a range of signage solutions.”
Ambridge claims that Sony is finding broad appeal in the business sector for its HDTV offerings, with customers in the leisure sector, bookmakers, supermarkets and race courses. “There’s also no ‘most popular’ screen size either, with different markets opting for different sized panels, depending on application,” he says. “For instance, Ascot race course wanted to use a lot of screens and they went for smaller screens whereas Twickenham and Arsenal’s Emirates Stadium went for larger 40in screens.”
McParland is also seeing sales to a broad spread of businesses. “The business take-up is pretty much across the board – there is no trend emerging of some sectors being more popular than any other,” he says. “It’s now becoming a standard within most businesses to have displays with HD capabilities.”
The two main HDTV technologies are LCD and plasma. Surface-conduction Elecron-emitter Display (SED) TVs have also been hovering on the horizon for some time.
Plasma was the first big-screen flat-panel TV technology, arriving some years ago into a market dominated by CRTs and rear-projection TVs. Plasma technology is usually only seen in HDTVs above 40in because it is too expensive to create smaller panels to suit the mainstream sub-40in market. LCD-based TVs have done the most to remove bulky CRTs from our homes, dominating the smaller screen sizes, up to 40in. Ironically, LCD HDTVs have been restricted to the smaller screen sizes, albeit the biggest chunk of the market, because the production of larger panels made them too expensive compared with plasma TVs.
For some years, there has been an invisible line dividing the market in this way, but the tide has now shifted in favour of LCDs. New production processes coupled with a raft of bigger, next-generation panel production plants have allowed LCDs to fight in the 40-50in space. There is still a price premium for LCD over plasma, but it is shrinking steadily. The investment of billions of pounds by the LCD players is paying off.
DisplaySearch noted that LCD TV revenues last year topped $22.5bn, up 85 per cent on the previous year. This compares with the plasma TV market, which generated a third of that revenue with $7.2bn and grew by just 28 per cent. LCD TV panels are expected to total more than 81 million units in 2007 with the 40-42in segment growing at more than 100 per cent year-on-year from the third quarter of 2006.
This is superb news for the canny reseller. Selling HDTVs into the businesses environment lends itself well to up-selling and value-added services. HDTVs need to be installed and will require some specialist equipment in the way of brackets or stands and additional wiring. There is also a wide range of AV furniture available that can enhance a HDTV set-up, not to mention the opportunities to sell on audio equipment, such as surround sound speakers, receivers, subwoofers, amplifiers and other AV products to enhance the HD experience.
“Resellers have a big role to play in recommending the right products to customers,” Lewitt says. “Businesses want peace of mind and they want something they will be comfortable with. Warranties are important. Sony now has a two-year install and re-install warranty. If resellers don’t get something like that then it is going to give a warranty or guarantee itself, which is time-consuming and costly. By and large, things like that are a good thing and give businesses the kind of reassurance that they want.
“There are most definitely great up-sell opportunities, from brackets to stands, not to mention bespoke furniture. If VARs are not selling the add-ons, they are not maximising the sale. With HDTV add-ons, VARs are not forcing customers to buy things they don’t need because they actually need these items. Resellers also need to be pushing the installation services and preventative maintenance contracts.”
McParland says: “Resellers need to understand what they are selling, and that it’s not just about flogging a TV. There’s a great chance for selling on audio accessories, videoconferencing tools and AV furniture.”
Ambridge agrees. “I would have thought there’s a great opportunity,” he says. “It should be a very buoyant space over the coming years. In terms of add-ons there are video products such as Blu-ray and HD DVD players, audio systems to complement the screens and then the more specialist packages for content management. A clear value-add is the installation side of things. Most medium to large-sized systems will require some form of installation and maintenance.”
The only problem in the UK right now is HD content, or rather the lack of it, to be more precise. Blu-ray and HD DVD players are only just becoming available and are too expensive for many end-users. There are also only about 200 movies available at the moment.
BSkyB is driving a lot of demand with its Sky HD service while others like the BBC and cable companies are also making some HD content available. However, it is a long way from being widespread. BT has got in on the act with its broadband TV service, BT Vision, which will roll-out in HD later this year. Even so, BT might be big, but it has virtually no experience in the TV business.
Sondra O’Boyle, senior analyst at Current Analysis, says: “BT has taken a relatively conservative approach to BT Vision and it is too early to tell if there is sufficient appetite for the service. BT Vision does not offer streams of hundreds of internet TV channels and programmes over broadband, but instead combines Freeview with an extensive pay-per-view video on demand library of content. This approach lets BT dip its toes into TV waters without betting the bank, but the downside is that the service is unlikely to stir up much excitement in the market.”
That said, the fact remains that the lack of content has not stopped consumers flocking to buy HDTVs. For businesses, their need for that HD content is even less urgent. It is about investing in something now that will see them safe a few more years down the road.
As McParland says: “A lot of companies are buying into the technology to future-proof themselves for what’s coming down the line.”
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CONTACTS:
Current Analysis (0141) 148 314
DisplaySearch (001) 512 459 3126
Midwich (01379) 649 200
Samsung (01932) 454 000
Sony (01932) 816 000