Here's the thing about HDM. . .

KEEBS1984

HD media (Blu-ray, HD DVD, HD VMD, etc.) probably won't ever beat out DVD. Shocking ( ) I know. It's just not likely to happen due to the "requirements" of enjoying such HD films.

Now, before I start on to the "why", let me say that I am not saying they will fail. HD media formats could very well succeed without taking over the entire market. It can reach critical mass, and it can become a huge money generator along-side of DVD. Now onto the "why":

HDM has requirements to enjoy. These requirements are relayed throughout almost every retail chain across the market. In order to enjoy HDM you need an HDTV. Bam! HDM already has a cap on how many units it can sell.

Now, according to this study (LINK) as of November 20th, 2007, about 25% of U.S. homes have an HDTV in them. Given the usual research study groups it probably has a +/- 5% error range. So let's say 20%-30% of U.S. Homes in the U.S. right now have HDTVs in them. This means that if HDM players were to sell like gangbusters right now, they could only take about 25% of the marketplace, leaving DVD with 75%.

So I know what you are already thinking. HDTVs are reaching mass adoption and eventually everybody will have an HDTV. Yes, you are correct. Eventually everybody will own an HDTV in the U.S., there is no doubt about it. As more and more CE companies stop selling/making SDTVs consumers will have no choice but to adopt HDTVs. However, despite this being true there are a couple of conditions that go along with it:

First, HDTVs will not be reaching complete penetration in the next 2 years (date when the BDA says Blu-ray will completely dominate the market, 3 years from last March) . Hell, I'd be surprised if HDTVs reached 40% penetration in 2 years. If you look at the timeline for HDTVs you can tell that the trend for buying HDTVs in not exponential like DVDs sales were. There won't be a short period time where there is a mass adoption of HDTVs. It happened with DVDs because Chinese manufacturers came in and slashed prices on a format that had no competition, didn't need an upgraded player to work, and offered features that were revolutionary (not evolutionary) to consumers. HDTVs are too expensive (even with Chinese manufacturers), and still too confusing with average consumers still believing that Plasmas are better than LCDs, which are better than DLPs. HDTVs will not grow exponentially, but rather gradually over the next 10 years. It has taken about 10 years to reach 25%, I think in another 10 years it might reach 90%-100%.

Second, the same people who have bought HDTVs in the last 10 years are not the same people who will be buying HDTVs for the next 10-15-20 years. A lot of these people will simply be getting HDTVs because they have to. They need a new TV, their old one broke, etc. These same people won't be rushing out to spend an additional $100 on HDM equipment/movies (assuming that at this time HDM players and movies drop to DVD levels).

So now let's throw back in the HDM equation. Currently, HDM (combined) is selling pretty well. There are charts that are showing that HDM (specifically Blu-ray) is beginning to show the same sales trends as DVD. Good news, right? If Blu-ray (or any other HDM format) is half as successful as DVD then it'll be well worth all the effort. However, at the current moment it can't be that successful. As soon as it hits the "wall" the sales trend will stop, and will then gradually gain momentum along with HDTVs, probably falling under the same percentage. For example, let's say HDTVs reach 50% market penetration, you can probably expect HDM players to reach 40%-45% penetration.

Finally, you have to take into account that when HDM seriously starts to take hold of the market there will also be radical price slashing of DVDs and DVD players (yes they can drop even lower). As with all products that are going into retirement, you can be assured that studios and CE companies will want to hang onto any last profits with that format for as long as possible even if that means slashing prices. This, in of itself, could undo HDM from establishing a dominant hold over the home video market by itself. As an evolutionary product (not a revolutionary product) there will be that large percentage of people in the U.S. who honestly just won't see the benefit in HDM and will wish to take advantage of the reduced DVD prices to expand their movie collections even farther.

This may seem like a doom & gloom post for HDM, but it's not. Actually, given the conditions, I think that HDM is very lucky to be coming into the market now as opposed to later or earlier. If HDM had come out in the beginning of the decade there probably wouldn't have been enough HDTVs to supplement it, and it would have died off like Laserdisc. In turn, had HDM launched later this year, or even over the next 2 years there is a chance that it might not have reached enough critical mass to combat digital downloads when they become feasible, which is going to happen eventually, don't kid yourself if you think that it's an impossibility. Bottom line, HDM will become probably become a success (in one form or another), but chances are the consumer isn't just going to stand up one day and throw out their DVD collections. In the end, I hope you are comfortable with a 2 format system because given all that I just explained I can't honestly see it happening any other way.

Thanks for reading.

bruceames

Nice post.

I think that HDTV penetration will continue at an accelerated rate and probably we'll see 50% penetration in about 2 years (I think we're closer to 30% now than 25%), as by then nearly every TV sold will be an HDTV.

If HD DVD were to win, then I think HDM would go mainstream by default as HDTV is (nothing else to buy). However with Blu-ray winning, I don't know if that will happen because Blu-ray players could never drop so much in price to where they can stop making DVD players and also combo only releases could never happen, ensures HDM gets sold by default.

HD Goofnut

Well said Keebs. I think you are right on the money.

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mobiushky

I have a couple points of contention with your post. BTW, nice and well thought out. Anyway. One thing you fail to consider is the looming DTV deadline of Feb 19th, 2009. Now you and I know that on that date, the world is not switching to HDtv, but to Digital TV and there is a big difference. HOWEVER, the main stream population does not truly understand the difference. AND add to that they already feel they are going to have to buy a new tv before then anyway. If they have to buy a new tv, it will be an HDtv because that’s all you can get now as mandated by the FCC. (Manufacturers are simply not investing Digital technology into SDtv sets anymore. And the FCC as dictated that all TVs sold must be digital capable by March 1, 2007). SO, the average consumer faces a quandary, buy a new tv now, or save money and buy it for Christmas 2008 since I need that new tv in February anyway. While I will not argue that HDtv penetration is not huge now, this next year will be a banner year in the TV market. While it may only be 25% today, over the next year I would easily expect that number to explode. And not over 10 years.

Second, a lot of HD-DVD backers are upset with NPD numbers on players sold because they “include free BD players.” What they fail to realize is that the way the consumer gets the player is completely irrelevant. That consumer has #1 a new HDTV and #2 a new BD player. Is that consumer now going to not buy any BD movies? That would be simply idiotic to ignore. And while BD media is still more expensive, a new release of a DVD will still run you $15-20. Why not pay $25 for it on BD? What you are basing all of your thoughts on is what has happened in the past. We have not even begun to scratch the surface of what is happening right now, let alone during the course of the next year.

As for downloads, yes they will happen. But it is still going to take a long time to develop the infrastructure to provide full HD on-demand movies that rival HDM. I know, but people are willing to accept lower quality, look at the mp3, etc, etc,. I disagree. MP3’s are a very poor indicator of movie trends. Sure people will be willing to download lesser quality to watch movies on ipod and what have you. BUT, movies are a different animal than just music. Movies are an event to our culture. We go to huge buildings with massive screens to “experience” movies. I know concerts, etc, still not the same. There is something in the psyche of people that makes us want to sit down, dim the lights, pop some pop-corn and experience that movie. I have no doubt that downloads will happen. And for a while they will be quick and lower quality and a lot of people will put them on their cell phones. But they are going to be very disappointed trying to put that movie on their TV. I feel that HDM has at least 5-7 years before a download will even begin to be equivalent. You are talking 30+ MB/sec badnwidth in an age where the MAX is around 10 MB/sec burst with no other traffic. Imagine 500 house trying to pull 30 MB/sec? Imagine 500,000. Imagine 5,000,000. And then another couple years before it becomes mainstream.

I do believe that HDM will be smaller than DVD. But more in the way that cable has affected Broadcast TV. The networks are still there. People are still watching tv, they are just spread over many more avenues than ever before. Maybe you call that a niche market, maybe. But I don’t think of it as being miniscule and irrelevant. I think it will be bigger than that, but by no means as large as DVD.

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Rick-F

I recently read an article that one of the cable companies can bring a complete HD movie (upload to DVR) into a home in 4 minutes. They do this by using 4 HD channels at once to increase the bandwith in order that the customer does not have to wait long to view a purchased movie. He can begin playback in just seconds . . .

Downloads are much closer than most of us think they are.

hatt

HD DVD/ Blu-ray quality downloads are a little ways out for most people.

unotis

You miss the point, many people would prefer ease and speed of getting the movie over quality and many cannot even tell the difference, you yourself have posted that the consumer doesn't care about the difference between SD DVDs at 480p and upscaled DVDs at 1080i.

And the ability of viewing 720p high definition downloads is here and there have been more sold by Apple then both formats combined.

As much as we might not like it, downloads could very well replace both formats in the near future and only purists like on this forum will complain.

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mobiushky

I know about that set-up. First, it's only in the initial stages and is not ready for public (and apparently will not be for some time.) Second, it's not an HD "channel" it is a bundling of 4 DSL channels together to form a parallel trunk. It means your computer will get faster downloads, but not necessarily your tv just yet. You'd have to use a media extender to port the movie over to your tv. How many people have those? Well besides the xbox and ps3 owners. I have also read that the compression is still greater that HDM, but not sure how much, and I can't find the article right now, so maybe that's a moot point.

I have no doubt that downloaded media is close and will happen. But I do doubt that it will completely replace physical media in 3 yrs. 5-7 yrs? I could see that.

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hatt

I agree that downloads will become more popular with each passing day but I still see a substantial market for a physical media(not necessarily an optical disc) for some time. People have been programmed from the beginning to actually have the media in their hands. That is changing but it will take a long time to complete.

MikeRox

That would certainly explain why Apple have had more downloads/sales from their download service (which launched around the same time as HDM) than HD DVD and Blu-ray media sales have had combined (even inspite of BOGOs etc).

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mobiushky

I need to add one major caveat to both of my posts. And it is simple. This year, IMHO, is the point of no return for HDM. One of the formats needs to win and do it convincingly before the end of the year. This next Christmas is going to be HUGE for HD. People are going to be flocking to buy the new TV's before the Feb deadline and Christmas is a Perfect date. If there is not a cleat winner in the HDM war, then consumers will avoid buy the new players blue or red and simply buy the TV. Then, the download becomes the next format. If Comcast can show even stripped down HD movies then the foot is in the door that that will be next and if people didn't buy HDM for Christmas they might as well wait another 2-3 yrs for better downloads. So from that standpoint, I would totally agree about downloads. I just think there is still a very small window of opportunity and a two format war is going to cloud that window over very badly.

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Super XP

Great Post. HD DVD is the only Hi Def format geared to and capable of completely replacing SD DVD in a short time frame (approx: 2 to 5 years time). The DVD Forum can easily implement an effective strategy for doing so quite easily providing Blu-Ray was out of the picture.

If Blu-Ray did win over HD DVD, they would never be more than a niche format if that. HDM is lost without HD DVD and/or HD Downloads.

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Jed

Bzzzzzt.........Wrong. First the analog shut down date is Feb. 17 2009. Secondly there is no mandate for people to buy a hdtv for that date either. The analog shut down date only applies to people who receive their tv signals from over the air broadcasts via a antenna. This does not apply for those that get their signals from cable or satellite co's because they are privately owned closed looped systems. It also doesn't say they have to purchase a digital television either. Here is some questions and answer from the governments dtv.org website:
1: If I have an older analog television, will I have to throw it away after February 17, 2009?

No. A digital-to-analog converter box will allow you to continue using your existing analog TV to watch over-the-air digital broadcasts. You do not need to get rid of your existing analog TV. In addition, analog sets should continue to work as before if connected to a subscription service such as cable or satellite TV. Also, analog sets should continue to work with gaming consoles, VCRs, DVD players, and similar products that you use now.

2:If I want a new TV, will I have to buy a High Definition TV (HDTV) to watch digital broadcast television after the transition?

No. It is important to understand that the DTV transition is a transition from analog broadcasting to digital broadcasting. It is not a transition from analog broadcasting to High Definition broadcasting. Digital broadcasting allows for High Definition broadcasts, but High Definition is not required, and you do not need to buy a HDTV to watch digital TV. A Standard Definition DTV (which is simply a TV with an internal digital tuner), or a digital-to-analog converter box hooked to an analog TV, is all that is required to continue watching over-the-air broadcast television. Digital broadcast television includes Standard Definition (SD) and High Definition (HD) formats. You can watch High Definition programming on a Standard Definition DTV (or on an analog TV hooked to a digital-to-analog converter box), but it won’t be in full High Definition quality. It is also important to know that Standard Definition DTVs are comparably priced to similar sized analog TVs.

3:What are low-power (LPTV), Class A, and TV translator stations and how does the DTV transition affect them?

You may have noticed that Congress mandated that “full-power” TV stations will not be able to broadcast in analog after February 17, 2009. While the majority of the viewed TV broadcast stations are full-power stations, three other categories of TV stations exist – “low-power” stations, “Class A” stations, and “TV translator” stations. There is currently no deadline for these stations to convert to digital broadcasting.

The FCC created low-power television (LPTV) service in 1982 to provide opportunities for locally-oriented television service in small communities. These communities may be in rural areas or may be individual communities within larger urban areas. LPTV stations are operated by diverse groups and organizations including high schools and colleges, churches and religious groups, local governments, large and small businesses and individual citizens. More than 2,100 licensed LPTV stations are in operation. LPTV programming can include satellite-delivered programming services, syndicated programs, movies, and a wide range of locally-produced programs.

Class A TV stations are former LPTV stations that have certain interference protection rights not available to LPTV stations. These stations are technically similar to LPTV stations, but unlike LPTV stations must air at least three hours of locally-produced programming each week and comply with most of the non-technical regulations applicable to full-power stations. Approximately 600 licensed Class A TV stations are in operation.

A TV translator station rebroadcasts the programs of a full-power TV broadcast station. Translator stations typically serve communities that cannot receive the signals of free over-the-air TV stations because they are too far away from a full-power TV station or because of geography (such as uneven terrain or mountains). Many of the 4,700 licensed TV translator stations operate in mountainous or more remote areas of the country.

There are several ways to determine whether the broadcast stations you view over-the-air (with a rooftop antenna or “rabbit ears” attached to your TV) are LPTV, Class A or TV translator stations. Class A stations are required to visually or aurally identify their stations with their community of license and call sign (that includes the suffix “-CA” for Class A) at sign on, sign off, and on an hourly basis. LPTV stations also must regularly identify their station call sign. When locally originating programming, they must visually or aurally identify their call sign and community of license at sign on, sign off, and hourly. LPTV call signs may consist of four letters followed by the suffix “-LP” (for low power) or, alternatively, five characters beginning with the letters K or W followed by two numbers (their operating channel) and two additional letters. Also, some TV translators are identified by the full-power TV stations whose signals they rebroadcast. Further, LPTV, Class A, and TV translator stations may regularly broadcast information as to their status, and may include information regarding the DTV transition.

While the February 17, 2009 deadline for ending analog broadcasts does not apply to low-power, Class A, and TV translator stations, the FCC will require these stations to convert to digital broadcasting some time thereafter. Nearly 2,000 of these stations have been authorized to construct digital facilities and some are broadcasting in digital already. The FCC is currently considering the remaining issues involved with the low-power digital transition and will make decisions regarding these stations in the future

4:Will cable customers with analog TVs have to buy or rent a set-top box from their cable company? If so, how much will it cost?

First, it's important to know that the February 17, 2009 deadline for the digital television transition only applies to full-power broadcast stations. Cable companies are not required by the government to transition their systems to digital, and can continue to deliver channels to their customers in analog. Cable companies are actually required by FCC rules to continue offering local broadcast stations to their customers in analog as long as they offer any analog service. This requirement will continue for at least three years after February 17, 2009. The Commission will decide in 2011 whether the requirement should be continued beyond February 17, 2012. This means that customers who receive analog cable service (without a cable set-top box) will be able to continue to do so.


However, for business reasons (among other things, digital is much more efficient than analog), cable companies may be interested in transitioning their systems from analog delivery to digital delivery. If a cable company makes the business decision to go all-digital (meaning it will stop offering any channels to its customers in analog), it must ensure that its analog customers can continue to watch their local broadcast stations. This may require customers with analog televisions to get a set-top box. If the cable company provides the customer with a set-top box, any costs related to it will be determined by the cable company. Therefore, it is recommended that analog cable customers contact their cable company to ask if a set-top box will be needed, when it will be needed, and if there will be a cost.


It is also important to note that a cable set-top box is different from a digital-to-analog converter box. A digital-to-analog converter box is necessary only for analog televisions that receive their programming over-the-air using a rooftop antenna or "rabbit ears" connected to the set. A digital-to-analog converter box is not necessary for a TV connected to a paid television service such as a cable or satellite TV provider. Information on any set-top boxes needed for a paid service such as cable or satellite should be obtained from the service provider.

5o cable TV networks, like CNN, MSNBC, Lifetime, etc., have to switch to digital broadcasting as well?

No. The current requirement to switch from analog to digital only applies to full-power broadcast TV stations, which use the public airwaves to provide free over-the-air programming. However, as cable providers convert to digital transmissions over their systems, you may need to subscribe to their digital tier to continue to receive this non-broadcast programming.

This is just another fine example about a subject were the facts get confused, just like HDM. For most people (with cable and satellite)Feb. 17 2009 will come and go and they will not notice any change in their tv signal at all. So there isn't going to be this giant rush for hdtv's next christmas and an upsurge in HDM purchases either.

mobiushky

[quote=Jed;511073]Bzzzzzt.........Wrong. First the analog shut down date is Feb. 17 2009. Secondly there is no mandate for people to buy a hdtv for that date either...QUOTE]

Nice long post to basically say exactly what I said. You tell me I got it "wrong," other than the 17th vs the 19th (which was a typo that I can't fix), where did I get it wrong?

I specifically stated that the switch to Dtv is NOT to HDtv. Do you think I'm some kind of idiot? I know that. I also already knew everything you posted. But you failed to read the important part of what I posted. Despited the wonderful in depth post you made, which is probably spot on I'm sure, but I'm not going to read the whole thing as it would be redundant, the main idea of what I posted was:

", the main stream population does not truly understand the difference. AND add to that they already feel they are going to have to buy a new tv before then anyway."

Kind of what you said isn't it? I get it, you get, the mainstream DOES NOT! I get calls nearly everyday from family and friends asking me when they have to buy an HDTV so they can keep watching tv after the switch. I tell them until I'm blue that they don't have to if they have cable. It still doesn't sink in. The perception is that they have to buy one to keep watching tv EVEN IF IT'S WRONG. I finally told my mother in law to go ahead and get the $50 converter deal from the fed even though she has both an HDTV AND Cable!!!! She won't listen to me and simply doesn't get it. That's whats rampant and I doubt and FAQ will change that. Jeez !!!!! Why are people so Freaking touchy around here! I am not saying "people HAVE to buy HDTV" I'm saying people THINK they have to when they don't.

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Jed

I agree what you were saying up to this point. Its what you stated after this sentence that I am responding to.

"If they have to buy a new tv, it will be an HDtv because that’s all you can get now as mandated by the FCC. (Manufacturers are simply not investing Digital technology into SDtv sets anymore. And the FCC as dictated that all TVs sold must be digital capable by March 1, 2007)"

The FCC has not mandated hdtv and the manufactures did not stop making sdtvs either . There is shelves at the kmarts and walmarts filled with sdtvs from various manufactures. Even my local independent tv dealer has them and they are selling very well.

The televisions of the future as mandated by the FCC are 480i 4x3 format and will have ntsc, atsc (to receive digital aver the air broadcasts), and qam decoders (to receive in the clear cable tv channels). But an important thing is that they didn't require the replacement of analog tvs and the adoption of hdtv after the shutdown date. Has the FCC set regulations pertaining to hdtv broadcasts: YES. Has the ATSC set specifications pertaining to hdtv broadcasts: YES. But there is no mandate to switch to hdtv at all and most likely never will be. HDTV is just a premium service just like HBO.

I agree with you 1000% about people being confused. It seems to me that every time the government, CE industry, and the media try to explain this they seem to create more confusion. The consumers are not confused about HD DVD or Blu-ray, but about the impending analog shutdown date. I do apologize if my tone seems hostile because its not intended to be that way.