Only two-thirds of US households with at least one HDTV set actually subscribe to high-definition programming, leaving an estimated 14 million households with HDTV sets but with no HD service, according to a study by by Frank N. Magid Associates.
The study of HDTV ownership and viewing behaviors revealed the continuing disparity between high-definition set ownership and service adoption, and the major opportunities for cable TV and satellite operators to grow their HDTV ownership base and programming customers through improved communication of the benefits of HDTV service.
HD…But Don’t Know It
HDTV set ownership continues to grow at a steady pace in the wake of the digital transition that drove adoption of HDTV sets? from 20% of US households in 2007 to 32% in 2008, the research found.
More than one-third (35%) of consumers report owning an HDTV set in their household, and an additional group of households describes their primary TV set as plasma or LCD and widescreen, but not HD, suggesting that an additional 8% of households own an HDTV set but aren’t truly aware of it. This, according to Magid, translates to 43%, or approximately 49 million households in the US that own an HDTV set.
Confusion about HD
The existence of this group of HDTV owners who are unaware of their set functionality suggests that consumers continue to be confused about their TV reception and display capabilities and also about the offerings and value of HDTV programming.
Those who describe their home as owning at least one HDTV set and subscribing to HD service remains limited, at 66% of HDTV set owners – nearly the same level of service subscription at 64% in 2008.
In terms of the size of the opportunity for operators, this translates to 14 million households with HDTV sets, but without programming service.
“The disparity between HDTV ownership and service adoption reveals challenges for programmers,” said Maryann Baldwin, VP of? Magid Media Futures. “Some consumers were driven to purchase HDTVs under the erroneous assumption that they would be prepared for the digital transition – and didn’t buy an HDTV set for the value of the programming in the first place.”
“On the other hand, this reveals a major opportunity to increase programming subscriptions and to close the gap between set buyers and service adopters though improved marketing and education,” said Jill Rosengard Hill, Magid SVP. “Since marketing buzz has waned after the digital transition, HD is fading as a top-of-mind feature for some consumers.”
The need for improved marketing is clearly demonstrated by the fact that 13% of consumers indicate that they have not seen or heard anything about high-definition television, the highest percentage since this survey was initiated in 2002.
HDTV Programming Lags
While HD programming service still lags significantly behind set adoption, HD programming service providers have made progress in the pace of conversion from buyers to subscribers, with 43% of buyers arranging for service when they bought their set, up from an average of 32% in the past 5 years,the research found.
However, service providers have not demonstrated the value of HDTV service to the one third of “sideliners” – those who own an HDTV set but don’t subscribe to HDTV service, the study said.? Four in 10 (42%) of sideliners admit that “options are not worth the fees,” and one third cite cost and affordability as the primary reasons for not buying service. Consumers are increasingly satisfied with HDTV sets simply for the design, with 32% saying they “like the way the set looks; don’t need HD programming” compared with 25% in 2008.
When asked if there’s any chance they may eventually arrange for HD programming service, 16% of these most recent HDTV set buyers say they may sign up for satellite HD in the next six months, while 22% may sign up for cable HD. This figure suggests that HD service providers have the opportunity to pick up another 4.5% of TV households as HD programming customers.
About the study: The online survey was conducted in October 2009 using a nationally representative sample of 1,373 adults age 21 years or more who own an HDTV set. This is the eighth consecutive annual digital TV and HDTV report released by Frank N. Magid Associates, Inc. The report is available for purchase from the firm.
