The percentage of U.S. households that said they were interested in HDTVs fell this year compared to those who expressed an interest last year, and the number or those reporting to have little or no interest has grown, according to a series of studies from market research firm In-Stat.
At the same time, worldwide interest in HDTV among consumers is rising, with particularly strong interest in France and South Korea, the research firm said. The reports also showed that consumers are choosing LCD TVs over their plasma display equivalents in good number, which will be responsible for LCD televisions claiming 75 percent of the market by 2011 and the plasma market share dwindling to below 15 percent.
HD Technology Update spoke with Michael Inouye, the In-Stat research analyst responsible for the studies, about the results and the possible reasons behind the findings.
HD Technology Update: Your reports find that U.S. consumers have reduced interest in HDTVs. Could you elaborate on your findings and possible reasons for the change?
Michael Inouye: We actually did two studies. One was phone-based and the other was Internet-based. The phone-based study was done with random dialing between 2006 and 2007. The level of interest in the top two boxes — those who were most interested — and the bottom two — the least interested — went down and up respectively, so interest in the aggregate has gone down, except for the middle-aged group, which went up a little bit. In the Internet-based survey, the results were quite a bit higher, so it could just be a difference in sample pull.
As for why interest may have gone down, there are a number of different reasons. The question was asked to those who do not currently have an HDTV. So, what we are doing is filing down the pool of those who don’t have it. Those who were more interested in HDTV, may have purchased one already, and those who don’t have it are less interested, or weren’t interested in the first place. It may be shifting that way.
It could also be that consumers are becoming more cognizant of what HDTV actually means — the physical device. There have been studies that have come out reporting that consumers were upset because when they purchased the HDTV, they didn’t realize they needed HD content to actually get the HD picture. They had thought that buying an HDTV would get them a better picture, and when they hooked it up to their cable without HD, in some cases it was actually a little bit worse quality. The way I look at it is better picture is an improvement, but it isn’t something like the way DVDs completely changed the way you watched your recorded media. With a DVD, you could plug it in and you didn’t have to rewind it, whereas HDTV is a step-up in quality, and you have the different form factor, which is nice. To me, it’s more of a form factor issue than the actual picture quality.
HD Technology Update: Your report finds that interest in HDTV internationally — particularly in South Korea and France — is strong. What do you forecast regarding the growth of HDTV internationally?
Michael Inouye: Internationally, HDTV is newer than in the U.S. where it’s more mature. So, some of the growth in interest could be related to that. The interest in purchasing HDTV ranged from a low in the UK, with 29.6 percent saying they were very interested, to a high of 44.6 percent in France, whereas in North America it was around 13 percent selecting the top two responses related to interest and 55 percent selecting the bottom two.
HD Technology Update: Could you clarify top two and bottom two?
Michael Inouye: It was “extremely interested” and “very interested” for the top two and “not very interested” and “not at all interested” would be the bottom two.
HD Technology Update: Your report forecasts LCD-based televisions having 75 percent market share within four years. What are the primary reasons consumers are showing a preference for LCD technology?
Michael Inouye: Part of the reason for the LCD strength is that when they came to market, they had more screen sizes. In the smaller sizes, they were cheaper. Plasmas were mostly hitting the 40in screen size range. They were more expensive because of size. So, as people upgrade they tend to buy the same thing.
As far as forecasting going forward, plasma seems to be relinquishing the 40in screen and targeting the 50in-plus sizes. The plasmas were cheaper in the bigger screens, but now LCDs have gone up and are pretty much cheaper than the 40in size plasmas. So plasmas are going toward 50in, where they are cheaper again. But as you go up in screen size, you are also losing the part of the market where 40in was the largest desired.
They’re also putting the 1080p in there. Realistically, 1080p is most optimal for 50in or bigger where you get the benefits of that higher resolution. Plasma makers are saying, “1080p is for 50in and bigger, and that’s where we are putting it.” Compare that to LCDs where you get the 1080p in screen sizes much smaller than that.
Depending on the consumer, they may look at it and realize that 1080p is really better at 50in or more, or are they may say it’s a value-add or they just want the 1080p, not caring what screen size it is. In that respect, LCD is going to be a little bit better in terms of the price point. Also, when you look at 1080p, it’s cheaper to implement in LCD than in plasma, so even at the 50in, the LCD may have a price advantage for that reason as well. Also, the production of plasma screens is going down.
HD Technology Update: Your reports say that worldwide shipments of DTVs are expected to grow from 68 million last year to 144 million by 2011. How important of a factor will the U.S. DTV transition in February 2009 be in propelling that growth?
Michael Inouye: For the U.S., the transition is not going to be a huge factor, because most of them, if not all, that are bigger than 18in have integrated DTV tuners, so it’s pretty transparent to the consumer. Also, only 13 to 15 percent of U.S. households are terrestrial-only, so that is not a significant number, and most of those households aren’t the ones that are that interested in HDTVs anyway. So, they will be the ones who go for the converter boxes watching with the box on their analog TV.
When it comes to the transition, driving the growth really isn’t there. Most of it in the United States is form factor, or if you are going to upgrade to HD, DIRECTV is going to have 100 HD channels. There is a push to have more HD channels in the United States, especially, so that will be driving the North American growth.
Worldwide, for a lot of countries it’s just a form factor. They may not have any HD channels, or just a few. So, they aren’t going to buy HDTV just because of those few channels. A lot of it again is just the new form factor. It’s slim and bigger — a new thing.
HD Technology Update: Is there anything else about the studies that you would like to add?
Michael Inouye: Part of the report talks about how manufacturers are trying to differentiate themselves with features, like networking. HP has its MediaSmart TV pushing WiFi for interconnectivity. Sony has its Internet link for the Bravia. There’s almost more of a convergence thing happening where we might see the TV becoming the centerpiece of the home and not jut a dumb video player.
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