HD metrics

By any measure, HDTV is making its mark on the television landscape in the United States. Viewers, programming hours and sets sold are all up, and consumer
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By any measure, HDTV is making its mark on the television landscape in the United States. Viewers, programming hours and sets sold are all up, and consumer desires this holiday season point to strong prospects for the future.

In fact, a new poll from the Consumer Electronics Association (CEA) found that when consumers were asked if they could have any gift this holiday season, what would they choose, “big screen television” — generally understood to be a synonym for a 40in or larger flat-screen HDTV — came in third, behind a new computer, and peace and happiness.

While there's general consensus among researchers that HDTV has gained strong momentum and will continue to proliferate and eventually dominate television viewing, Nielsen Media Research raised a few eyebrows in late October when it reported that only 13.7 percent of U.S. television households have an HD set and tuner and that 11.3 percent are actually receiving HD programming.

That's 15 million households with the gear needed to watch HD, a figure significantly lower than what's quoted by other industry authorities:

  • The CEA data from June 2007 shows 32 percent of U.S. households own an HDTV.
  • Leichtman Research released figures last month showing about 25 percent of U.S. households have at least one television set that can receive HD programming.
  • Strategy Analytics in October projected 40 percent of U.S. households would own a flat-panel TV by year's end, although it must be noted that not all flat-panel TVs are HD.

The difference between Nielsen's numbers and those generally accepted in the industry is significant — a disparity of between 10 percent and 18 percent. This raises the question: Who's got it right?

That's more than an academic question. The difference between 13.7 percent and 32 percent is the difference between a market of early adopters and innovators and a market filled with mainstream adopters. With hundreds of millions of dollars on the line in capital investment and marketing funds, that's an important distinction.

Leichtman Research Group in Durham, NH, specializes in research and consulting on the broadband, entertainment and media industries. Led by Bruce Leichtman, the market research firm said in November that about one in four U.S. households owns an HDTV. Why are Nielsen's numbers so much lower?

“Plain and simple. They used the wrong denominator,” Leichtman says. “Their number is just wrong. Their denominator was households that had HD sets with a built-in tuner.”

According to Leichtman, the number of people Nielsen found who are actually viewing HD television is similar to his organization's number.

“But their actual number of HD homes, just based on sales, based on anything, is impossibly low,” he adds.

Nielsen methodology

However, Leichtman's characterization of what Nielsen used for its “wrong denominator” may not be entirely accurate. In announcing its findings, Nielsen did in fact define what it terms HD-capable households as being “equipped with an HD television and HD tuner capable of receiving signals in HD.” The research organization never said its universe of HD-capable homes included only sets with built-in HD tuners.

The CEA updates its estimate of HD households in the United States twice per year. The last estimate in June pegged the percentage of HD households at 32 percent, up from 26 percent in January. According to Tim Herbert, CEA senior director of market research, the association's research methodology is based on two prime components, telephone and on-line surveys and detailed sales data of manufacturer shipments into the retail channel.

“Nielsen's number appears to be quite a bit lower than everyone else,” Herbert says, referring to the general consensus about the number of HD households among independent researchers. “One thing we speculated, if you look at the number of households actually receiving HD — and that would be 44 percent — 44 percent of the 32 percent (CEA's HD household penetration) comes out much closer to the 13.7 percent figure Nielsen has (for HD-capable homes).”

Nielsen methodology

Nielsen's Oct. 30 release of numbers for HD-capable and HD-receivable households offers statistics for national HD household penetration as well as the number of HD households in 13 individual markets. Nationally, the numbers show that from a total universe of almost 113 million TV households in the United States, 15.5 million are capable of receiving HDTV — in other words, those households have an HD set and an HD tuner. Further, it revealed that 11.3 percent, or 12.7 million households, have the HD equipment and are actually receiving one HD channel or network.

Nielsen's numbers are based on total U.S. and local People Meter homes. According to Anne Elliot, Nielsen media VP of communications, measuring HD households based on the organization's 35,000 People Meter homes is significant. To become a People Meter home, households must agree to allow a representative from Nielsen to enter their home to connect the meter to a set or set-top box. Therefore, the organization has firsthand knowledge gleaned from observation byits trained personnel about what's actually being used in the home to receive and watch television.

“We held out coming out with a universe estimate until we could do it based on our field reps actually seeing the television,” Elliot says. “As you can imagine, if you call somebody and ask, ‘Do you have high-definition television?’ everybody who watches TV and sees ‘Now in high def,’ a certain percent of those people, I would guarantee, will then assume they have high definition. That does not mean they have the equipment to see high definition.”

Additionally, if a People Metered household buys a new television set and begins using it rather than the metered set, Nielsen can detect a change in the household's viewing and respond.

“We'll pick up a dramatic change in viewing in such instances,” Elliot says. “That might trigger us to call them and say, ‘We've noticed there is no viewing in your living room anymore. Did you get a new set?’ Then we come back out and install it. We check each day to ensure that the data we get is good, which indicates that the equipment is in working order.”

HD-receivable homes

So, who's right? Nielsen on the low end, or the Consumer Electronics Association, Leichtman Research Group and others on the high end? It seems impossible to know for sure. Both camps make strong cases for their view of HD market size.

Perhaps the more relevant number for stations, groups, networks, consumer electronics manufacturers, the ad community and everyone else whose future is touched by how many HD households exist is what Nielsen terms HD-receivable homes.

When it comes to how many homes are actually watching HD programming, the numbers are much closer. Nielsen pegs the figure at 12.7 million households nationally. Leichtman Research estimates about 53 percent of HD-capable households, or about 15 million, actually receive HD programming. Similarly, the CEA puts the number at about 16 million households.

Working from this common agreement about how many households actually watch HD in the United States appears to give the industry a baseline from which to measure its progress. Perhaps that's where the industry should focus its attention.

Phil Kurz authors several Broadcast Engineering e-newsletters, including “HD Technology Update.”

Top 5 Holiday '07 Wish List Items Among Adults No. 1 Computers No. 2 Peace and happiness No. 3 Big-screen TV No. 4 Clothes No. 5 Money Top 5 Consumer Electronics Gifts Consumer Hope To Receive No. 1 MP3 player No. 2 Notebook/laptop computer No. 3 Video game system No. 4 Digital camera No. 5 Any type of TV Source: Consumer Electronics Association 14th Annual CE Purchase Patterns study HD Television Household Estimates November 2007
TV HHs HD-Capable % HD-Receivable Total U.S. 112,880,000 15,500,000 13.7 12,730,000 11.3 New York 7,391,940 1,334,840 18.1 1,293,790 17.5 Philadelphia 2,939,950 457,900 15.6 438,110 14.9 Detroit 1,925,460 238,830 12.4 212,370 11.0 Boston (Manchester) 2,393,960 399,440 16.7 388,350 16.2 Washington, DC (Hagrstwn) 2,308,290 447,160 19.4 387,680 16.8 Atlanta 2,310,490 345,680 15.0 287,710 12.5 Tampa-St. Pete (Sarasota) 1,783,910 296,300 16.6 277,970 15.6 Chicago 3,469,110 585,960 16.9 485,580 14.0 Houston 2,050,550 344,260 16.8 270,820 13.2 Dallas-Ft. Worth 2,435,600 425,420 17.5 364,850 15.0 Los Angeles 5,647,440 1,152,380 20.4 965,200 17.1 San Francisco-Oak-San Jose 2,419,440 397,860 16.4 320,740 13.3 Seattle-Tacoma 1,782,040 255,960 14.4 216,530 12.2 Source: Nielsen Media Research, October 2007.