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'HDTV Gap' exists in Canada, researcher says

Canadian TV viewers may be just as confused about HDTV as viewers in the United States.

Rick Nadeau, author of Decima Research's "The Digital Domain," sees an "HDTV Gap" — the difference between those who own an HDTV and who have an HD set-top box — in Canada that points to viewer confusion about HD on par with that of U.S. TV viewers.

HD Technology Update spoke with Nadeau about Canadian TV viewers' perception of HD and how HDTV is developing in Canada.

HD Technology Update: How aware are Canadians of HDTV at this point, and what are the demographics of the typical Canadian HDTV owner today?

Rick Nadeau: Our research among households in general, and among digital TV subscribers in particular, shows that Canadians are increasingly aware of HDTV. Among digital TV subscribers, awareness of HDTV has jumped a full 10 percent over the past 18 months — from 73 percent in 2005 to 83 percent in 2006. Furthermore, this awareness is fairly pervasive across all segments of the population.

But awareness has yet to materialize into understanding. We are finding that there continues to be a notable "HDTV Gap" in terms of the proportion who own an HDTV set and those who claim they own an HD set-top box. There is clearly confusion in the marketplace pertaining to the use and need of a set-top box to achieve the full HDTV experience. To compound this, there is also significant confusion with the limitations around HD channels: three-quarters of existing HD television set owners, 81 percent of HDTV-ready households (i.e. households that own both the requisite TV set and the set-top box) and 60 percent of intending HD television set owners understand that only certain channels are available in HD format.

In terms of demographic profile, very few HDTV-ready Canadians are less than 24 years old — fewer than one in 10. They are more likely to be between 34 and 54 years old, the households likely earn more than $80,000 and they have children living at home.

HDTU: I've read recommendations to the Canadian government proposing that it concentrate its HD terrestrial broadcast efforts in populous urban areas and let those in more rural and remote areas rely on satellite, cable or IPTV for HD content reception. What direction will Canada's HD rollout take?

RN: Significant strides have been made and continue to be made to provide television and Internet access to Canada's rural and remote areas — it is, in my opinion, one of the areas where both industry and the government need to continue to work in tandem so these communities can reap the benefits of broadband services. The focus for the time being seems to be on high-speed Internet and perhaps less so on HDTV specifically.

But in rural regions, satellite TV is for the most part the only way to receive HD. There are a growing number of small cable system operators in many rural parts of Canada that are beginning to offer HD service, but it is happening at a slower pace. Certainly as high-speed Internet service becomes a more pervasive service in these regions, IPTV will also serve as a viable means for these Canadians to access HD content, but that is only happening on a very piecemeal and regionalized basis right now.

In urban centers, Canadians can tap into HD content a variety of ways — cable, satellite and telco. The telephone companies' IPTV offerings are limited to a small number of big cities, but they are working to expand their offerings to compete against the cable providers. Telco TV will get a major boost in the near future, perhaps this year, when Bell Canada introduces its IPTV offering in central Canada.

HDTU: What do you forecast the HD uptake to be among digital cable and satellite subscribers in Canada?

RN: We are currently seeing about 8 percent to 10 percent of digital service subscribers achieving the full HD experience — i.e. they claim to have both the set-top box and the HD television set. This puts the total HD household count across Canada at approximately 600,000 to 700,000 strong.

Based on our most recent study with Canadian households last fall, we have conservatively estimated this number to increase by about 20 percent by the fall of 2007, and at this rate, we could see Canada reaching the 1 million mark sometime in early 2008. Given the growing availability of HD programming and persistent decreases in technology costs, it is quite fair to consider our estimates to be conservative.

HDTU: I see periodic announcements by Canadian broadcasters about moves to launch HD programming, particularly newscasts. How would you describe the state of availability of HD programming produced in Canada?

RN: Although the quality of the HD programming currently available to Canadians is top notch, I wonder if the quantity may still not be meeting consumer expectations. As a proportion of the total amount of channels available to Canadians today, the average consumer may not believe that the availability of HD channels is stellar.

To further complicate things, there are still many HD set owners who seem to believe that they are watching HD programming because they have the requisite TV set — and there is another contingent that thinks that by owning both the set and the set-top box, they can watch all channels in HD. I can't help but think that this marketplace has become one that is increasingly difficult for carriers to sell HD programming channels or packages.

HDTU: Is there a particular price point that must be reached for HDTVs that could serve as a tipping point to mass adoption of HD by Canadian viewers?

RN: I don't think television set prices are the obstacle they used to be — about 30 percent of digital TV subscribers claim to have an HD-ready TV set, and given the market trend for prices for LCD and plasma sets, it is hard to believe that the pace will slow down. What we have been seeing, however, is that there continues to be a gap between TV set owners and set-top box owners, so I would sooner see the adoption of the set-top box as a critical obstacle for the market to overcome rather than the sets themselves. Until the industry takes consumer education well in hand, it will be difficult for full HD adoption among Canadians to grow at a pace the industry would like to see.

What one needs to wonder though is whether the industry has benefited indirectly from a misinformed marketplace — for instance, would HD adoption in Canada be where it is today if Canadians knew, for instance, that just owning the TV set would not yield a complete HD experience?

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