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Revenue from pure HD cable networks to reach nearly $1 billion by 2009

The number of purely HD cable networks and the revenue they generate is expected to grow dramatically over the next five years, according to a new report from Kagan Research.

According to the first edition of Kagan's Economics of High Definition Cable Networks 2005, eight cable networks are classified as offering pure HD services and nine more are on the way this year. Over the next five years, revenues for the eight are expected to produce a compound annual growth rate of 88 percent, reaching $943 million. Most of the revenue in 2009 will come from ESPN HD, followed by HDNet and Discovery HD.

Expenses will actually decline on a per subscriber basis for pure HD networks, the report found. Today, per subscriber expenses for HD networks are $16.43. By 2009, this figure will be 68 percent lower, or $5.26 per subscriber, according to the report.

The report pointed to several factors spurring HDTV cable network growth, including:

  • More than 12 million HDTV sets sold to U.S. consumers; bringing penetration of HD sets into TV households to 10 percent;
  • 1373 stations broadcasting in digital in 211 markets serving 99.98 percent of TV households;
  • DBS operators garnered 672,000 HD tier subscribers in 2004, which is expected to reach 11.5 million by 2009;
  • Networks migrating to HD feeds are prompted by the limited amount of bandwidth available on cable systems and satellite transponders; and
  • MPEG-2 remains the dominant codec; however, a migration to MPEG-4 and/or VC-1 is just around the corner.

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