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Content Undercover: DTV, HDTV and a Blip on the Horizon

Fantastic viewing options on the way By Miles Weston

Digital TV, HDTV is here and getting huge.  See that blip on the hill?  It's IPTV and it is going to offer some fantastic viewing options.  Content Undercover sleuth and expert industry analyst Miles Weston has the numbers and the scoop.

The standards for digital TV have been in place since 1994. It has only been in the last few years that the sale of HDTV sets got interesting.  While the Wonderful World of Disney sparked the sale of color TV sets, sporting events like the soccer World Cup and football's Super Bowl have driven the demand for digital TV -- especially large flat screens.

With digital TV becoming more affordable by the day, the demand for high-def home entertainment is growing steadily according to industry observations:
• 74% of European households will have digital TV by 2009
• 10.4 million digital TVs were sold in Asia in 2004 and 28.8 million will be sold in 2008
• 20.9 million Americans will have digital TV by the end of the year, 37 million by 2008
• 30 million digital TV subscribers in China this year
• 14 million British households have digital TV
• 15% of US adults plan to get HDTV
• Digital TV sales were up 70% in 2004
• By 2010 more than 370 million sets should be in use worldwide

What we can't figure out is that with 1000+ channels and the successful rise of reality TV, what are all these people watching?  Guess Alfred Hitchcock was right -- Television is like the invention of indoor plumbing. It didn't change people's habits. It just kept them inside the house.

While sales are good in front and rear projection systems, it is the flat screen (plasma and LCD) segment that has gotten all of the manufacturer attention (Figure 1).

Fig. 1

Panasonic expects the US plasma TV market to reach 1.6 million units in 2006
• LCD TV shipments were up 123% in 2004
• Chinese digital TV production will grow 37% per year thru 2010
• 2.8 million plasma TVs were sold worldwide last year and 1.1 million were in Q4

Panasonic and Pioneer have enjoyed a couple of years of good profit margins from large screen (40-in) plasma sets.  Both firms continue to expand manufacturing, growing the size of the screens and dropping prices.  Panasonic has pinned so much of its future on plasma sets they are determined not to give up market share…no matter what it costs.

But the rapid proliferation of LCD screens is just beginning to impact their market shares and bottom lines. While Panasonic says the better viewing at all angles will keep them in the quality viewing lead, with their new G7 (7th generation)  panels that are having an impact at the cash register.  They have already abandoned the sub-40-inch segment to LCD sets, the 44-inch LCD sets are cheaper by the minute and next comes the 50-inch and above arena.  Panasonic and Pioneer will have to be more aggressive in their pricing sooner rather than later.  Or just keep growing the size of their sets and focus on the "mine's bigger than yours" sub-market. 

There has been a lot of improvement in the quality of large screen LCDs and even more production capacity is ramping up.  Sony has a $2 billion LCD joint venture with Samsung.  LG and Philips have invested $5 billion LCD facility in Korea and they've committed even more investment in the coming years.  Sharp has a large LCD plant going up in Japan.  The market for eyes looks so promising that Taiwan and mainland China firms have joined the race.

Plasma has historically "owned" the large (40-inches and up) flat screen market because they provided better family viewing but G7 products have eliminated the color distortion and motion blur they had previously.  Even the fact that plasma sets are cheaper to make will disappear when the new LCD plants go on line.  These folks will not only pump out big screen TVs but also PC monitors as well as cell phone and digital-everything screens.  Volume is a huge elixir for price flexibility.

Whether it’s based on corporate ego or hunger, all of the firms are each projecting they will be the ones that get 40% of the worldwide market…of course!  So prices are in freefall.  The bloodbath will get worse and brand name premium is worth very little in a commodity market.  The plasma leaders expect the channel -- Best Buy, CompUSA, GoodGuys, Wal-Mart, Costco, Target (cripes everyone) -- to cut their margins to keep the "premium" sets competitive…yeah, like that cooperation always happens!

While Intel doesn't care what you watch your content on they are determined to play a big role in the home.  Their latest entertainment approach Viiv (like jive) may get them there if they could get over the Windows-wait.  Dell, Gateway, HP, all of Taiwan and half of China have seen the vision and the fact that all of our content is going digital (Figure 2).  They have come to play!

Fig. 2

Give them a couple of years and they might make engineers understand that UPnP really has to be universal and plug-and-play.

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Related Keywords:DTV, digital television, Microsoft Vista, IPTV, plasma, LCD, Digital TV, G7, Viiv, FOD, SOC, SD, HD

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