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By now, there's not a couch potato in America who hasn't heard the television industry's Big Sell: Digital TV is coming - soon - and it will deliver higher screen resolution, wide formats, variable and selective camera angles, five-channel surround sound, even perhaps high-speed Net access. But television set manufacturers, publicly giddy about the prospect of injecting life into a TV-set market that's been flat for five years running, ignored one small detail during their hypemeistering: There's nothing to put on the shelves yet.
Digital TVs will reach the market in late 1998, but with exorbitant price tags around US$10,000, and only limited high-definition programming to view on them. Perhaps realizing this, the television set industry, though still banking on a wicked growth period as DTV takes off, has recently come to its senses about the importance of its current analog TV revenue stream.
To that end, the industry is now engaged in a counter-marketing plan aimed to, well, make DTV look a little less attractive than purchasing one of the millions of analog TV sets needed to keep the industry afloat through the long analog-to-digital conversion.
Although everyone involved knows programming will drive the adoption cycle of DTV, set manufacturers insist that their product plans won't be dictated by the percentage of digital programming broadcasters will release.
On top of that, ABC, NBC, CBS, Fox, HBO, and everyone else is still weighing the virtues of delivering one HDTV show over their allotted 6 MHz of digital spectrum, or instead sending several, lesser-quality (and less bandwidth-hungry) standard definition digital TV signals in conjunction with data services.
Nevertheless, in accordance to the timetable laid out by the FCC, the big four broadcasters will have digital broadcasts in the top 10 American TV markets by March 1999.
Despite the confusion about the broadcasters' plans, John Taylor, vice president of public affairs at Zenith, said set makers aren't sweating a lack of programming. "In fact," Taylor said, "more than 80 percent of all prime-time programming today is already produced in 35 millimeter, and is already a high-resolution or a high-definition video source, and easily transferable to HDTV."
But whether this will amount to plug-and-play digital broadcasting doesn't mean set manufacturers are rushing full product lines to market in expectation of a spending spree. Representatives from Toshiba, Thomson (which manufactures the ProScan, RCA, and GE brands), Mitsubishi, Zenith, and Philips have all said that their first digital products to market will be large screens for the big-spending early adopters.
This leaves many in the industry worrying that the initially marginal sales of digital sets and a cooling interest in analog models over the next several years could spell big trouble for manufacturers as well as retailers.
Jim Carnes, president of the David Sarnoff Research Center, a private R&D firm that played a pivotal role in developing standards for digital TV, said, "The market might sag a little bit, but it doesn't have to do much sagging to cause lots of problems. I mean, this industry operates on razor thin margins. And it could sag 10 or 15 percent."
This summer, retailers began getting nervous, prompting electronics firms to redirect their salesmanship. Zenith has begun an offer that promises to allow buyers to put the full cost of certain analog sets bought through the end of this year toward a digital set bought by the end of 1999. But most manufacturers won't voluntarily subject their bottom line to such a bite. So they are doing some fast talking, un-selling their prized, but still non-existent, digital sets for now.
In an attempt to move existing boob tubes, the Consumer Electronics Manufacturers Association has launched a massive consumer educational campaign. With well-placed brochures and videos in electronics stores called "straight talk about digital products," CEMA is trying to soothe consumer pocketbooks by noting that with forthcoming digital converters, analog TVs bought today "will not become obsolete"; how broadcasters will "phase-in their digital broadcasts over a number of years" so as not to make viewers of the old analog signal feel left out; and how, with the incredible expense of initial digital TVs, most of their neighbors won't have one for another 10 years.
CEMA has also sent along some instructive role-playing literature meant for retailer eyes only.__Customer: I was thinking about getting a new TV, but I have been hearing about HDTV coming next year, and now I think I should probably wait awhile.
Salesperson: HDTV is not coming as fast as you may have heard. Sure, it'll be here eventually, and when it does it will be as great as the experts have said. But in the meantime, well, look at this map here.
Customer: But I heard that all TVs will be obsolete in 2006. I would be crazy to buy now.
Salesperson: No, you wouldn't be crazy at all.
Customer: Well, okay, maybe you're right. But rather than a big TV, why don't you show me something a little smaller and cheaper. This way, I won't waste my money.__
Needless to say, the customer in CEMA's scenario leaves the Best Buy or The Good Guys shop a few minutes later with a large screen TV with built-in Dolby Digital surround sound. And yes, it won't really be "obsolete" in 2006 when the FCC turns off the analog signals and converts to digital signals. The customer will merely have to fork over $1,000 for a digital-to-analog converter that offers none of the extra digital features when used with an analog TV.
Still, with the all-important holiday season coming up, manufacturer spokespersons are irrepressible in their efforts to unfold the enigma that is television. TVs don't last that long anyway, they say, and, well, people don't get rid of TVs, they migrate them - eventually moving them to another room to make space for a better one coming in. And, furthermore, this whole DTV thing was so overblown, if they could only find the people who overhyped it, they'd, they'd....
But talk with industry types long enough, and it becomes apparent how painful it must be for them to keep up such an unconvincing act without cracking a sick, revenue-induced grin about the promise DTV holds for their futures.
Ed Milborn, manager of advanced television systems planning at Thomson Consumer Electronics, the largest manufacturer of TV sets in North America, broke down relatively quickly to wax poetic about the psyche of the American mush mind and its soft spot for DTV.
"You see, nobody's seen digital TV, in terms of Mr. and Mrs. America. And as soon as he sees it, he likes it. Psychologically, if you watch SDTV, it's good. And then if you watch HDTV, you really like it. And then you switch back to SDTV, and you say 'I don't like that at all,'" he explained.
Milborn submits that he knows why HDTV induces such "gotta have it" attitude in people. "It's kind of like a drug to the brain," he said. "The brain's basically lazy. And when it goes back to SDTV, it's got to work again."
Before this new drug takes suburbia, however, some see rough times ahead for proponents like Milborn. Carnes, the R&Dster who had a hand in DTV standards, predicts that increasing costs, inflation, stagnating products sales, and price cuts stemming from competitive pressures to sell DTV products will make 1998 and 1999 the hardest years yet for TV manufacturers.
The television industry, which has been hovering at sales of around 25 million sets a year for the past five years, may see attrition before it sees growth. "I think the TV set manufacturers face a tremendously difficult five years ahead of them," said Carnes. "The stronger companies will be able to deal with it, and the weaker companies won't."
