Powered by TMCnet
| More

Cable Technology Feature Article

November 24, 2009

There is Consumer Resistance to Paying for HDTV Service: Why?

By Gary Kim, Contributing Editor

Although 43 percent of U.S. households own a high-definition TV set, about 14 million of those households apparently have chosen not to subscribe to an HDTV service, a new survey by Frank Magid Associates report. “Those who describe their home as owning at least one HDTV set and subscribing to HD service remains limited, at 66 percent of HDTV set owners, nearly the same level of service subscription at 64 percent in 2008,” survey officials said.
The obvious issue is “why” so many consumers have chosen not to subscribe to an HDTV tier of service beyond their other multi-channel TV services.
Analysts suggest consumers are unaware of their set functionality and continue to be confused about their television reception and display capabilities. But, it seems clear the problem is more complex than that.
In part, "consumers remain uninformed about the offerings and value of HDTV programming," survey officials said.
But the survey also found other logical reasons for the resistance. About 42 percent of sideliners admit that "options are not worth the fees," and one third cite cost and affordability as the primary reasons for not buying service.
Consumers are increasingly satisfied with HDTV sets simply for the design, with 32 percent saying they like the way the set looks; don't need HD programming compared to 25 percent in 2008.
If one had been involved in discussions about HDTV a couple of decades ago, when HDTV did not exist, several issues already were clear. Image quality, though touted as the primary advantage, might not be the only reason people buy HDTV sets.
In tests, consumers showed images of identical quality chose the HDTV aspect ratio over the existing standard. In other words, people prefer the different 16:9 aspect ratio, that used by movies shown in theaters, for example, over the 4:3 that was typical of legacy TV.
In other words, the shape of the screen was attractive, irrespective of image quality. Another angle is simply screen size: people prefer larger screens to smaller screens.
Also, there is the issue of form factor. People like flatter, slimmer displays compared to the boxy, bulky form factor of legacy TVs. Additionally, consumers shown pictures of identical image quality preferred better audio, so some buyers might prefer HDTV on larger screens when they can create a home theater experience, irrespective of image quality.
That isn't to say that image quality is unimportant. Some types of programming clearly benefit from HDTV, including sports programming, for example.
But even decades ago, it was clear that there are many motivations for buying an HDTV display, and picture quality is not the only variable.
To be sure, there is room to close the gap between set buyers and service adopters though improved marketing and education, Jill Rosengard Hill, Frank N. Magid senior vice president, said.
But there are reasons for consumers to buy new displays, even when they do not choose to pay extra for HDTV service on every new set. So the resistance to buying of HDTV tiers of service is not simply a matter of "misinformation" or "consumer awareness."
In fact, people might be making rational choices about the bundle of values a new HDTV display represents, and not all those considerations have to do with image quality.
That should change over time, as more programming is available in HDTV format. But consumers might also be making rational choices about subscribing "right now."
While HD programming service still lags significantly behind set adoption, HD programming service providers have made progress. About 43 percent of buyers indicate they have purchased an HDTV tier of service, up from an average of 32 percent in the past 5 years.
But service providers have not demonstrated the value of HDTV service to the one third of "sideliners," those who own an HDTV set but don't subscribe to HDTV service.
When asked if there's any chance they may eventually arrange for HDTV programming service, 16 percent of these most-recent HDTV set buyers say they may sign up for satellite HDTV in the next six months, while 22 percent may sign up for cable HDTV, suggesting that service providers have the opportunity to pick up another 4.5 percent of TV households as HDTV programming customers.
But those figures also suggest significant resistance to paying extra for HDTV service, even when the HDTV display is seen as valuable in its own right.
In summary, consumer resistance to paying extra for HDTV service is not simply a matter of "education." Many people are indicating they do not see the value.
The online survey was conducted in October 2009 using a nationally representative sample of 1,373 adults age 21 years or more who own an HDTV set, Magid officials said.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Kelly McGuire