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Is the Cost of HDTV Receivers Limiting DTV and Home Theater Sales? Print E-mail
Wednesday, 25 May 2005
HDTV sales continue to boom at the retail and custom level to the tune of over 1,000,000 sets per month, according to recent Consumer Electronics Association reports. HDTV is the home theater industry’s “killer application,” providing an outrageously good video experience on TVs that are ultra-thin. The problem is that a DTV (DTVs are TVs that can reproduce HD content but don’t necessarily have tuners built into them) rarely have HD tuners built into them even at the highest price points. Soon, many HDTVs will have cards that will allow consumers to control their satellite or digital cable content right in their sets. However, these cards do not allow for a DVR (digital video recorder like TiVo) which is pretty hard to live without for any TV or home theater enthusiast. This leaves the consumer needing an outboard HDTV DVR to get the most from HDTV and, by today’s standards, that is no small expense.

DirectTV’s HD 10-250 and Dish’s 921 are the two standards at this stage in the development of HDTV. Both are made and sold by their respective satellite providers. Gone are early players like the Sony HD100, HD200 and HD300, which were the HD tuner references (granted, no TiVo or DVR) for HDTV early adopters on DirecTV. The cost of the early non-DVR boxes was in the $799 range. Today, an HD DVR for Dish or DirecTV can be anywhere from $500 to $1,000. With large, thin HDTV sets costing as little as $1,500 in stores across America, this comes as a shock to many consumers who are price-sensitive when making electronics investments in the four-figure range.

Cable providers have had the answer to consumer’s objections all along – rent the hardware to consumers as part of their bill. With MPG4 video coming soon, it is rumored that the current HDTV receivers on DirecTV and possibly Dish will be obsolete within a year or two. Dish helped early HD adopters upgrade (away from their receiver, which you could use to record HD content) when they had new HD hardware. DirecTV is going to need a similar plan if they end up making everyone’s $1,000 HD 10-250 investment obsolete.

There is no question that HDTV is currently booming. However, it could be booming much harder if the cost of the best hardware needed to make HDTV content work for consumers was more affordable. A TiVo license and a hard drive in a low-cost, mass market component chassis likely will cost less than the $100 in parts per unit cost in the volumes that any satellite provider spends to purchase them. In order to keep customers loyal, Satellite providers will need to continue to offer top performing content and equipment, considering they compete with a dominant player in the cable industry who also can offer high speed Internet as part of your $100 per month “cable” bill.

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