By ReutersInformationWeek
By February of next year, the U.S. government will require
the 18 million to 22 million homes that get their television
entertainment solely from over-the-air analog broadcast signals
to switch to digital televisions.
Digital televisions allow broadcast signals to be
compressed, thus freeing up broadcast spectrum that can be sold
by the government to media and phone companies.
Though most cable operators already offer digital video to
their customers, the government-mandated transition offers a
chance to win new first-time or lapsed pay-TV subscribers.
An SNL Kagan study conservatively estimates that 10%
of those over-the-air U.S. households will opt for pay
television after the transition, with cable receiving the
majority of converts and satellite and phone companies
splitting the remainder.
Comcast Chief Operating Officer Steve Burke said this month
that the digital transition offers a "real opportunity" with
the 8 million analog broadcast households in its region.
"Many of these people have analog sets and they are going
to need to do something," said Burke.
Time Warner Chief Executive Glenn Britt was more
conservative. He said last month he expected a modest pick-up
in new subscriptions due to the digital transition.
CABLE REBOUNDS
Cable operators such as Comcast Corp and Time
Warner Cable Inc have bounced back from the second half
of 2007, when increased competition from satellite TV operators
and phone companies undermined confidence and hurt shares.
After forecasting a difficult 2008, some analysts were
surprised by the strong subscriber growth posted by major cable
companies in the first quarter, allaying concerns about the
U.S. weak economy and housing market slump.
"Cable television will do fine in a recessionary period,"
said Jan Woodcock, a consultant at Deloitte Consulting.
"Entertainment becomes more important in hard times and
you'll go for the most reasonably priced form, which is
cable."
Shares of Comcast, the largest U.S. cable TV provider, have
risen 40% since hitting a 12-month low in January. Time
Warner Cable shares have gained 38.5% since its year low
in February.
END-YEAR RUSH
Analysts anticipate a surge in consumers switching to
digital television late in the December holiday season, with
high-definition, flat-panel TV sets acting as a catalyst.
According to Frank Magid Associates, 25% of U.S.
households now have HDTV sets and growth is accelerating.
Nearly four in 10 HDTV set owners plan to purchase another HDTV
set in the next 12 months.
Competition between cable and satellite will heat up over
the coming year as they vie to offer more high-definition
content to win consumers. Comcast offers hundreds of HD movies
and TV shows for free and on-demand viewing.
"You've bought this $5,000 high-performance TV, it's
hanging up on your wall with a new home theater system, so you
want to exercise it with whatever you want to watch," said
Comcast's senior vice president of video services, Derek
Harrar.
"HD is going to be a major topic this year," said Harrar.
Cable companies are expected to show off advances in
digital technology, such as new devices and services compatible
with the interactive Tru2way platform, which debuted at the
Consumer Electronics Show in Las Vegas in January.
Tru2way technology enables all cable operators to deliver
their services over a single platform, so that compatible TV
sets and digital video recorders can receive programs and
interactive services without a set-top box. Any device branded
Tru2way will work with any cable operator, and will also allow
'two-way' services like video-on-demand.
By: Yinka Adegoke
Copyright 2008 Reuters. See original article on InformationWeek
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