Forrester Research, a publicly-held independent research firm in Cambridge, Mass., began a hotly debated dialogue on Dec. 8, ’98 when it released a controversial report titled "HDTV Dreams; SDTV Realities." The report concludes that HDTV will fail, and broadcasters will use DTV’s wider bandwidth for multicasting SDTV formats, providing consumers with a more affordable DTV experience while offering the industry profitable business models. It also suggests that there will be a further splintering of the TV ad market.
HDTV proponents were quick to respond to the report’s conclusion. "Forrester makes predictions in its report about what consumers want without talking to consumers," says Gary Shapiro, president of the Consumer Electronics Manufacturing Association (CEMA). "Our HDTV research is based on consumer opinion surveys and consumer focus groups that included HDTV demonstrations. … Consumers want high definition TV and, in demonstration after demonstration, they express a strong preference for HDTV over standard definition TV."
A Forrester spokesperson said the company prepared the report because it independently identified DTV as a business that required more information. In preparing "HDTV Dreams, SDTV Realities," Forrester spoke with networks and station groups, cable and satellite operators, and program producers. Forrester interviewed more than 50 TV manufacturers, retailers, and software and equipment vendors to assess the impact of DTV on the industry. Procter & Gamble and Young & Rubicam were among those interviewed from the ad sector. Forrester emphasized that CEMA research was used to prepare the report.
Advertising played into the report’s conclusions. The report points out that HDTV would likely raise production costs but may not generate additional revenue. The report reads, "even HDTV-aware advertisers like P&G appear unlikely to pay more for high-definition spots, especially with HDTV sets economically out of reach for 90% of consumers.
"By 2002, 80% of the nation will be in range of four digital stations. But with HDTV prices still above $2,000 due to high display costs, annual HD sales won’t pass half a million sets," the report predicts. In contrast, it suggests that 480P sets will be available for roughly $1,000 by 2002. As a result, Forrester expects SDTV to be in four million households by 2003 and capture more than 80% of the market by 2008.
Forrester Research suggests that in addition to attracting consumers with affordable DTV sets, SDTV offers a variety of profitable business models. Chief among these is multicasting, which could improve revenues by creating new broadcast carriage options and expanding viewership; broadcasters will also experiment with datacasting.
Could the report conclusions provide some insights into what agencies should advise their clients? Josh Bernoff, principal analyst for TV research at Forrester, tells SHOOT that he would advise agencies to look into producing ads in widescreen. He says that regardless of SDTV or HDTV, widescreen "will certainly make a difference" for viewers with widescreen TVs. Here are some additional thoughts:
