High stakes, high definition

Broadcasters and electronics companies are gearing up for the British launch of HDTV. They will have their work cut out making sure there is enough content and that prices are pitched to the mass market – but the looming DVD format war won’t h

Consumers have, arguably, only just got to grips with digital television. But they are about to be faced with what some have dubbed the biggest technological revolution in picture quality since the arrival of colour – high-definition television (HDTV) – which will deliver sharper, better pictures, with an almost three-dimensional edge to them.

To watch HDTV, consumers will have to invest in a TV panel, with the requisite resolution and connectivity, and a receiver. But the impact of high definition goes much further than mere TV. High-definition DVD players and recorders, camcorders, games consoles and PCs will all eventually go on sale in the UK.

“Right now, there is a very low awareness among consumers of high definition,” says Nate Elliott, a digital home analyst with JupiterResearch. He says that unless manufacturers and retailers work together to explain the technology, consumer “confusion” will be rife.

HD ready to roll

So far, manufacturers have teamed up through the European Information & Technology Association to introduce an “HD Ready” logo that is starting to appear on HDTV-compatible sets in retail chains such as Comet and Dixons. BSkyB is expected to assist this education process when it launches its HDTV service – partially unveiled last week – next year.

But these attempts to make life easy for consumers could come unstuck thanks to a falling-out over the format for the next generation of DVDs, which will be played on high-definition DVD players and recorders, games consoles and PCs. Talks between Toshiba and Sony, each leading a consortium that backs a different next-generation DVD standard, broke down last week. The two could now find themselves in a format war similar to the Betamax-VHS battle of the 1970s.

Sony, which lost that scrap, is this time around pushing its Blu-ray format, which is backed by Philips, Twentieth Century Fox, Dell and others. In support of the HD-DVD format, Toshiba is leading a group that includes NEC, Sanyo and Warner Bros Studios.

It is expected that manufacturers in rival camps will now press head in launching products such as DVD players and recorders, using their respective technologies. Some could even be available before Christmas.

Sony has already committed to using Blu-ray discs for its new PlayStation 3 console, which was due to launch this year but has been put back to 2006, making a format battle even more likely.

TV manufacturers, which have not had to contend with format problems, are already ahead of the game, having launched entire ranges of HDTV sets. But, even here, consumers could end up confused. There is already much debate over what size screens are suitable for HDTV – BSkyB suggests screens of 26 inches and above, while at least one manufacturing source says that in order to get the most out of the technology a screen of more than 37 inches is needed.

But even if consumers bite the bullet and shell out for an HD-ready set, they may have to wait up to six months before they are able to view high-definition programming.

Sky is the only broadcaster to have unveiled firm plans to broadcast an HDTV service. Last week, it revealed that that this will include a Sky Sports channel, Sky One, Artsworld, a Sky Box Office channel and two Sky Movies screens. It is in talks with other broadcasters about including other channels in the service.

Sky hopes that HDTV will help it to meet its target of 10 million subscribers by 2010. It currently has 7.8 million. In order to receive Sky’s service, not only will viewers have to subscribe to Sky, but they will also have to buy an HDTV set and Sky’s HD box, which will combine Sky Plus functionality with the HD receiver. The box could be priced at more than Sky’s most expensive personal video recorder (PVR), at &£299. Sky could also charge a premium subscription for the HD content. However, given Sky’s marketing record to date, it is sure to come up with some value-led HDTV introductory package.

Too far too quickly?

GfK director John Binks says the cost of the service will have to be “reasonable”. He suggests about &£10 a month. But he is unsure about how fast take-up of HDTV will be: “The mass market is just about getting into digital TV, and perhaps finding it a bit confusing. Now they are being told: ‘Here’s something else that’s better than what There are no figures so far for HD sales. But according to GfK, sales of flat-screen TVs – some but not all of which are HDTV-ready – for the 52 weeks to the end of June were 1.34 million, compared with 400,000 for the year to June 2004.

Sky estimates that almost 2 million HDTV sets will have been sold in the UK by the end of 2006 and that by the end of the decade the majority of UK households will have one.

And Sky is not the only digital operator to have plans for HDTV. Later this year, Telewest plans to launch a PVR with HD functionality, although it has not revealed when it will begin to broadcast HD content. NTL is testing HDTV, through both cable and broadband, and BT is doing the same via the internet.

But Sharp head of product planning Guy Pearson says HDTV take-up will be limited until a free-to-air service launches.

At the moment, Freeview has insufficient capacity to broadcast HDTV. But analogue switch-off will free more space. There is already industry speculation that the BBC is working with product manufacturers on a PVR for Freeview, which could also be HDTV-compatible.

However hard HD is marketed, it needs content. Pearson says the situation in the UK is unlikely to be as bad as when HDTV first came to the US and Japan a few years ago, when there was a shortage of content. Broadcasters and studios are already recording in HD.

The BBC has set a target of moving all its content to HD by the end of the decade. It has already filmed Planet Earth and Bleak House in HD.

Reaching the goal with football

Sky is banking on football to drive mass-market take-up and is offering live HD coverage of the Premiership. But the biggest boost could come from next year’s World Cup, which is being recorded in HD. Sky is thought to be in talks about broadcasting the event in this format in the UK.

With HDTV sets likely to be available for less than &£1,000 by Christmas and Sky pushing pre-registration of its service through retailers, consumers will be left in little doubt that HD is coming. But the prices of other HD-ready products, such as HD camcorders, may not be low enough yet to spark mass-market interest.

However, manufacturers are intent on marketing the benefits of HD across numerous products. Sony plans to distribute leaflets through retailers explaining to consumers that they can shoot their own HD content with a camcorder, edit the footage on an HD-compatible Sony computer and then play it on an HD-ready TV panel.

HD may be a development that the public will not be able to ignore. But whatever the efforts of marketers, consumers can refuse to shell out for HD-ready products until they are sure that content and format issues are resolved.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here