One interesting takeaway from the Consumer Electronics Association‘s New York press preview last month: Consumers will likely buy fewer gadgets this holiday season, but they will spend just as much money. What’s going on? One suspicion is that shoppers are putting all their money into pricier HDTVs rather than spreading the wealth across several lower-priced items. (Doesn’t everyone have an iPod by now?)
For cable, this is good news. After all, more HDTVs mean more subs willing to buy into HD tiers and order HD VOD selections and HD set-tops, and brag about it to their neighbors—which only pressures more people into buying HDTVs. This cycle, along with an increase in HD programming, is creating a tipping point that spells opportunity for MSOs, along with plenty of challenges.
The main hurdle is simply freeing up enough bandwidth to offer the kind of HD selections that consumers expect. Right now, most cable operators are doing the best they can and keeping up (barely) with the kind of packages offered by DBS and the telcos. The industry must do more to keep customers from defecting to competitors.
The HDTV wave likely will become a tsunami in the next couple of years as broadcasters prepare to give back their analog spectrum by February 2009. The NCTA, NAB and CEA already are talking about funding a massive joint education campaign. It won’t be long before largely unaware consumers start learning that their analog TV sets will go dark unless they buy converters or upgrade to digital sets. Yes, some people will reluctantly buy converters. But with prices on HDTVs coming down (and likely to be far cheaper during the next few years), many millions are likely to use the transition as the final excuse to upgrade.
Cable operators need to capitalize on this tipping point now. That means making tough decisions. MSOs should think about the programming contracts coming up for renewal and decide if those slots would be better served with HD product (or take the opportunity to pressure programmers to offer more HD content). In addition, several innovative vendors—such as RGB, Vyyo, BigBand Networks and many others—offer cutting-edge ways to optimize bandwidth. Here’s another decision: In a digital VOD world, is it really necessary to devote linear slots to adult pay-per-view selections running on a loop? A VOD red-light district is more bandwidth-efficient.
Cable operators aren’t stupid. They know HD is changing the game. The tough part is getting ready before competitors do—and in advance of the coming tsunami, which will overtake the media industry. HDTVs are flying off shelves. It’s cable’s job to make sure the content gives consumers a reason to turn off that Blu-Ray or HD-DVD player and watch cable.
Michael Grebb is executive editor of CableFax Daily. He can be reached at firstname.lastname@example.org