HDTV Penetration


Think you know about the HDTV market? No question: HDTV is the differentiator. It is or will be why people switch pay-TV providers. DirecTV and Dish Network are in a race toward offering the most HD channels. Local cable companies like Cablevision are giving away HD as part of any digital package. All because the Consumer Electronics Association released figures back in July that 32% of U.S. households have HDTVs — inflection point’s coming at us fast.

Akamai is passing by all this by offering HD content delivery on the Web.

But wait, what’s this from Nielsen? Only 13.7% of households are "HD capable?" The latest, via Broadcasting & Cable:

Measurement giant Nielsen finally released estimates of high-definition-set penetration for both the total United States and Local People Meter markets, and the overall numbers may surprise some consumer-electronics manufacturers and programmers as being rather low — particularly given the recent momentum of HD-set sales and launches of new HD networks.

They may also disappoint advertisers, which have long been seeking clarity on the actual size of the HD audience.

Nielsen found that only 13.7% of TV households in the United States — or roughly 15.5 million out of 112.8 million total U.S. TV households — are equipped with HD televisions and HD tuners capable of receiving HDTV signals, a status Nielsen described as “HD Capable.”

Nielsen didn’t define what an “HD tuner” means, but a conversation with a Nielsen spokesman indicated that it could mean an integrated ATSC (Advanced Television Systems Committee) tuner in the set or a connected HD-capable cable or satellite set-top (there are also over-the-air set-tops that receive HD signals, albeit few).

That 13.7% figure is much lower than research from the Consumer Electronics Association, the trade group representing HDTV-set manufacturers. The CEA estimated that HDTV household penetration in July 2007 stood at 32% — or some 36 million homes, going by Nielsen’s household numbers — and would rise to 36% by year-end. The CEA put the total number of HDTV sets sold by year-end 2006 at 39.9 million, climbing to 60.6 million by the end of this year, and it said one-third of HD households own multiple sets.

Of course, not all HDTV sets are actually used to watch HD programming — something both set-makers and programmers have long lamented. Industry research has generally indicated that anywhere from 40%-60% of HD sets are still being fed exclusively with standard-definition content, either because consumers don’t know any better or they haven’t bothered to sign up for HD cable or satellite service or to hook their TVs up to over-the-air antennas to receive local broadcast HD signals.

The CEA’s own research, in fact, indicated that in 2007, only 44% of HDTV owners are actually receiving HD programming. A CEA spokesperson explained that this was because many consumers buy the wide-screen sets simply to watch DVD movies.

But Nielsen sees HDTV consumption in a more optimistic light. Its HDTV estimates — based on in-home collection by its field staff in metered samples and currently limited to National and Local People Meter samples — suggested that 11.3% of U.S. TV households, or some 12.7 million homes equipped with HD televisions and HD tuners, receive at least one HD network or station, a category it calls “HD Receivable.” And those 12.7 million homes are included within the overall 15.5 million household total, which would indicate that some 82% of homes with HD sets are actually using them to watch HDTV.

That 82% usage number, frankly, is far more surprising than Nielsen’s HDTV household estimate, as it would suggest a much higher adoption of HDTV content among HD set-owners than even the most optimistic network programmers and engineers would claim. When repeatedly asked for further clarification, a Nielsen spokesman stood by the numbers. But he added that Nielsen had actually found that some 21% of U.S. households, or 23.6 million, have HD displays but not necessarily tuners.

Using that larger number from Nielsen — which inexplicably was not included in its press release — means that only 53.8% (the aforementioned 12.7 million) of HDTV-display owners are using them to consume HD content. That usage number falls more in line with CEA research and other industry studies.

In market-by-market breakdowns, Nielsen found that Los Angeles has the highest penetration of HD Capable homes, with 20.4%, or some 1.2 million households, while New York has the highest penetration of HD Receivable homes with some 17.5%, or 1.3 million households.

But the market-by-market numbers don’t include a total for HDTV displays, regardless of whether or not they have tuners, so they similarly lack clarity and suggest an adoption of HD content that is probably much higher than reality. For example, a quick look at the data Nielsen released would suggest that 1.29 million of the 1.33 million HD Capable homes in the New York DMA — or some 97% — are watching HD content.

Nielsen also released some demographic data on HDTV, reporting that 10.4% of U.S. Hispanic or Latino households are HD Capable and 8.2% are HD Receivable, while 8.1% of African-American households are HD Capable and 6.9% are HD Receivable.

 I still think HD will make a difference — especially in the major markets.