HDTV: I’ll Pay Anything?

Jun 2, 2003  •  Post A Comment

Thinking about buying a new, expensive high-definition TV? Well, get ready to pay even more after you bring it home.

I have learned that DirecTV and EchoStar, the nation’s two satellite TV services, are planning to launch a monthly package of HDTV channels, including ESPN HD and Discovery HD Theater. Like a premium channel, which requires a subscription, the HD bundle will cost approximately $10 a month.

The launch, which is expected this summer, is part of a new industry trend to charge for HDTV programming. (Charter Cable is already offering a HDTV monthly package for $10.) In fact, the trend is growing so quickly that Marty Franks, executive VP of CBS, and David Zaslav, president of NBC Cable, told me recently they are considering offering pay-per-view programming that feature HD broadcasts.

“There has been talk about pay-per-view for the Olympics,” said Zaslav. “We are considering it with HDTV as part of the offer.”

However, before the TV providers get carried away, a few questions must be answered: Will anyone pay for HD programs? And, if they have to pay, will they be less likely to spend thousands of dollars on a new HD set?

Growing Demand

For cable and satellite operators, the HDTV subscription model is inevitable. There are approximately 10 networks that now broadcast in high-def. But several more are in the works, including Bravo. With digital TVs in 6 million homes and growing, consumer demand for HD content will grow as well.

But it’s more expensive to add an HDTV channel. Cable and satellite operators need the fees to defray the expense.

Supporters say the fees will ultimately boost sales of digital TVs because they will give cable and satellite operators an incentive to add high-def channels. With more high-def channels, consumers will be more likely to buy an HDTV set.

However, although prices have dropped, most sets still require an investment of $2,000 to $3,000 because you also need an HDTV tuner box and an off-air antenna to watch your local networks in high-def. (Note: A few cable operators now offer local HD feeds so the antenna is not necessary.)

In a down economy, some HD buyers may hesitate if they have to go to the hip again when they bring the set home.

Clint Stinchcomb, senior VP of Discovery HD Theater, says research shows that HDTV owners will pay monthly fees to get more programming.

As an HDTV owner, I see his point. I would pay almost anything to watch more shows in high-def. However, that’s because I am HDTV-starved. I have owned a high-def set for 18 months; I’m desperate to watch something other than HBO and the Super Bowl.

However, future shoppers may not see it that way. They haven’t made the investment yet; programming fees could unseal the deal.

The industry must carefully monitor the impact of HDTV subscription fees on Digital TV sales. Although the fees may be necessary, they could slow the progress of Digital TV.

Phillip Swann is president and publisher of TVPredictions .com. He can be reached at Swann@TVPredictions.com.