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I PREDICT!

Jan 5, 2004  •  Post A Comment

Last January in this space, I made three predictions for the coming year:
1. Rupert Murdoch’s News Corp. will buy DirecTV.
2. Hollywood and the tech industry will reach a digital TV compromise.
3. TV manufacturers will use sports to help drive sales of high-definition TV sets.
How did I do?
Three for three!
Despite reports in early 2003 that SBC Communications might buy DirecTV, Murdoch was ultimately successful. The Federal Communications Commission approved a compromise between the entertainment and tech industries (the “broadcast flag”) that promises to eliminate piracy and promote digital TV sales. And TV makers increased their emphasis on sports in print and broadcast ads for hi-def sets. (For instance, Panasonic’s new HDTV spot, dubbed, “Va-Va-Voom,” showcases a rain-soaked football game on a wide-screen set. The picture is so realistic that the actor is forced to pick up an umbrella.)
So as we enter the first full week of 2004, I am taking out my crystal ball and making three more predictions:
1. HDTV: Cable will get more subs than will satellite. When it comes to hi-def TV, DirecTV has been the 800-pound gorilla. However, this year the cable industry will make a monkey out of DirecTV and its chief satellite rival, EchoStar.
DirecTV and EchoStar have offered HDTV programming for nearly two years, while most cable operators sat on the sidelines. In addition, many hi-def sets come with DirecTV tuners inside, thanks to marketing alliances between DirecTV and the TV makers. Consequently, to date, the satellite industry, particularly DirecTV, has dominated the hi-def market.
However, in the second half of 2003 cable operators started playing catch-up, and some now offer more hi-def channels than does either dish operator. Plus, many cable operators now provide HD feeds of local channels, something the satellite industry cannot do and may not be able to do for years. So I predict that the majority of new HDTV owners will subscribe to cable in 2004.
2. Cablevision will sell Voom. In the fall of 2003, cable operator Cablevision launched an ambitious new satellite TV service called “Voom.” I say “ambitious” because the dish is targeted largely to the HDTV audience. Voom’s lineup includes up to 39 different hi-def networks-four times as many as its satellite and cable rivals.
However, although it’s growing, the hi-def audience is only around 7 million homes, far too small to sustain a new satellite TV business. Plus, with Voom retailing at more than $700, most hi-def dish enthusiasts will choose DirecTV or EchoStar, both of which offer less-expensive systems.
So I predict that Cablevision will throw in the towel in 2004 and sell Voom’s subscriber list to either DirecTV or EchoStar.
3. TiVo will sell the company. First, full disclosure: At my Web site, I predicted that TiVo would sell out in 2003.
Wrong!
But I still think the digital video recorder service needs to become part of a larger media outfit to guarantee its longtime survival. Although TiVo now has more than 1 million subs, the company’s future growth is uncertain because the cable industry and EchoStar have decided to use non-TiVo DVR services.
So I predict that TiVo will sell the company in 2004, most likely to its marketing partner, DirecTV. The satcaster could make TiVo an exclusive feature, unavailable on any other cable or satellite service. With TiVo’s brand getting stronger every day, that could be invaluable to DirecTV’s new owner, Rupert Murdoch.
Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.