In the aftermath of the U.S. switchover to a new digital television standard, which became official on June 12, the man who saw it through a 25-year transition, Consumer Electronics Association President Gary Shapiro, likened the effort recently to "putting a man on the moon."
Gary Shapiro, president of CEA.
(Credit: CEA)Speaking with CNET News by telephone from his Washington, D.C. office this week, Shapiro reflected on the cooperative effort undertaken by consumer electronics companies worldwide, the U.S. government, and broadcast, cable, and satellite providers. He says the transition was completely smooth but reflects on the bumpy road behind the scenes in getting to this point.
In the edited conversation below, he also talked about the major missed opportunity by U.S. broadcasters, why the CEA was no fan of the free coupon program for digital-to-analog converters, and where he sees the next phase of television (hint: it's not in your house).
Q: You said last week that the DTV transition was "the equivalent of putting a man on the moon." That's quite a comparison. Can you explain why you think this was such a dramatic feat?
A: We first started this in the early 1980s as the next generation of television. (The CEA) along with broadcasters got together and talked about ways to (move to digital). We agreed on a joint effort and a whole bunch of things over time: It was going to be over a large geographic area, both urban and rural, and would meet the needs of over-the-air broadcasters. There were 20 proposals from companies, and eventually we created the Advanced Television (eventually called "digital TV") testing centers. Then General Instruments came in the late '80s/early '90s and had a digital way of doing it. That stopped everything. We said, "This is such a revolutionary thing. We have to look at this again." Eventually everything came around from that.
Was it a harder sell to the manufacturers or the broadcasters?
Manufacturers are always wanting the next big thing. The broadcasters were the biggest challenge by far. They saw nothing to be gained by this. The only argument was, "Look, cable will get there, satellite will get there, and you'll become the inferior medium." They felt they couldn't charge more for advertising in HD. They (eventually) had the foresight to say look, if we're going to do this right, broadcasters can't be left in the dark. And frankly they on their own funded a lot of the testing and research.
But I think broadcasters blew it in that HDTV was their one opportunity to get ahead of cable and satellite in the sense that it was cheaper for them to go to HDTV because they could just send out (an HD) broadcast signal. They just have to invest in the towers. It could have been their competitive advantage. With cable, everything they sell has to be in HDTV. And broadcasters did not push the concept of free over-the-air television and their market share has gone down still to this day dramatically. And along came not only cable and satellite but now the Internet, and soon mobile devices.
(Once agreed upon) in 1996 we went forward and developed the first and best DTV standard. And if you compare that with other places in the world, Japan started with an analog advanced television standard, and they sold TV sets and had to recall them when digital came along because they realized they'd be left behind. Europe went a totally different way. They said high definition is not important, regular digital television is fine, European consumers don't care about the quality that Americans care about. And that also turned out to be a huge mistake, because although their broadcasters were fine with that, along came the satellite people and the TV set makers that started selling high-definition televisions and (high-def feeds). And all of sudden the broadcasters are left out in the cold. So they had to quickly develop their own high-definition standard. So the U.S. is really the first place in the world that did it right and a lot of people are trying to emulate us.
The U.S. was the first actually to transition in such a wide scale way, to all of the country all at once. The Europeans, they kind of did it segmented by geographic area and countries are still doing it. Most of the world hasn't even gotten there yet. So we're so far ahead of everyone at this point and it was unique in that it wasn't only manufacturer and broadcaster but the cable industry got involved, the satellite industry got involved. In terms of the transition itself, we saw 200 different groups, for seniors and minorities and different languages, everyone got involved to educate the public. And we did it right and it's been fabulous, and it wasn't really celebrated, but I think it deserves celebration.
Not really celebrated? How so?
Well, when Neil Armstrong stepped on the moon, it was like, "Wow, here's a defining moment." When we turned off analog broadcasting a couple months ago, it was kind of like the last item in the news. "Oh, it's done." There wasn't any grand finale, it was more of a non-event because by that point you're dealing with the latest adopters and you know, most everyone you know had digital television in one form or another.
There was a lot of angst among policy makers. I say I couldn't deal with members of Congress the last couple years because they thought they'd be thrown out of office because consumers would protest that their TV would be taken away from them. When I've asked members of Congress now how many people they've heard from complaining, senators have told me not one person in the entire state has called their office. So, could be the angst was overblown.
You know, the Obama administration made the decision for the (transition) delay before they were in office. It was acceded to by the Democrats in Congress because here there was this phenomenally popular, historic president...In my view it wouldn't have mattered whether they gave it or not. We would have the same result.
But wasn't the reason that the coupon program ran out of money?
Theoretically ran out of money. They actually never ran out of money until a couple weeks ago. It's just a matter of the way the government accountants chose to count. It was to count every coupon they gave away, not every one that was cashed, which is not traditional in the coupon world. There's a large number that are never cashed.
The government was exceedingly generous. I mean, think about it: you buy a television 15 years ago. Why do you have the constitutional right that it'll last forever? Any other product you use you know that it's likely to break down, service will be stopped. That's just the risk you take. Hell, I signed up for ClearPass to get through airports three months ago and a month after I signed up it went out of business. I wasn't thrilled, but that's the risk you take. So, we were never an advocate of the coupon program.
Why not?
Well, because we at the CEA have never asked the government for money, especially for our industry. That money is going to our pocket. And we have a position that we believe in the free market and we don't think we should be asking government for special favors for our industry.
So does that mean everybody's gotten a new converter than needs one?
Ninety percent of the population has cable or satellite. And then one out of four families buys a TV set every year. And this has been out there for five years now, and you have (the requirement for) a digital tuner in (new TVs) there for three or four years, all those people have it. So there's almost nobody who's disenfranchised. Now there is a small segment of perhaps and the most sympathetic segment is someone who is horribly poor or old or disabled who wasn't able to afford this, and they had the coupon program. Every survey we've done shows that over 99 percent of Americans knew about the program. So, we've succeeded, and we'll move on to the next thing.
In another 15 or 20 or 30 years there'll be another TV standard. We're working now on 3D TV and certainly mobile TV, which are the two big categories. But I don't think that requires a dramatic change like we've gone through. The really dramatic change the country's gone through is 40 years ago you got three networks over the air and then cable came along and then satellite, and now fiber, and the Internet and there are so many ways of getting that video signal into your home that over-the-air television does not have the power that it used to have. But they are using still a tremendous amount of spectrum. And that spectrum is going to increasingly come under scrutiny as policymakers in Washington try to figure out how we can fulfill this tremendous need that Americans have to have broadband wherever they are. The issues are still going to be discussed in Washington over the next five to 10 years.
You spoke of the next thing, which is 3D, and mobile TV. How do you see us getting there?
Well, one of the most successful products in cars has been the screen in the back for kids to watch. There's no theoretic reason that can't be a mobile device for reception. If you combine it with the Internet, you could have location-based service, if you're driving by somewhere. You have the broadcaster using their spectrum, which gives them an opportunity for advertising, which they otherwise would not have had, and to expand their audience to a mobile environment.
We're very close (to that). You'll see products at CES, which will show mobile television. Many different manufacturers, many different products and broadcasters doing demos in January.
And then 3D television is something which has long been around, certainly Hollywood is very excited about it. It is challenged by the fact that you need special glasses...But people love it. More and more is being done that's 3D capable.
Can you describe where we're at in getting a 3D standard?
Well, CEA has created a committee to look at the standard that's similar to the problem we had with HDTV, where you have different proprietary systems out there. Now Hollywood is really engaged on that, which is very helpful. And the way things work in standards setting is you really need an industry to agree on it, and if they can't, it's fought out in the market place. Sometimes when things are fought out in the marketplace it's very difficult because the consumer freezes--they don't' want to make a mistake like they did with Betamax, or even with Blu-ray versus HD DVD.
It's too early to say which way this will go on 3D now. Everyone's fresh from the HD DVD/Blu-ray battle, and I don't think that's viewed as positive battle for anybody. It certainly inhibited the growth of the technology and the format in a way which wasn't helpful. The government was involved in the HDTV one because it involved spectrum, which is regulated by the government. The government was actually helpful in that standards issue, which is why it was a man-on-the-moon approach. It was such a big precedent, it involved so many industries, the government. They did it right. And that was refreshing.
We're not asking government to get involved in 3D TV or anything else. And I'm not saying we're going to do it right, but we're going to try to come up with one standard, and if we can't the marketplace will, which is fine also.
LOS ANGELES--There are a lot of bad economic winds swirling, but the high-definition television industry doesn't appear to be moved.
Here at DisplaySearch's HDTV Conference, there is far less handwringing than in past years, when manufacturers complained about rapidly falling prices, the sudden appearance of too many brands, and consumer confusion.
Instead, far more confident industry leaders led a discussion Tuesday that revolved around how to make gentle adjustments to keep the HDTV sales machine in top condition. In North America, shipments are still increasing 17 percent year over year, according to DisplaySearch data. And this is despite the decline of home values, and the rising gas and food prices over the same time period.
"It indicates demand is there, (and) if pricing is right, TV sales will remain strong," said Paul Gagnon, who monitors the TV industry for DisplaySearch. "It's a positive indicator for this industry."
A year ago manufacturers were beginning to worry as prices dropped precipitously how they'd extract a profit out of this fast-maturing flat-panel market.
Turns out, their worries were a bit premature, as prices mellowed and the market sorted itself out. Discount brands have lost momentum (some entirely came to a halt, like Syntax-Brillian, which filed for bankruptcy earlier this year), more HD TV content is available than ever, and consumers generally understand the difference and value of an HD picture now.
Plus, there are still many things for HDTV manufacturers to take advantage of to keep consumers buying new products. New designs, the analog-to-digital switchover, and the continuing move from standard-definition channels to HD channels and services are ways TV makers hope to convince consumers to buy their bigger, fancier TVs.
Big is the key right now. As picture technologies get better, and TV panels are made larger, it's yet another opportunity for the TV makers to charge a premium.
"The ASP (average selling price) peak is coming in 2008. We can't count on shift in technology to prop up ASPs anymore," said Gagnon. That's why manufacturers will continue to pump out larger, and more expensive TVs.
The 40- to 44-inch size TVs' average selling price will peak next year, according Bob Scaglione, senior vice president of marketing for Sharp. Therefore, he notes, 60-inch TVs and larger are a good opportunity for manufacturers to grow their businesses because though prices are dropping, they're doing so more slowly in that range than 40- to 44-inch sets. So expect to see much more activity in terms of promotions around 60-inch and larger televisions in the next few months.
One reason the big manufacturers are starting to feel comfortable again is that they've retaken their places atop the LCD sales figures. The surprising story last year was Vizio's stunning leap to the top of LCD TV sales in North America. It came from severely undercutting the big guys on pricing and selling through club stores.
It's a different story this year. The big guys in TV figured out what Vizio was doing and responded by creating specific models of TVs for mass market stores like Wal-Mart and Target. By associating their brand names with the prices Vizio and others like Westinghouse and Olevia (made by Syntax-Brillian) were offering, the result has been that Samsung, Sharp, and Sony have leaped back into the lead, and Vizio has fallen behind.
Key to that change has been manufacturers like Sony and Samsung working with retailers to tailor their products to specific sets of customers. HDTV makers don't need their products to be a luxury anymore. They want everyone to have a high-def set in their home. The industry has reached buyers that were wowed by the technology first, and now it's on to the people who need to upgrade to a digital TV, or have been waiting for prices to drop.
"It's a new phase of HDTV adoption," said Gagnon of DisplaySearch. "Half of U.S. households have an HDTV, but the next wave of consumers is going to come through mass merchants who focus on a lower price point."
It appears the TV industry's self-prescribed medicine of pushing smaller flat-panel sets is working.
The second-quarter check-up is in, and the industry is in far better health than a year ago. DisplaySearch's Quarterly Global TV Shipment and Forecast Report was released Thursday, and worldwide TV shipments increased 11 percent from the same period in 2007, but just 3 percent from first quarter of 2008.
(Credit:
LG Electronics)
Still, the news is encouraging to an industry that was wringing its hands back in March over running out of places to sell its rapidly maturing, but still-pricey sets.
Around that same time, some of the bigger tier-one manufacturers began pushing smaller screens in an attempt to attract buyers who might be tightening their budgets as gas and food prices rose.
Vizio made a splash with its 32-inch plasma, a size that hasn't been available in that technology in the U.S. for a while. Even the big guys like Panasonic, LG, and Sony and Samsung were going small: 32, 40, 46 inches.
"Sony and Samsung launched what we termed 'fighter models,' because they were designed to reach new pricing lows," said Paul Gagnon, who monitors the TV industry for DisplaySearch. Vizio's smaller plasma was specifically launched "to blunt the impact" of Samsung's and Sony's moves into smaller-and-cheaper sets, he added.
Vizio's 32-inch plasma sells in club stores for about $550, while Samsung and Sony's 32-inch LCDs each retail for $699, the lowest price each has ever offered for that size TV.
The result has been a resurgent plasma TV business. DisplaySearch is reporting that shipments of plasma worldwide increased 52 percent from the same quarter a year ago, or 3.4 million units. That's way behind LCD TV shipments, but it's encouraging for a technology that many of the biggest vendors had basically left for dead.
Plasma shipments are on the rise everywhere, but they are particularly healthy in China, where they rose 285 percent in the last year.
To be sure, LCD TVs are still the new television of choice for most. LCD shipments jumped 47 percent in the last year to reach 23.7 million units (compared to plasma's 3.4 million units) in the second quarter worldwide, DisplaySearch says.
Despite LCD's established presence in many North American living rooms, it appears that the introduction of smaller sizes and lower prices are helping retailers to move plenty of product. Last year, LCD shipments to the region were dropping. But second-quarter shipments increased almost 30 percent from a year ago.
And LCD prices have still been dropping more quickly than plasma. With major shopping opportunities like Labor Day, the beginning of football season, and Black Friday fast approaching, plasma's recovery could be brief.
Sony and Samsung tend to set the pace on price reductions, and Gagnon of DisplaySearch says the other brands will all react in order to maintain their brand position in the market. If Samsung drops its 42-inch LCD $100 in the coming weeks, expect Panasonic to do the same on its 42-inch plasma.
But it doesn't appear there are going to be bold moves on the part of plasma to steal some more share and get ahead. For all the brands, said Gagnon, "it's all about maintaining price differential."
- prev
- 1
- next
