Skip to main content

Economics of High Definition Pay-TV Service

By end 2010, high definition (HD) TV will be ubiquitous as its penetration is forecast to surpass 80 percent of all U.S. TV households. In the meantime, Kagan Research finds cable and satellite TV platforms scrambling to make economics work while simultaneously jumping to exploit early-stage opportunities.

To steal the march on cable, direct broadcast satellite company DirecTV made a $1 billion investment to beam 150 national channels and 1,500 local channels in HD by end 2007. By then, Kagan Research estimates just 60 percent of cable subscribers will be digital capable, which is a prerequisite for HDTV. Of course, direct broadcast satellite is all-digital.

In theory, the transition to HD presents a window of opportunity to launch new TV programming services, such as billionaire Mark Cuban's HDNet and HDNet Movies channels. But the economic model most have embraced is incumbent standard-definition channels simply offering parallel HD simulcasts. Of the 40 cable channels transmitting at least some content in HD at mid-2006, 35 are simulcasts.

Holding down revenue potential for TV channels, advertisers are not yet captivated by HD. TV channel platforms struggle to come up with consumer pricing models, with no success in making HD an 'a la carte' program option. As a result, HD is simply coupled with standard definition TV service.

Popular posts from this blog

Global Rise of Domestic Payment Ecosystems

Alternative Payment Methods (APMs) – comprising digital wallets, instant payments, and QR payment systems – are experiencing explosive growth that's reshaping the global financial services marketplace. According to the latest worldwide market study by ABI Research , the combined global transaction value for APMs is projected to reach $142 trillion by 2030. What's particularly fascinating is the underlying driver behind this trend: a growing desire for financial sovereignty, with nations developing domestic payment ecosystems rather than remaining dependent on international financial networks. Payment Ecosystem Market Development In 2024, approximately 45 percent of the global population used digital wallets – a remarkable adoption rate for a technology that barely existed a decade ago. China leads this transition, with 95 percent of its population using WeChat's payment functionality. WeChat exemplifies the "super app" phenomenon, where payment capabilities are in...