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U.S. TV Networks and Global HDTV Markets

According to In-Stat, the move by NBC Nightly News to High Definition TV (HDTV) is part of a migration toward HDTV by all broadcasters whose markets are large enough to justify the investment. This is a long-term opportunity that will take several years to develop, but HDTV programming will eventually become the norm.

In-Stat believes that several trends are supporting this drive toward HD production. In the U.S. market, over 80 percent of viewers for Broadcast Network programs are watching on a Pay-TV service. Digital Cable TV, Digital Satellite TV, and now the TelcoTV (IPTV) services are all charging additional monthly premiums to deliver HDTV content to their subscribers.

These subscribers pay for an upgraded HD Digital set top box, as well as for the HD channels. For local affiliates, the network's prime time HDTV programming represents a revenue opportunity. The local TV stations can more easily justify payments for retransmission consent, because the Pay-TV services are charging for their version of the HDTV programming.

As more broadcast TV content moves onto the Internet, the value to viewers of the HDTV content goes up. TV shows on the Internet are at resolutions less than Standard Definition TV. Younger people who today are viewing broadcast TV content via the Internet will eventually purchase wide-screen HDTV displays, and create demand for HD programming.

The hope -- if the TV Networks and local TV stations begin offering more HDTV programming now, then this theoretically enables viewers to follow their content from the Internet onto wide-screen HDTV sets in the future. I'm not sure that I agree with this logic, but time will tell.

The laptop computer user is creating a large installed base of 1920 by 1080p portable wide screens that do a good job of displaying HDTV content. People with these laptop and notebook PCs will synchronize files from a home PC, or even from a Pay-TV service, onto the notebook's massive hard disk drive, making their HDTV content portable.

In-Stat says eventually wide-screen HD displays will be deployed worldwide. A key growth opportunity for U.S.-based broadcast TV networks will arise for them to provide HD content of all types to markets in other countries. Over the next 10 years, as HDTV deployments steadily increase, the U.S. networks could see a significant revenue opportunity.

In conclusion, In-Stat believes that broadcast networks are likely to re-claim audience share from the competing Pay-TV networks over the next 2-5 years -- if they produce the majority of compelling HDTV content. They will be able to use their online services, and mobile services, to pull the audience back to the wide-screen, HDTV version of their content. Again, in theory.

I'm left wondering, however, how the broadcast networks can keep pace with people's increasingly divergent interest and lifestyle-oriented content desires. This is not the same legacy mass-market opportunity of a decade ago, it's segmented into many more genres.

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