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HDTV set sales remain sluggish, there's a relative lack of high-definition programming available and consumer equipment remains priced at the high end of the cost spectrum. So, what are direct broadcast satellite operators doing in the thick of the effort to foster the next-generation format in 2001?
If this month's International Consumer Electronics Show was an indication, how about pushing equipment prices lower, offering new HD programming and further technology innovations?
DBS leaders DirecTV and EchoStar Communications have been offering at least limited HD programming for more than two years, and believe their customer base is especially ripe for at least a gradual adoption of the format.
Besides the attraction of picture quality, service providers also are eager to tap into the potential market for the format's broadband capabilities that enable features such as datacasting and interactivity.
"We want to continue as a leader in the technology, even though its gotten off to a slow start," says Marc Lumpkin, spokesperson for EchoStar, which saw its new Model 6000 integrated satellite/HDTV set-top win the CES show's Innovations Award as one of the best new satellite products.
Slow start may be an understatement. After more than two years of availability, HDTV shipments totaled only 625,000 last year compared with 25 million TVs overall, according to the Consumer Electronics Association (CEA).
Networks continue to squeeze out high definition programming-Home Box Office with its recently-announced plans to show its hit series "The Sopranos" in high-definition format, for example-but a general dearth of HD shows has given consumers little reason to shell out several thousand dollars for advanced TV sets.
And in a classic chicken-or-the-egg dilemma, cable operators seeing a relatively tiny HDTV subscriber base are reluctant to allocate precious bandwidth for HDTV programming.
Enter the satellite services, with their national signal footprints, copious bandwidth for experimentation, and consumer electronics-based equipment distribution models that seem well positioned to usher in the slow-emerging era of high-def. Both EchoStar and DirecTV began offering HDTV demo channels, supporting each of the ATSC HDTV formats, for retail showrooms in late 1998 along with the first product shipment. Both operators have consistently, albeit slowly, continued to add HDTV content, focusing on movies, since then.
EchoStar's Dish Network currently offers HD channels of HBO, Showtime and pay-per-view movies, plus a demo channel for retailers, for example. The newly introduced Model 6000 is capable of receiving Dish Network's HD and standard digital programming and has a suggested retail price of $499, an unheard of price point for HDTV equipment. For an additional $149, consumers can purchase an upgrade enabling them to also view terrestrial HD broadcasts. "Cable isn't going to have the channel capacity to be able to integrate all of the new programming-satellite will," says Lumpkin.
DBS leader DirecTV also is a cautious but consistent supporter of HD. Beyond its show floor demo channel, DirecTV offers just two channels of HDTV programming, HBO and a PPV channel. The operator plans more programming in the near future though, particularly in the sports genre. "You can expect to hear more announcements in the next month or so," said DirecTV spokeswoman Gina Magee.
DirecTV has also made significant inroads with consumer electronics partners, seeking inclusion of the DirecTV system within a variety of HD products. To date, DirecTV counts nine such partners, offering both HDTV sets and set-tops. (See chart)
But even as operators seek to embrace the format, obstacles remain. "Programming is the major challenge overall, because there really is just very little of it at this point," says Lumpkin. "Discovery has talked about doing a 24 hour channel of HDTV but it's not available yet."
"It's still an up and coming market," says DirecTV's Magee, "Until (programmers) really see a mass market product, they're not going to move aggressively."
Additionally, lack of a single digital file protection standard has left content owners wary of HDTV programming. Indeed, the absence of a cross-industry agreement on digital copy protection remains "the single biggest impediment" to DirecTV's obtaining additional high-definition content, according to senior vice president Dave Baylor.
There has been a widely shared assumption that the IEEE-1394 FireWire broadband connection standard, with a "5C" copy protection alliance standard from Hitachi, Intel, Matsushita, Sony and Toshiba, would emerge as a cross industry standard for all HDTV sets, set-tops and related products. But stalled negotiations among the 5C consortium and the major motion picture studios have left a possibility for other emerging formats which may spark a format war in the year ahead.
Intel's "Digital Visual Interface" with "High Definition Copy Protection" has emerged as a dark horse, for instance. EchoStar endorses the standard for its next-generation receivers and JVC plans to use it for D-VHS VCRs.
Even with all this uncertainty, the CEA predicts more than 1 million HDTV units will ship this year, a faster rollout than for color television, an oft cited historical parallel to the technological upgrade from high-def.
The bottom line, according to DirecTV's Magee?
"We're covering all our bases."
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