Overwhelmed consumers shying away from HDTV

Gregory McCutchen knows the sales pitch well:

This is a fine high-definition television you're considering, sir — but what about this newer model, with even higher resolution? You'll need this set to get the best picture with the next-generation DVDs arriving in 2006.

No, thanks. He's sticking with a less expensive model. Besides, that cutting-edge TV will probably be out of date soon anyway, he reasons.

"Every two or three years they come out with something else that's supposed to be an upgrade," the Rowlett, Texas, resident said during a visit to a Best Buy in Plano. "The way technology's going, you can't really keep up with it."

Nearly a decade after the United States began its move to digital broadcasts, consumers are still trying to catch up. And their learning curve keeps getting steeper as new acronyms, features and measurements enter the market.

Slow to embrace

The confusion has made HDTV adoption much slower than U.S. electronics makers had hoped when the sets first went on sale in 1998.

The technology produces such brilliant images that TV makers expected consumers to flock to it. But only about 11 million U.S. households had an HDTV set at the end of 2004.

Those numbers should spike by year's end, according to the Consumer Electronics Association, because manufacturers are being required to sell more digital televisions — many of which are high-definition.

TV makers and retailers would love to see that happen.

The electronics association projects sales of 20.2 million digital TVs this year. That would represent $17.6 billion in factory revenue, meaning manufacturers would be getting nearly $900 per unit.

HDTV has held such promise that it has drawn in traditional TV makers such as Sony and Samsung Electronics, as well as computer companies such as Dell and Hewlett-Packard. Texas Instruments makes chips for one type of set.

And the technology industry has plenty of marketing studies showing consumers are more familiar with HDTV and want the technology in their homes.

Holding back

But something's stopping consumers from going through with a purchase, according to Maryann Baldwin, executive director of the research arm of media-consultant Frank N. Magid Associates.

In a fall 2004 study, her company found that about 10 percent of consumers planned to buy an HDTV in the following six months. In such a study, researchers would normally expect about 7 percent to actually make a purchase. Only about 3 percent did, she said.

"That totally tells the story," she said. "People are going in stores looking, ready to spend $1,000, and they're walking out not spending that."

What's holding consumers back?

"It's fascinating," Baldwin said. "People are saying, 'I want this. It's cool. It's important. I want to be state of the art and have the HD viewing experience in my home.' But then they get overwhelmed by all the options and say, 'You know what? I'd better just wait.' "

Every year, it seems, some wonderful new display technology debuts. Prices keep falling, making it difficult to know when it's time to buy.

And shoppers want to know that they're buying a TV set that will be able to handle all the technology of the future. That type of assurance is hard to find.

Many factors

There are so many considerations — price, size, technology type, programming choice, upcoming media formats — and each decision comes with its own trade-offs.

This plasma set looks stunning on a wall, but it's more expensive than that Digital Light Processor set. The DLP set requires a new light bulb every few years, which isn't necessary in the liquid-crystal-display flat panel. But the LCD set doesn't handle some images as well as DLP, and it costs more in bigger sizes.

"The more you add, the more choices, the more confusion's going to come," said Joni Blecher, an associate analyst at JupiterResearch.

The company's surveys have found that nearly 90 percent of consumers know what high-definition TV is. But when it comes to the different types of technology, they're relatively clueless.

"Plasma, LCD, rear projection — they're all so different from the standard TV they know," Blecher said.

Even shoppers who have learned all the terms can get overwhelmed. They've studied enough to know that new technologies are just around the corner and that prices will probably continue to fall.

"They're terrified of making this huge investment, then walking through the store a few weeks later and discovering something they don't have," Baldwin said.

So instead, they decide to wait to make a purchase, freezing into "a state of paralysis," she said.

Still, JupiterResearch expects that HDTV sales will represent 70 percent of all TV sales by 2010, up from 21 percent last year. Falling HDTV prices, along with the federal government's move to convert broadcasters to digital signals, will lure consumers, Blecher said.

When McCutchen bought his first HDTV set in May, his wife argued that it was too expensive.

"Now she watches it all the time, and we fight over the remote," he said. That's why he was recently at Best Buy's Plano location, looking for a new set he won't have to share.

McCutchen, 44, shopped with skepticism, carefully eyeing the TV sets that lined the walls. He was looking for the perfect balance among image quality, size and price.

Salesman Adam Dyer answered his questions. He pointed out that McCutchen could buy a model with 1080p resolution, the new top-of-the-line display, for $2,000 more than the one he was considering.

"It has a better picture quality," Dyer offered.

"Can you tell, though, side by side?" McCutchen said, arms crossed. His eyes drifted back toward the 50-inch Panasonic DLP model sitting in a corner of the dark display room.

"That one's $2,099?" he asked.

"Yeah," Dyer said. He stood shoulder-to-shoulder with McCutchen and watched the images flash on the Panasonic. "That's a heck of a deal."

Dyer told customers that he didn't work on commission and just wanted to find them the perfect fit. McCutchen took him literally, asking him to measure the height of the Panasonic to make sure it would fit in his game room's entertainment center.

Enough programming?

Another customer, Theodore Timaru, wasn't convinced that there was enough HD programming available to warrant purchasing an HDTV.

Dyer tried to ease his mind by showing him how a non-HD television feed would look on one model. The television had so-called upconverting technology that was supposed to make standard-definition signals look better than they do on most HD sets.

Dyer changed the channel, and suddenly the sharp images were replaced by a fuzzy broadcast of a "Roseanne" rerun. The actors' heads appeared blurry.

"Yeah," Timaru said, squinting behind his glasses. "Especially on this big screen, you can see the difference. Maybe we got used to the high-definition image and when we switched back. ... " His voice trailed off.

Dyer told the Plano resident, 58, that he would have plenty of options for HD programming, especially if he signed up for an HD subscription on cable or satellite.

"But you don't have all the channels yet," Timaru said. He was right. Most cable networks don't have high-definition versions of their shows.

He left the store undecided.