Klopfenstein Responds to "Paul Kagan Forecasts 82% of Households Will Be HD-equipped by 2010"

You may use this content (better still, argue with me!), but please cite my ideas as (c) 2005, Dr. Bruce Klopfenstein.

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Here is a press release with MY COMMENTS IN CAPS. Distribution of this news release further enhances Kagan's chances of selling more copies of his report.

"Kagan Forecasts 82% of Households Will Be HD-equipped by 2010

"MONTEREY, Calif. --(Business Wire = FREEBIE NEWS RELEASE -BK)-- Nov. 9, 2005 -- A new study from Kagan Research, THE STATE OF HIGH DEFINITION TELEVISION 2006, forecasts 377 mil. cumulative HD sets will be sold to consumers by 2015, resulting in 110 mil. HD households. With more than 1,500 of 1,745 commercial and non-commercial U.S. stations broadcasting in digital as of June 30, 2005, and HD set sales now constituting the lion's share of digital TV sales, the HDTV supply chain is gearing up.

"According to Kagan Research associate Patrick Johnson, "At the end of 2004, there were 11 mil HD households; each owning an average of 1.2 HD sets. We project the average price of an HD set will decline some 38% by 2010, reducing the average price to $1,139. Rapid price declines, coupled with increasing levels of HD programming will drive the number of HD households to nearly 97 mil in 2010, penetrating more than 82% of total TVHH."

KLOPFENSTEIN COMMENT: THE DECLINE IN THE AVERAGE PRICE OF AN HDTV SET OF ONLY 38% BY 2010 IS EXTREMELY CONSERVATIVE. PLEASE QUOTE ME ON THAT. I DON'T KNOW WHY WE CONTINUE TO UNDERESTIMATE THE RAPID PRICE DECLINE OF CONSUMER ELECTRONICS DEVICES ONCE THEY HIT CRITICAL MASS.

"The study also reports on cable, satellite and telco rollouts of HD content, projecting that the number of cable HD subs will surpass 30 mil. by 2010, and forecasting that nearly 80% of all multichannel sub growth through 2015 will go to DBS and the telcos.

THAT IS A DARING PREDICTION. THE TELCOS HAD BETTER START DOING SOMETHING DIFFERENT AS THEIR WIRED TELEPHONE SERVICE IS GOING THE WAY OF THE AFTERNOON LOCAL NEWSPAPER.

"Kagan's annual edition of THE STATE OF HIGH DEFINITION TELEVISION 2006 provides an in-depth look at programming strategies, regulatory issues regarding the transition to digital and 10-year forecasts for high-definition DVDs, digital sets, HD sets, and HD subscribers for both cable and satellite operators. Relevant industry statistics and exclusive projections based on Kagan's respected forecasting model include:

-- Kagan estimates in 2005 9.1 mil. HD sets will be sold to consumers. This figure is up from 3.4 mil. and 5.6 mil. in 2003 and 2004, respectively.

IT WOULD ALWAYS BE NICE TO KNOW WHERE THESE ESTIMATES ORIGINATE. ONE OF THE BEST SOURCES IS "TELEVISION DIGEST WITH CONSUMER ELECTRONICS," A VERY PRICEY NEWSLETTER.

-- The number of cable HD subs grew from 675K in 2003 to 2.3 mil. in 2004. At the end of this year, Kagan estimates this figure will grow to 3.8 mil. and by 2010, the number of cable HD subs will surpass 30 mil.

-- The U.S. DBS marketplace saw 10.6% annual sub growth in 2003 and 13.8% in 2004. In terms of HD subs, Kagan projects that by 2010, there will be more than 18 mil.

I WONDER WHAT WILL HAPPEN IF ECHOSTAR AND DIRECTV MERGE BEFORE 2010?

-- Kagan estimates that just 1.1 mil of the sets purchased by OTA subs this year will be digital, and that the number of analog sets in OTA TVHH will be roughly 39 mil. at year-end 2005.

FREE COMMERCIAL FOR PAUL KAGAN:

"THE STATE OF HIGH DEFINITION TELEVISION 2006 is a detailed and forward-looking report that breaks out HD set sales from other types of digital sets; provides exclusive 10-year projections for the number of cable and DBS HD subs, both tier and non-tier; and allocates the number of digital sets sold to consumers each year among subscribers to cable and satellite platforms, as well as those relying solely on OTA broadcasts.

"For Table of Contents and more information on THE STATE OF HIGH DEFINITION TELEVISION 2006 visit www.kagan.com/HDTV/110905"