• by Wayne Friedman , March 25, 2008

Five years from now, about two-thirds of TV households will have HD TV sets--a growth rate of 65%. SNL Kagan estimates over 71 million HD subscribers by 2012.

According to Kagan, about one-third of homes have HD TV. The media researcher also notes that since 2003, 74 HD Networks have launched, pushing consumers to consider HD. Two main revenue areas in pushing HD, the study says, are license fees and advertising. But to grow the HD business, networks will have to sacrifice license fees, which typically account for about half of a cable network's revenue stream. That means that HD networks will need to count on advertising revenue for growth.

Kagan says the 25 HD networks that it tracks pulled in $49 million in advertising revenues in 2007. In five years, it expects that number to collectively grow to $421.7 million--still a fraction of all advertising revenues of cable networks.

Overall revenue will also climb. Combined license fee and advertising revenue for the HD networks was $465.1 million in 2007, and Kagan estimates that could rise to $2 billion by 2012.

In regard to the entire cable industry, networks' advertising revenues in 2007 was $19.3 billion, which will go to $28.3 billion in three years. Overall revenue--license fees and advertising revenues--has moved from nearly $12 billion in 1998 to nearly $38 billion in 2007.