Selling TVs, Service? Post-2/17 Should Be Interesting

satellite dishIn about a month--if all goes as planned--the United States will switch from an analog broadcast system to an all-digital platform. The airwaves (and print and some online areas) have already been filled with ads from electronics, cable, telecommunications and satellite companies trying to get people to buy new televisions or service before the transition takes place. But some of the biggest opportunities may come afterwards.

"This is not a one-month play here," David Klein, executive vice president at technology marketing research company Centris, tells Marketing Daily. "Clearly, we're down to the wire. But what happens after Feb. 17 is when this gets interesting."

According to Centris, nearly 34 million homes will be affected by the digital TV (DTV) conversion. About 15 million of them use the over-the-air (OTA) broadcasts as their only reception source, while about 19 million receive over-the-air signals only for a second or third television. Many of these televisions will require a converter box to receive the digital signals. Some may opt to purchase the converter box (using a government-subsidized coupon to reduce the cost), but many others will either add cable or some other service, Klein says.



"The trend has already shown declines in OTA homes, and the DTV transition is only going to speed up that trend," Klein says. "And with the price declines in high-definition televisions, and more consumers buying them, they're going to want more content, not less."

And when they do, they are likely to buy bundled packages. According to Centris, nearly one-half (45%) of households that switch to cable from OTA broadcast also sign up for voice, video and data services at the same time.

Of the nearly 15 million households that primarily receive broadcast OTA, a little more than half (8.5 million) will have trouble receiving digital signals with their converter box and their current antenna, according to Centris. Retailers that can help people purchase and install new antennas or other needed equipment may benefit from households that do not sign up for a cable or satellite service, but choose to receive digital broadcasts over the air.

"Even if everyone wanted to remain an over-the-air home, they would still not get all of their channels," Klein says. "This was approached as a national issue, but it's turned into a local one. Those companies that are able to do local marketing and know the issues are going to do well."

There is, however, a distinct possibility that the transition will be delayed. President-elect Obama has already gone on record expressing his desire to hold off for a few months to ensure that people are prepared. Even so, Klein says, it's unlikely that the opportunities for marketers will change drastically. "The only thing [a delay] would potentially be able to do is get more coupons into the hands of people who use converter boxes," Klein says. "It doesn't change [marketers' plans] at all."

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