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www.emarketer.com
Digital Television2003:The Emergence of Advanced TV Services
August 2003
This report is the property of eMarketer, Inc. and is protected under both the United States Copyright Act and by contract.Section 106 of the Copyright Act gives copyright owners the exclusive rights of reproduction, adaptation, publication,performance and display of protected works.
Accordingly, any use, copying, distribution, modification, or republishing of this report beyond that expressly permitted byyour license agreement is prohibited. Violations of the Copyright Act can be both civilly and criminally prosecuted andeMarketer will take all steps necessary to protect its rights under both the Copyright Act and your contract.
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©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Table of Contents 3
Methodology 7
The eMarketer Difference 8
The Benefits of eMarketer’s Aggregation Approach 9
“Benchmarking” and Projections 9
I Key Findings 11
II TV Technology & TV Households Worldwide 13
A. Understanding the Technology 14
B. TV Households 16
C. Global Digital TV Projections 17
D. Digital Terrestrial Television (DTT) 22
E. IPTV – Internet Protocol TV 25
F. The Set-Top Box (STB) 26
Categories of Set-Top Boxes 26
Cable Vs Satellite Vs Digital Terrestrial Set-tops 27
Global Set-top Box Projections 28
G. Digital TV Sets 30
III Advanced Television Services 33
A. Video-on-demand (VOD) 34
Worldwide Revenues 35
B. Personal Video Recorders (PVRs) Worldwide Forecasts 36
IV US 39
A. Digital TV 41
Cable TV 44
Satellite 46
Digital Terrestrial Television 48
Digital TV Sets 49
B. Video-on-Demand (VOD) 50
US Forecasts 53
US PPV Revenues 55
US VOD Revenues 57
Consumer Surveys 61
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
C. Personal Video Record (PVR) 71
US Forecasts 72
PVRs - Complimentary or Competing Against VOD? 76
Consumer Surveys 78
D. High Definition Television 82
US Forecasts 83
Consumer Surveys 88
E. US Competitive Landscape 92
Cable Vs DBS 92
F. Leading US Multichannel TV Providers 94
Comcast 94
DirecTV 95
Time Warner Cable 96
EchoStar 97
Charter Communications 97
Cox Communications 98
Adelphia Communications 99
Cablevision 99
Mediacom 100
Insight Communications 100
V Appendix: Glossary of Acronyms 101
Glossary of Acronyms 102
Index of Charts 103
Reuse of information in this document, without prior authorization,is prohibited. If you would like to license this report for yourorganization, please contact David Iankelevich [email protected], or 212.763.6037.
Written by Ben Macklin
Also contributing to this report:Yael Marmon, director of researchTracy Tang, researcherDavid Berkowitz, senior editorAllison Smith, senior editorKwanza Osajyefo Johnson, data entry associateDana Hill, production artist
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
August 2003
Welcome to eMarketer
Dear Reader:
The August 2003 Digital Television: The Emergence of Advanced TV Services report provides anoverview of the growing digital TV market in the US and around the world. The emergence of digitalTV has spawned a number of advanced TV services such as video-on-demand, high-definition TV andpersonal video recorders, all of which are transforming the TV viewing experience. Thistransformation is forcing advertising, media, content and TV distribution companies to re-examinetheir traditional business models.
The Digital Television: The Emergence of Advanced TV Services report provides the necessary dataand analysis so companies can make better decisions in this rapidly changing digital marketplace.
Ben MacklinSenior Analyst
Ben MacklinSenior Analyst, [email protected]
eMarketer, inc.821 BroadwayNew York, NY 10003T: 212.677.6300F: 212.777.1172
Methodology 7
The eMarketer Difference 8
The Benefits of eMarketer’s Aggregation Approach 9
“Benchmarking” and Projections 9
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
IV US 39
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
8
Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
eMarketer’s approach to market research is founded on a philosophy ofaggregating data from as many different sources as possible. Why? Becausethere is no such thing as a perfect research study and no single researchsource can have all the answers. Moreover, a careful evaluation andweighting of multiple sources will inevitably yield a more accurate picturethan any single source could possibly provide.
The eMarketer DifferenceeMarketer does not conduct primary research, it therefore has no testingtechnique to defend, no research bias and no client contracts to protect.
eMarketer prepares each market report using a four-step process ofaggregating, filtering, organizing and analyzing data from leading researchsources worldwide.
Using the Internet and accessing a library of electronically-filed researchreports and studies, the eMarketer research team first aggregates publiclyavailable e-business data from hundreds of global research and consultancyfirms. This comparative source information is then filtered and organizedinto tables, charts and graphs. Finally, eMarketer analysts provide conciseand insightful analysis of the facts and figures along with their ownestimates and projections. As a result, each set of findings reflects thecollected wisdom of numerous research firms and industry analysts.
“I think eMarketer reports are extremely useful andset the highest standards for high quality,objective compilation of often wildly disparatesources of data. I rely on eMarketer’s researchreports as a solid and trusted source.”— Professor Donna L. Hoffman, Co-Director, eLab, Vanderbilt University
www.eMarketer.com©2001 eMarketer, Inc.
Analyze
Aggregate
Filter
Organize
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
The Benefits of eMarketer’s AggregationApproachObjective: information is more objective than that provided by any singleresearch sourceComprehensive: gathered from the world’s leading research firms,consultancies and news organizationsAuthoritative: quoted in leading news publications, academic studies andgovernment reportsAll in one place: easy to locate, evaluate and compareReadily accessible: so you can make quick, better-informed business decisionsAbove the hype: accurate projections that business people can use with confidenceTime saving: there’s no faster way to find Internet and e-business stats,online or offMoney saving: more information, for less, than any other source in the world
“Benchmarking” and ProjectionsUntil recently, anyone trying to determine which researcher was mostaccurate in predicting the future of any particular aspect of the Internet didnot have a definitive source with which to do this. For instance, over 10firms predicted e-commerce revenues for the fourth quarter 1998 onlineholiday shopping season, and yet no single source could be identified afterthe fact as having the “correct” number. In the Spring of 1999, however, theUS Commerce Department finally began measuring e-commerce B2Cactivity so business people and others could have a benchmark with whichthey could compare and evaluate projections.
eMarketer has adapted its methodology to recognize that certaingovernment and other respected, impartial sources are beginning toprovide reliable numbers that can be consistently tracked over time. Mostof these established sources, however, only measure past results; typically,they do not make predictions.
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Today, eMarketer formulates its essential e-business numbers by firstidentifying the most established, reputable source for a given sector beingmeasured and then adopting that organization’s figures as benchmarks forthe historical/current period. For instance, eMarketer’s US Internet userfigures will be based on a combination of the most recent data from the USCensus Bureau and the International Telecommunication Union. Using thisdata as the benchmark for 2000 and 2001, eMarketer will make projectionsfor subsequent years based on the following factors:
■ a comparative analysis of user growth rates compiled from otherresearch firms
■ additional benchmark data from Internet rating firms, e.g.,Nielsen//NetRatings, comScore Media Metrix, which use panels tomeasure Internet user activity on a weekly and monthly basis
■ an analysis of broader economic, cultural and technological trends inthe US
Similarly, US e-commerce revenues are being “benchmarked” usinghistorical data from the US Department of Commerce, and broadbandhousehold and penetration rate forecasts are being built off baseline datafrom the Organization for Economic Cooperation and Development (OECD).
Through this benchmarking process, eMarketer will be holding itself –and its projections – accountable.
“When I need the latest trends and stats on e-business, I turn to eMarketer. eMarketer cutsthrough the hype and turns an overabundance of data into concise information that is sound and dependable.”— Mark Selleck, Business Unit Executive, DISU e-business Solutions, IBM
IMethodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
IV US 39
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
■ Digital TV households worldwide will number 100 million by the endof 2003, and 400 million by 2010. (Strategy Analytics, 2003).
■ The US will have nearly 60 million digital TV households in 2005, upfrom 40 million in 2002 (eMarketer, 2003).
■ Only the United Kingdom has a higher household digital TVpenetration than the US (Strategy Analytics, 2003).
■ US video-on-demand users will grow at a CAGR of 71% to 2006, andrevenues will grow from $228 million in 2002 to $1.76 billion in 2006(eMarketer, 2003).
■ Personal video recorders are in less than 4% of US homes currently, butthis will rise to 13.3% by 2006 (eMarketer, 2003).
■ High-definition TV is available to over 55 million US households, butonly about 2 million households will be viewers of HDTV in 2003.HDTV households, however, will grow at a CAGR of 128% to 2006,numbering 16.4 million in that year (eMarketer, 2003).
■ All major US cable and satellite TV providers have launched or aretesting advanced TV services. The competition between cable and DBSwill continue to be fierce.
IIMethodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
A. Understanding the Technology 14
B. TV Households 16
C. Global Digital TV Projections 17
D. Digital Terrestrial Television (DTT) 22
E. IPTV – Internet Protocol TV 25
F. The Set-Top Box (STB) 26
G. Digital TV Sets 30
III Advanced Television Services 33
IV US 39
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
A. Understanding the TechnologyTelevision pictures the world over are transmitted into homes by means ofthree main technologies: terrestrial, cable and satellite.
Terrestrial TV, also called over-the-air broadcasting, is transmitted throughthe air from a large antenna, usually situated at a high location, andreceived by an internal or external antenna in the home. TV became a massmedium in most countries during the 1950s by over-the-air broadcasting.Some of the problems that have been experienced with terrestrial TVtransmission over the last 50 years have been that the spectrum, which isshared among many broadcasters, limits the amount of channels that canbe broadcast over the air in a given city, and obstructions and longdistances can often degrade the TV signal.
Cable TV transmission receives, converts and transmits the TV signal alonghybrid fiber/coaxial cable. Cable TV was developed to deliver TV signals tosmall isolated communities and later used to increase the number ofchannels available to viewers. Since cable TV provides a dedicated ‘pipe,’with more usable bandwidth than regulators allocate to terrestrialbroadcasters, cable operators can offer subscribers many more TVchannels, normally with clearer pictures. Cable networks cost a lot of timeand money to build, but recent technological developments have allowedcable TV operators to also utilize the cable network to offer additionalrevenue-generating services such as high-speed Internet and telephony.
Satellite TV, also called direct-to-home (DTH) or Digital Broadcast Satellite(DBS), is the transmission of TV signals from orbiting satellites at about35,000 feet directly to small receiving dishes attached to a household.Anyone who can install a receiving dish and point it to the sky can receivesatellite TV. Most DTH satellite systems are already digital, so they can offera wider selection of channels than can analog cable.
IPTV – Internet protocol TVTerrestrial, cable and satellite are the three main TV distribution platformsthe world over, but emerging technologies are allowing TV signals to betransmitted on technologies such as DSL, fiber and wireless technologiesusing Internet protocol. This will mean that TV will be available to people’sInternet devices including PCs, mobile phones and PDAs. Already in theJapanese market, one can receive TV through mobile phones, and othermarkets are sure to follow shortly. With DSL quickly becoming the mostpopular broadband Internet technology throughout the world, digital TVthrough DSL will grow steadily in the coming years.
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Digital vs AnalogThe major difference between analog TV signals and digital TV signals isthat digitizing the TV signal increases the capacity of the transmissiontechnology, thereby allowing TV providers to offer a greater number ofchannels. A digital TV signal can be transmitted using any of thedistribution technologies mentioned previously, so digital TV is possible oncable, satellite, terrestrial and other emerging technological platforms.Mobile phone operators around the world made a similar transition in the1980s and 1990s when they moved from analog transmission to a digitaltransmission. This provided mobile phone users with better reception andfunctionality, but more importantly for the operator, they were able tobetter utilize their spectrum and service many more customers. Like mobilephone operators, however, cable, satellite and terrestrial operators need toupgrade their systems and networks in order to provide customers withdigital TV and for the consumer, they need to purchase different equipmentto receive digital TV.
Digital TV is already available in many markets around the world inconjunction with Analog TV. Typically, there is no single digital TV standardthroughout the world. Rather the US digital TV system (ATSC) is differentfrom Europe (DVB), and Japan and China are developing their own.
Many national governments, including Australia, the US and Taiwan,have mandated that TV broadcasters cease transmission of analog TV at acertain date. In the US, this date was tentatively set at 2006, but it lookslikely that this will be pushed forward to give broadcasters more time to getready for digital. When the analog signal is turned off, TV viewers who arenot currently subscribed to a digital TV service will only be able to receivea TV signal if they purchase a digital TV, or alternatively, a set-top box thatwill translate the digital signal into viewable pictures on their existinganalog TV.
HDTV and ITVThe other important element to digitizing the TV signal is that it providesoperators with a viable opportunity for offering consumers high-definitionTV (HDTV) - with double the resolution of standard TV, CD-quality soundand a wider picture - as well as interactive TV functions, video-on-demand(VOD) and personal video recorder (PVR) functions. With cable operatorsspending billions of dollars upgrading their analog networks to digital,they are looking to advanced TV services such as VOD, HDTV and PVRs asthe key revenue drivers for their future networks.
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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AdvancedTelevision Services
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Appendix:Glossary of Acronyms
Index of Charts
B.TV HouseholdsThere are over a billion TV households worldwide and at least 1.4 billiontelevision sets, according to Baskerville Communications and MerrillLynch. The United States represents less than 10% of worldwide TVhouseholds, while China boasts over 30%.
Middle East/Africa2%South America7%
North America13%
Europe28%
Asia-Pacific50%
Geographic Distribution of TV Households Worldwide,2000 (as a % of total households)
Source: Baskerville Communications, 2000
036314 ©2002 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
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Appendix:Glossary of Acronyms
Index of Charts
C. Global Digital TV ProjectionsInforma Media Group estimates there will be nearly 100 million digital TVhouseholds worldwide at the end of 2003, with North America containingover 51% of the total. Europe, the next largest digital TV region, willcontain 30.7 million digital TV households, or 31.7%.
By 2010, there will be 393 million digital TV households worldwide, withthe Asia-Pacific region being the largest market, according to InformaMedia Group.
Digital TV Households Worldwide, by Region, End of2002 & 2003 (in thousands)
Asia-Pacific
7,851
12,306
Europe
26,921
30,721
Latin America
3,590
4,020
North America
42,840
49,685
Total
81,202
96,732
End of 2002 End of 2003
Source: Informa Media Group, May 2003
049492 ©2003 eMarketer, Inc. www.eMarketer.com
Digital TV Households Worldwide, by Region,1995-2010 (in millions)
1995 2002 2003 2005 2010
Asia-Pacific 0 8 12 36 157
Europe 0 27 31 43 97
Latin America 0 4 4 6 23
North America 2 43 50 66 116
Total 2 81 97 151 393
Source: Informa Media Group, April 2003
049040 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
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TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Strategy Analytics predicts 374 million digital TV households worldwideby 2008, up from 103 million in 2002.
Digital TV Households Worldwide, 2000-2008 (inmillions)
2000 54.9
2001 76.7
2002 103.3
2003 135.8
2004 175.2
2005 221.5
2006 272.2
2007 324.4
2008 374.0
Note: includes all digital TV platforms - terrestrial, satellite, cable, DSL andotherSource: Strategy Analytics, June 2002
040969 ©2002 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
While cable penetration is very high in North America, it is not as high inother parts of the world. This is why satellite TV (DTH/DBS) will be thedominant digital TV platform at the end of 2003, with nearly 57% of themarket, compared to digital cable at 38%.
Digital TV Households Worldwide, by DeliveryPlatform, End of 2002 & 2003 (in thousands)
Digital terrestrial (DTT)
1,566
3,237
Digital cable
28,647
37,305
Digital satellite (DTH/DBS)
50,470
55,088
DSL entertainment
519
1,102
Total
81,202
96,732
End of 2002 End of 2003
Source: Informa Media Group, May 2003
049493 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
The United Kingdom will have the highest digital TV household penetrationin the world at 44% at the end of 2003, followed by the US, at 42%, andCanada at 40%.
Leading Digital TV Countries Worldwide Ranked byPenetration*, End of 2003
UK 44%
US 42%
Canada 40%
Ireland 35%
New Zealand 33%
Sweden 27%
Malaysia 26%
France 21%
Finland 17%
South Korea 16%
Note: *% of TV households taking digital signalsSource: Informa Media Group, May 2003
049495 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
The US digital TV market is over four times as large as the next largestdigital TV market, the UK, according to Informa Media Group.
“Digital video households, while still far fewer thananalog video households worldwide, represent oneof the fastest growing sectors in electronics today.Anticipated growth from 2002 to 2005 isapproximately 67%”— Multimedia Research Group, April 2003
Leading Digital TV Countries Worldwide, End of 2003(in thousands of households)
US
45,041
UK
10,824
Japan
5,572
Canada
4,834
France
4,717
Germany
3,916
Italy
2,768
South Korea
2,302
Spain
1,769
Poland
1,433
Source: Informa Media Group, May 2003
049494 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
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TV Technology &TV Households Worldwide
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Appendix:Glossary of Acronyms
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D. Digital Terrestrial Television (DTT) While cable and satellite are currently the two dominant digital TVplatforms, two others will also grow in prominence over the coming years –DTT and DSL.
Digital terrestrial television is coming because many nationalgovernment have said so. Countries such as the US, Australia, Canada,Taiwan and others have already made the decision as to when they will beceasing analog TV transmission.
In those countries where over-the-air broadcasting dominates and cable andsatellite TV are not widely available, DTT will garner significant subscribers.When the analog TV signal stops, TV viewers won’t be able to watch TVunless they purchase a new digital TV set or a set-top box that will translatethe digital signal so that television is viewable on their analog TVs.
There are two major digital TV technology standards in the world today,ATSC and DVB. Japan is using an alternative standard, ISDB, and China isdeveloping its own standard.
Digital Terrestrial Television (DTT) Start and AnalogSwitch-Off Dates for Selected Countries, 1998-2010
DTT Start Analogswitch-off
UK 1998 ND
US 1999 2006
Canada 1999 2007
New Zealand 1999 ND
Spain 1999 ND
Sweden 1999 ND
Singapore 2000 ND
China 2000 ND
Finland 2000 ND
France 2000 2010
Hong Kong 2000 ND
Ireland 2001 ND
Netherlands 2000 ND
Portugal 2000 ND
Australia 2001 2008
Korea 2001 ND
Taiwan 2001 2006
Japan 2003 2010
Note: ND refers to 'not determined'Source: Screen Digest, October 1998
036838 ©2002 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
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The following tables provide an update of the deployment of digital TVacross the world as of 30 June 2003 from the digital TV standards body,Advanced Television Systems Committee (ATSC).
ATSC Digital Terrestrial TV (DTT) DeploymentsWorldwide, 2003ATSC
Argentina Adopted ATSC in 1998. Experimental ATSCbroadcasts in Buenos Aires.
Canada First commercial station in early 2003. Service inToronto, Montreal, Ottawa and Vancouver by endof 2003.
Mexico Expected to formally adopt ATSC in 2003. Testbroadcasts of ATSC HDTV 45hr/week in MexicoCity for past five years. One commercial ATSCstation operating in Tijuana.
South Korea Launched in late 2001, already reaching 48% ofthe population with DTV signals. 70% by the endof 2003, nationwide by 2005. World leaders ininteractive DTV services, using the ATSC DASEStandard.
US More than 1,000 DTV stations on air, reaching98% of the population. Nearly 500 DTV/HDTVproducts on the market. By the end of 2002, 5million units had been sold, representing aconsumer investment of $9 billion.
Note: ATSC=Advanced Television Systems CommitteeSource: ATSC Forum, June 2003
050999 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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DVB Digital Terrestrial TV (DTT) DeploymentsWorldwide, 2003DVB
Australia
EU countries
France
Germany
New Zealand
Scandinavia
Singapore
UK and Spain
Australia uses the DVB standard in commercial DTVservice but with Dolby audio. Unlike Europe, Australiaoffers HDTV among its DTV services. Lack of HDTVreceivers led to a wasteful requirement to simultaneouslybroadcast separate SDTV and HDTV streams.
Mandated via European Commission decision. Onlystandard-definition television available in Europe. NoHDTV whatsoever - not by cable, satellite or terrestrialbroadcast.
Implementation plans keep getting deferred.
Rapid transition planned, including government subsidy ofDTV receivers, in order to recover spectrum for otheruses. (Terrestrial TV is only used by a few percent ofGerman viewers.)
Adopted DVB without considering other options, but hasnot launched any commercial service.
Broadly deployed terrestrial DTV services operating inSweden. Less broadly deployed terrestrial servicesoperating in one or two other Scandinavian countries.
Adopted DVB Standard, but with Dolby audio. Only DTVservice operating or contemplated is a mobile service tobuses and subways. Reception quality is so poor that theaudio is simulcast over FM radio.
Major terrestrial pay DTV services launched in eachcountry went bankrupt and ceased operations in 2002. UKsaid their service failed due in large part to poor technicalreception. UK re-launched a free-to-air services but withonly about 2/3 the bit rate in order to provide more robustreception. (This system only delivers 13.6 Mbps,compared to 19.4 Mbps for ATSC, in a 6MHz channel.
Note: DVB=Digital Video BroadcastingSource: ATSC Forum, June 2003
051104 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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E. IPTV – Internet Protocol TVDigital Subscriber Line (DSL) has been touted as the potential fourth platformfor digital TV, but it is unlikely this market will emerge as a true competitor tothe other digital platforms for some time. DSL is a broadband technology,which utilizes the existing phone line and provides bandwidth from 200kbps–to 50+Mbps depending on the ‘flavor’ of DSL deployed. The service ispredominately offered by telecommunications companies, so if digital TVover DSL is to become widespread, then telecom companies will need to workout how to become TV broadcasters as well. This may very well be the factorwhich prevents digital TV via DSL from becoming widespread.
Strategy Analytics projects that the number of people around the worldusing television and video services delivered through Internet protocol (IPTV)will grow from just 110,000 in 2002 to 20.44 million by 2008. Strategy notesthat 2003 will be the year for the most significant growth in the number ofIPTV subscribers with a rate of 662%. The research firm believes that Europeand Asia-Pacific will be the regions leading the overall market.
Strategy studied 30 commercial and planned IPTV deployments anddetermined that IPTV technologies help reduce the costs of both marketentry and operation for broadband television service providers about toenter the arena.
IPTV* Subscribers Worldwide, 2000-2008 (in millions)
2000 0.01
2001 0.03
2002 0.11
2003 0.83
2004 2.19
2005 4.53
2006 8.23
2007 14.02
2008 20.44
Note: *term describing television and video services that are delivered totelevision receivers using IP-Internet ProtocolSource: Strategy Analytics, December 2002
045386 ©2002 eMarketer, Inc. www.eMarketer.com
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Index of Charts
F.The Set-Top Box (STB)The piece of hardware that transforms the TV into an advanced digital andinteractive device is the set-top box (STB) – labeled such because it is a boxthat usually sits on top of your TV set. STBs could be described ascomputers since they have microprocessors, memory, and various inputsand outputs, but a typical STB does not have the processing power norlocal storage capability of a standard PC. However, emerging STBs arebecoming more sophisticated.
Categories of Set-Top BoxesThe importance of the set-top box, and the strategy the various digital TVplayers are taking, are directly related to the possible advanced TV servicesand applications a digital TV user will have available.
According to Chorus Senior Technology Strategist Gerard O’Driscoll, set-top boxes can be broadly classified into six major categories. The followingtable illustrates the so-called ‘fat’ versus ‘thin’ client strategy taking placewithin the set-top box industry. Those with thin set-tops have limitedmemory and processing power and therefore offer limited functionality; fatset-tops have greater memory, processing power and functionality.
Categories of Set-Top Boxes (STBs) Worldwide, 2002Analog set-top boxes Perform the functions of receiving, tuning and
de-scrambling incoming television signals
Dial-up set-top boxes Allow subscribers to access the internet throughtheir TV
Entry-level digitalset-top boxes
Are capable of receiving broadcast digitaltelevision and complemented with apay-per-view system and a very basic navigationtool. Usually low cost, limited memory andprocessing power
Mid-range set-topboxes
Include a return path for communication with theserver at the head-end. Usually double theprocessing and storage capabilities of anentry-level STB
Advanced digitalset-top boxes
Bear a close resemblance to a multimedia PC.Usually contain 10 times the processing power oflow-level STBs and significantly more storagecapabilities in conjunction with high-speed returnpath which allows advanced services such asvideo conferencing, IP telephony,video-on-demand and high definition television
Advanced digitalset-top box with PVRfunctionality
These STBs include a hard disk drive whichallows users full VCR functionality allowingrecording of shows and skipping of ads, etc. aswell as all the functionality associated with anadvanced digital STB
Source: Chorus, 2001; eMarketer, 2002
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“Over the next five years, we anticipate seeing anincrease in the mid-range set top boxes that willenable network operators to initially deploy iTVservices such as weather, e-mail and horoscopes,and then transition to more advanced servicessuch as t-commerce and premium video games.”— James Ackerman, CEO OpenTV, 29 January 2002
Cable Vs Satellite Vs Digital Terrestrial Set-topsThe major difference between cable, satellite and digital terrestrial set-topsis the greatly enhanced two-way capabilities of the cable network.Upgraded cable networks can both send and receive real-time signals to thehome, while satellite and digital terrestrial networks generally can onlysend signals one way to a subscriber. This is critical in services such astelephony and video-on-demand, but to-date, this lack of a high-speedreturn path has not overly hampered the roll-out of interactive servicesfrom satellite or digital terrestrial TV providers. On the contrary, the factremains that the most successful interactive TV provider, BskyB in the UK,is a Satellite TV provider. Sky’s interactive subscribers only have the phoneline as a return path, yet their variety of interactive applications faroutnumber any interactive service offerings from cable TV providersaround the world.
“Interactive TV through digital broadcasting is slowbecause uploading — that would be the interactivepart — goes through the phone line. This causes anoticeable delay that few channel surfers cantolerate. PC users are accustomed to annoyingdelays; TV viewers are not.”— Steve Mollman, J@pan Inc, February 2001
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Global Set-top Box ProjectionsAccording to Morgan Stanley, 31 million of the 55 million cable and DBSinstalled set-tops in the world were in North America in 2000, with Europe,the next closest region with 15 million installed set-tops. By 2005,however, Morgan Stanley predicts Asia will surpass Europe with over 60million digital STBs.
Strategy Analytics’ break-down of set-top box shipments worldwide showsthat cable and satellite STB were neck and neck in 2002, but by 2008 thenumber of digital cable STB shipments will almost double that of satellite.The research firm predicts annual average growth in set-top box revenuesof 24% until 2008.
Worldwide Cable and Digital Broadcast Satellite (DBS)Set-Top-Box Installed Base, by Region, 1999-2005 (inmillions)
1999 2000 2001 2002 2003 2004 2005
North America 19.7 30.6 43.3 55.0 65.9 77.3 92.2
Europe 9.2 15.2 22.0 28.8 35.1 40.6 48.2
Latin America 2.0 3.0 4.4 6.1 8.2 10.4 13.5
Asia 3.5 6.0 12.7 21.2 32.5 43.9 60.7
Worldwide total 34.5 54.8 82.4 111.1 141.6 172.2 214.6
Source: Morgan Stanley Dean Witter, March 2001
036518 ©2002 eMarketer, Inc. www.eMarketer.com
Digital TV Set-Top Box Market Forecast Worldwide,2002 & 2008 (in millions of units)
2002
21.6
21.6
0.8
0.6
2008
82.9
47.8
6.1
10.9
Cable Satellite Terrestrial Other
Source: Strategy Analytics, 2002
040968 ©2002 eMarketer, Inc. www.eMarketer.com
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“Market leaders such as Motorola, Inc., Scientific-Atlanta, Inc.,Thomson Multimedia, PhilipsElectronics and Pace Micro Technology will takeheart from this latest forecast, but the analysts alsoidentify emerging Chinese manufacturers as thebiggest long-term threat to today’s leading players.”— Peter King, Senior Analyst, Strategy Analytics, 2002
Shipments of advanced set-top boxes, which provide PVR functionalityand/or act as a media hub are forecast to rise to nearly 30 million unitsworldwide in 2008, according to Strategy Analytics, from only 1 million in 2002. The research firm estimates that basic PVR functionality willincreasingly become the norm in new digital STB, but it will take some time before the STB becomes the ‘media home-gateway’ according to their estimates.
Allied Business Intelligence is even more optimistic than Strategy Analyticson worldwide STB shipments with PVR functionality. The research firmestimates that 72.5 million STBs will be sold in 2008 and 68% (49.2million) will have PVR functionality. This is more than double theestimated figure from Strategy Analytics.
Advanced Digital TV (DTV) Set-Top Box MarketWorldwide, by Functionality, 2002-2008 (in millions ofunits)
2002 2003 2004 2005 2006 2007 2008
Basic PVR 0.96 2.25 3.61 6.12 10.37 15.49 21.00
Broadband media center 0.01 0.29 1.05 2.33 3.82 5.61 8.01
Total 0.97 2.53 4.67 8.45 14.19 21.10 29.01
Note: includes cable and satellite set-top boxes onlySource: Strategy Analytics, October 2002
044175 ©2002 eMarketer, Inc. www.eMarketer.com
Set-Top Box (STB) Shipments Worldwide, 2002 & 2008(in millions)
STBs with PVR functionality
3.8
49.2
Total STBs sold
33.4
72.5
2002 2008
Source: Allied Business Intelligence (ABI), January 2003
051002 ©2003 eMarketer, Inc. www.eMarketer.com
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G. Digital TV SetsIt is not necessary to have an actual digital television set in order to receivedigital television, as a less expensive set-top box is able to translate thedigital signal so it is viewable on an analog TV set. However, with agrowing amount of digital terrestrial content being broadcast, as wellincreasing numbers of digital cable and satellite TV subscribers, there is acorresponding growing number of digital television sets being soldworldwide. As digital TVs are still extremely expensive compared to theiranalog counterparts, however, the market is still very small.
Estimated Worldwide Digital TV Set MarketProjections, 2001 & 2005 (in millions)
North America
1.0
7.0
Japan
0.4
8.0
Europe
0.2
7.0
Asia Pacific*
0.3
4.0
2001 2005
Note: *Korea, China, Taiwan and AustraliaSource: Cahners In-Stat Group, 2001
033516 ©2001 eMarketer, Inc. www.eMarketer.com
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Consumer electronics association (CEA) estimates that DTV product sales inthe US will number 10.5 million in 2006, which is the year the USgovernment originally mandated that analog TV signals will cease.
For additional information on the global digital TV marketplace, seeeMarketer’s eStat Database athttp://www.emarketer.com/products/database.php
Digital TV (DTV) Product* Sales in the US, 2002-2006 (inmillions of units)
2002 2.1
2003 4.0
2004 5.4
2005 8.0
2006 10.5
Note: *DTV products are defined as integrated sets and monitorsdisplaying active vertical scanning lines of at least 480p and, in the case ofintegrated sets, receiving and decoding ATSC terrestrial digitaltransmissionsSource: Consumer Electronics Association (CEA), September 2002
043462 ©2002 eMarketer, Inc. www.eMarketer.com
IIIMethodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
A. Video-on-demand (VOD) 34
B. Personal Video Recorders (PVRs) Worldwide Forecasts 36
IV US 39
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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The growth of digital TV around the world has spawned the emergence ofadvanced TV services such as video-on-demand, personal video recorderfunctions, high-definition TV and interactive TV content and services. It isthese emerging services that TV broadcasters and distributors are hopingwill be the driver of revenue growth in the next decade.
A.Video-on-demand (VOD) While revenues from DVD/VHS sales and rentals far exceeds that of pay-per-view movie revenues, there is nevertheless a healthy and growing pay-per-view (PPV) market in the US and worldwide. This is one of the mainreasons why those in the industry think VOD has potential, as both arevenue earner and a service to reduce churn.
Pay-per-view (also called near video-on-demand, or NVOD) differs fromVOD in that PPV movies and events are on at scheduled times, usually atstaggered intervals on multiple channels. Users, however, are not unable towatch the movie more than once, nor are they able to pause or rewind themovie, as is possible with VOD. It is likely that the PPV market will be thefirst to embrace video-on-demand.
Informa Media Group estimates that in 2002 there were 94.4 millionhouseholds worldwide with access to on-demand (which includes PPV and VOD) television services. North America currently accounts for nearly50% of the market while Europe makes up 30%. By 2007, Informa MediaGroup estimates that on-demand television households in the Asia-Pacificregion will number 93 million, just shy of the 98 million they forecast inNorth America.
Direct-to-home (DTH) satellite television providers dominated the PPVmarket over the last few years. Since the vast majority of all DTH (alsocalled direct broadcast satellite – DBS) services are digital, their additionalcapacity has allowed them to offer numerous movie channels dedicated toPPV providing a near video-on-demand experience. According to InformaMedia Group, however, the dominance of DTH providers in the on-demandtelevision market will not last long. Their data shows that by 2007 cable
Households with On-Demand Television ServicesWorldwide, by Region, 2000-2002 & 2007 (in millions)
2000 2001 2002 2007
Asia-Pacific 4.0 7.7 15.2 93.0
Europe 16.8 23.3 29.0 73.5
North America 25.6 34.0 44.5 98.9
Latin America 2.8 4.2 5.8 16.0
Total 49.2 69.2 94.4 281.4
Source: Informa Media Group, April 2002
039423 ©2002 eMarketer, Inc. www.eMarketer.com
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households with on-demand television services will number 176 millioncompared to 70.7 million DTH households.
True VOD requires an advanced set-top box and significant bandwidthboth downstream and up. This means that satellite and terrestrial TVservices are less suitable for VOD because there is no high-speed backchannel. VOD distributed via cable and DSL will be the two majortechnologies utilized for VOD, according to Informa Media.
Worldwide RevenuesOn-demand television service revenues will total $12 billion worldwide, upfrom $4 billion in 2002, according to Informa Media Group. Revenue fromcable PPV (NVOD) and DTH PPV will make up the vast majority ofrevenues. Informa Media Group estimates that VOD revenues worldwidewill only total $1.7 billion by 2007, which is considerably lower that manyresearch firms predict for the US market alone at the same time.
Households Using On-Demand Television ServicesWorldwide, by Platform, 2000-2002 & 2007 (in millions)
2000 2001 2002 2007
Cable NVoD 14.0 24.9 44.1 176.6
DTH NVoD 34.8 43.4 48.6 70.7
Cable VoD 0 0.1 0.5 16.6
DSL VoD 0.4 0.7 1.3 17.5
Total 49.2 69.2 94.4 281.4
Source: Informa Media Group, April 2002
039426 ©2002 eMarketer, Inc. www.eMarketer.com
On-Demand Television Services Revenue Worldwide,by Platform, 2000-2002 & 2007 (in millions)
2000 2001 2002 2007
Cable NVoD $532 $998 $1,689 $6,690
DTH NVoD $1,446 $2,013 $2,420 $3,762
Cable VoD 0 $7 $22 $916
DSL VoD $12 $21 $45 $781
Total $1,990 $3,039 $4,177 $12,149
Source: Informa Media Group, April 2002
039427 ©2002 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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B. Personal Video Recorders (PVRs)Worldwide ForecastsPVRs, also called digital video recorders (DVRs), have the full functionalityof a VCR with additional storage and tools allowing users to automaticallyrecord programs by time, genre, actor and other criteria without the ads, aswell as allowing users to pause and fast-forward live TV…and also ads, ofcourse. Early PVR incarnations were just a stand-alone box priced at nearly$500, but now PVR technology has been included within set-top boxes thatusers require for cable or satellite TV. In fact, 70% of all PVR homes in theUS are digital broadcast satellite (DBS) subscribers utilizing PVRtechnology through their set-top box.
While PVRs are in only a handful of homes worldwide now, InformaMedia Group predicts that by 2010, they will be in 172 million homes.
Infoma Media Group forecasts that by 2010, PVRs will be in 44% of NorthAmerican homes, up from 3% in 2002. In Asia-Pacific, Europe and LatinAmerican households, 25% to 30% of households will have PVRs by 2010,up from 1% in 2002.
Personal Video Recorder (PVR) HouseholdsWorldwide, 2001, 2002, 2005 & 2010 (in millions)
2001 0.8
2002 2.0
2005 24.1
2010 172.0
Source: Informa Media Group, September 2002
044116 ©2002 eMarketer, Inc. www.eMarketer.com
Personal Video Recorder (PVR) Household PenetrationRate Worldwide, by Region, 2001, 2002, 2005 & 2010(as a % of digital TV homes)
2001 2002 2005 2010
Asia-Pacifc 0% 1% 9% 27%
Europe 0% 1% 9% 30%
Latin America 0% 1% 9% 25%
North America 2% 3% 13% 44%
Total 1% 2% 10% 31%
Source: Informa Media Group, September 2002
044125 ©2002 eMarketer, Inc. www.eMarketer.com
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Screen Digest forecasts that by 2005, there will by three times as many PVRhouseholds in the US as there will be in Europe at the same time.
PVR functionality will be available in set-top boxes offered by cable, DBS(also called DTH), digital terrestrial and DSL providers. DBS is currently thedominant PVR platform worldwide, but by 2005, Informa Media Grouppredicts cable providers will take the lead.
Digital Video Recorder Sales in the US and Europe,2002 & 2006 (in millions)
Europe
0.3
5.0
US
2.3
15.3
2002 2006
Source: Screen Digest, August 2002
042844 ©2002 eMarketer, Inc. www.eMarketer.com
Personal Video Recorder (PVR) HouseholdsWorldwide, by Delivery Platform, 2001, 2002, 2005 &2010 (in thousands)
2001 2002 2005 2010
Digital Cable 200 576 13,181 106,895
DSL 1 15 965 11,309
Digital DTH 594 1,393 7,568 26,598
DTT 0 36 2,348 27,241
Total 795 2,020 24,062 172,043
Source: Informa Media Group, September 2002
044118 ©2002 eMarketer, Inc. www.eMarketer.com
IVMethodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
IV US 39
A. Digital TV 41
B. Video-on-Demand (VOD) 50
C. Personal Video Record (PVR) 71
D. High Definition Television 82
E. US Competitive Landscape 92
F. Leading US Multichannel TV Providers 94
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Television is ubiquitous in America. According to the National Cable andTelecommunications Association (NCTA) there were 106.6 million TVhouseholds in the US in May 2003, 67% of which receive TV through cable.
Not only are TVs in nearly every US home, but people are watching morehours of TV per day, according to Nielsen Media Research. TV usage hasincreased one full hour per day over the last 10 years.
Other1.0%
Satellite19.2%
Cable67.4%
Terrestrial12.4%
Television Households in the US, by DistributionPlatform, 2003
Source: eMarketer interpolated from National Cable & TelecommunicationsAssociation (NCTA) data, July 2003
051003 ©2003 eMarketer, Inc. www.eMarketer.com
Average Television Usage among Households in theUS, 1990-2003 (in hours:minutes/day, hours/year, andas a % ncrease/decrease vs. prior year)Broadcast year (Sept-Aug) Hrs:min/day Hrs/year Growth rate
1990-1991 6:56 2,531 0.2%
1991-1992 7:04 2,579 1.9%
1992-1993 7:12 2,628 1.9%
1993-1994 7:16 2,652 0.9%
1994-1995 7:15 2,646 -0.2%
1995-1996 7:17 2,658 0.5%
1996-1997 7:12 2,628 -1.1%
1997-1998 7:15 2,646 0.7%
1998-1999 7:22 2,689 1.6%
1999-2000 7:29 2,731 1.6%
2000-2001 7:47 2,841 4.0%
2001-2002 7:42 2,811 -1.1%
2002-2003* 8:00 2,920 3.9%
Note: includes broadcast and cable; *represents data from 23 September2002 through 12 January 2003Source: Nielsen Media Research, April 2003
049487 ©2003 eMarketer, Inc. www.eMarketer.com
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A. Digital TVeMarketer forecasts the number of digital TV households to reach 56.5 millionin 2005, up from 38.9 million at the end of 2002. This equates to a rise indigital TV penetration from 35.9% of households in 2002 to 50% in 2005.
There is a reasonable consensus among research firms forecasting digitalTV in the US. Most firms estimate approximately 40 million digital TVhouseholds in 2002, and that the number will rise to approximately 55million to 60 million by 2005.
Digital TV (DTV) Households in the US, 2002-2005 (inmillions)
2002
38.9
108.5
2003
44.7
110.0
2004
50.1
111.5
2005
56.5
113.1
Digital TV households Total households
Note: Total households in 2000 is 105.5 million as recorded by the USCensus Bureau. Following years are eMaketer estimatesSource: eMarketer, July 2003
051005 ©2003 eMarketer, Inc. www.eMarketer.com
Comparative Estimates: Digital TV Households in theUS, 2000-2005 (in millions)
Deutsche Bank, February 2002 (1)
eMarketer, July 2003
IDATE, October 2002 (2)
Informa Media Group, October 2002
Morgan Stanley, February 2002 (3)
PricewaterhouseCoopers (PwC),February 2002 (1)
Yankee Group, January 2003
2000
23.6
23.0
–
–
24.1
20.8
–
2001
33.1
31.8
33.7
–
33.4
29.8
–
2002
43.2
38.9
–
40.3
41.0
41.2
–
2003
52.4
44.7
–
–
47.1
54.0
43.3
2004
60.8
50.1
–
–
52.3
61.0
49.5
2005
67.9
56.5
–
–
56.9
68.0
55.6
Note: (1) includes DBS and digital cable only; (2) includes cable and satellitehouseholds; (3) includes DBS and digital cable only; represents all of NorthAmericaSource: eMarketer, July 2003; various, as noted, 2002 & 2003
051072 ©2003 eMarketer, Inc. www.eMarketer.com
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By way of comparison, digital TV household penetration will significantlyexceed broadband Internet penetration by 2005. By 2005, approximately30% of US households will have broadband Internet compared to 50% withdigital TV.
Broadband and Digital TV (DTV) Households in the US,2002-2005 (in millions)
2002
17.2
38.9
2003
24.2
44.7
2004
30.3
50.1
2005
36.5
56.5
Broadband Internet Digital TV
Source: eMarketer, July 2003
051006 ©2003 eMarketer, Inc. www.eMarketer.com
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While digital broadcast satellite (DBS) has a head start over digital cable,this lead will be whittled down over the next 12 months as the digitalfootprint of cable companies continues to expand. With such a highpenetration of cable and satellite TV in the US, the prospects for digitalterrestrial and other technologies competing with the two major digital TVplatforms does not look promising in the short to medium term.Nevertheless, the US government has mandated that, in 2006, all terrestrialtelevision transmission will be digital, so if TV viewers want to watchtelevision and they don’t want to pay for cable or satellite TV, then theywill need to purchase a new digital TV set or set-top box capable oftranslating the new digital signal.
Digital TV (DTV) Households in the US, by DistributionPlatform, 2002-2005 (in millions)
2002
38.9
19.2
19.4
0.3
2003
44.7
22.5
21.2
1.0
2004
50.1
24.5
22.8
2.8
2005
56.5
26.9
24.6
5.0
Digital TV total Digital cable DBS Digital terrestrial
Source: eMarketer, July 2003
051009 ©2003 eMarketer, Inc. www.eMarketer.com
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Informa Media Group, reporting in October 2002, expects 64% of US TVhouseholds to have digital TV by 2008, with digital cable making up nearly40 million of the 70 million digital TV households at that time.
Cable TVRecent data from the National Cable and Telecommunications Associationshows that there were 71.9 million basic cable customers in May 2003, withapproximately 20 million of them being digital cable customers.
US Digital TV Households, by Platform, 2002 & 2008 (inthousands)
Cable Satellite DSLvideo
DTT Total Digital TVhouseholdsas a % of TVhouseholds
2002 19,000 20,000 277 989 40,266 38%
2008 39,567 25,510 4,188 1,148 70,413 64%
Source: Informa Media Group, October 2002
044687 ©2002 eMarketer, Inc. www.eMarketer.com
US Cable Industry Statistics, 2003Industry statistics
Basic cable customers (May 2003) (1)
US television households (April 2003) (1)
Cable penetration of TV households (May 2003) (1)
Homes passed by cable (December 2002) (2)
Basic cable/homes passed (December 2001) (3)
Annual cable revenues (2002) (2)
Total advertising revenues (2002) (2)
Broadband deployment
Digital cable customers (April 2003) (4)
Cable modem customers (April 2003) (4)
Homes passed by cable modem service (December2002) (5)
Residential cable telephony customers (31 December2002) (4)
71,897,250
106,641,910
67.4%
103,700,000
69.9%
$49.43 billion
$14.7 billion
20,000,000
12,000,000
85,000,000+(estimated)
2,500,000
Source: (1) ACNielsen Media Research; (2) Kagan World Media; (3) Cable TVFinancial Datebook; (4) National Cable & Telecommunications Association;(5) Morgan Stanley, 2000-2003
051010 ©2003 eMarketer, Inc. www.eMarketer.com
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Appendix:Glossary of Acronyms
Index of Charts
eMarketer forecasts 26.9 million digital cable households in the US in 2005,rising from 19.2 million at the end of 2002.
The Yankee Group’s recent projections illustrate the strong growth in thesector over the coming years.
Digital Cable TV Households in the US, 2002-2005 (inmillions)
2002 19.2
2003 22.5
2004 24.5
2005 26.9
Source: eMarketer, July 2003
051011 ©2003 eMarketer, Inc. www.eMarketer.com
Digital Cable Households in the US, 2001-2007 (inmillions)
2001
14.9
2002
18.9
2003
22.6
2004
27.1
2005
31.5
2006
35.4
2007
39.0
9
27
45
Source: Yankee Group, January 2003
046679 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Appendix:Glossary of Acronyms
Index of Charts
Forrester Research predicts 38 million digital cable households in 2006, andof these, 24.4 million will have advanced set-top boxes which allow a high-speed return path using a cable modem. This will allow cable companies tooffer such services as multi-user gaming and other advanced interactiveservices that take advantage of the high-speed return path.
SatelliteeMarketer projects there will be 24.6 million digital broadcast satellitehouseholds in the US in 2005, from 19.4 million in 2002. While DBScaptured early digital TV subscribers with compelling content offerings,this growth is likely to slow as cable companies begin to match, thenexceed, the service offerings of their satellite counterparts.
US Digital Cable and Satellite Penetration, 2001-2006(in millions)
2001 2002 2003 2004 2005 2006
Satellite 18.1 19.7 20.7 21.3 21.9 22.4
Analog cable 53.3 46.0 41.8 38.7 36.2 33.7
Basic digital 15.0 20.7 21.7 18.8 16.0 13.6
Advanced STB* 0.1 2.0 6.1 12.8 18.8 24.4
Total digital cable (millions) 15.1 22.6 27.9 31.6 34.8 38.0
Note: *advanced set-top box is STB with cable modemSource: Forrester Research, 2001
033529 ©2001 eMarketer, Inc. www.eMarketer.com
Satellite TV (DBS) Households in the US, 2002-2005 (inmillions)
2002 19.4
2003 21.2
2004 22.8
2005 24.6
Source: eMarketer, July 2003
051012 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Appendix:Glossary of Acronyms
Index of Charts
The Yankee Group forecasts 27.1 million DBS households in 2007, up from20.7 million in 2003. The research firm estimates that DBS growth will fallfrom 10% in 2003 to 6% growth in 2006 and 2007.
There are two major DBS companies in the US, DirecTV and EchoStar. Inthe latter half of 2001, EchoStar sought to acquire DirecTV, but the FCC didnot approve this merger. News Corporation is now the leading contender toacquire DirecTV, which will, if successful, further expand the satellite TVempire of Rupert Murdoch.
Direct Broadcast Satellite (DBS) Households in the US,2003-2007 (in millions and as a % increase vs. prioryear)
2003 20.7 (10%)
2004 22.4 (8%)
2005 24.1 (8%)
2006 25.6 (6%)
2007 27.1 (6%)
Source: Yankee Group, March 2003
048608 ©2003 eMarketer, Inc. www.eMarketer.com
US Direct Broadcast Satellite (DBS) Households, byMajor Provider, Q1 2003 (in millions and % of total TVhouseholds)DirecTV 11.4
EchoStar 8.5
Total 19.9
% of total TV households 18.7%
Source: company reports, 2003; eMarketer, July 2003
051013 ©2003 eMarketer, Inc. www.eMarketer.com
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Appendix:Glossary of Acronyms
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Digital Terrestrial TelevisionIt is unclear what sort of demand digital terrestrial television will muster inthe coming years in the US, but logic suggests that after 2006, when theanalog TV signal has been ‘switched-off,’ those people who don’t want orcan’t afford cable or satellite TV will have to work with the digitalterrestrial signal. Screen Digest is rather optimistic about the prospects fordigital terrestrial, forecasting over 14 million DTT households in 2005 fromvirtually none in 1999. They have forecast that over 2 million people willaccess digital terrestrial television through their PC by 2005. Internationalresearch firm Baskerville Communications forecasts that, by 2010, only12.5% of North American digital TV households will be digital terrestrial.
US Digital Terrestrial Television (DTT) Households,1999-2005 (in millions)
1999 0.06
2000 0.4
2001 1.1
2002 2.7
2003 5.4
2004 9.1
2005 14.4
Note: 2000-2005 includes households with PCs equipped to receive digitalterrestrial signalsSource: Screen Digest, 2000
036668 ©2002 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
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Digital TV SetsData from the CEA shows that the average price of a digital TV set in 1998was $3,147, but this has fallen to less than $1,500 in 2003. The CEAestimates that nearly 4 million digital TV sets will be sold to dealers in2003, up from less than a million in 2000.
CEA estimates that DTV product sales will number 10.5 million in 2006,which is the year the US government has mandated that analogue TVsignals will cease.
Digital TV (DTV) Product* Sales in the US, 2002-2006 (inmillions of units)
2002 2.1
2003 4.0
2004 5.4
2005 8.0
2006 10.5
Note: *DTV products are defined as integrated sets and monitorsdisplaying active vertical scanning lines of at least 480p and, in the case ofintegrated sets, receiving and decoding ATSC terrestrial digitaltransmissionsSource: Consumer Electronics Association (CEA), September 2002
043462 ©2002 eMarketer, Inc. www.eMarketer.com
Digital TV Set and Display Sales to Dealers*, 1998-2003Unit sales
(in thousands)Dollar sales(in millions)
Average unitprice
1998 14 $43 $3,147
1999 121 $295 $2,433
2000 648 $1,426 $2,201
2001 1,460 $2,648 $1,812
2002 2,535 $4,280 $1,688
2003** 3,846 $5,543 $1,441
Note: *includes direct-view and projection DTVs with integrated digitaldecoders and stand-alone DTV displays; **preliminarySource: Consumer Electronics Association (CEA), January 2003
050455 ©2003 eMarketer, Inc. www.eMarketer.com
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B.Video-on-Demand (VOD)Watching any movie or TV show at any time of the day or night with fullVCR functionality is undoubtedly an attractive proposition for mostconsumers, but VOD is by no means a fait accompli. Video-on-demand hasserious competition, first and foremost from the existing home videomarket, which is not going away in a hurry, as 92% of TV households in theUS have a VCR; second, from the growing DVD market, which theConsumer Electronics Association reported was the fastest growingconsumer electronics product sold in 2001 and 2002; and third, from PVRs,which are allowing TV viewers to better utilize the 4 hours a day theyspend in front of the box.
“Unless video-on-demand can provide a service lessexpensively than home video, it will have difficultygaining traction.”
— PricewaterhouseCoopers, May 2001
Digital Video Disc (DVD) players are in an increasing number of Americanhomes. The Consumer Electronics Association estimate that 12.5 millionstand-alone players were sold in 2001, 17.6 million in 2002 and 20.1million will be sold in 2003.
US Sales of Select Digital Video and Audio Products,2002 & 2003 (in millions of units)
Stand-alone DVD players
17.6
20.1
DTV sets
2.7
3.8
LCD TVs
1.0
1.1
MP3 players
1.7
2.1
2002 2003
Source: Consumer Electronics Association (CEA), January 2003
046301 ©2003 eMarketer, Inc. www.eMarketer.com
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Approximately 35% of households had a DVD player at the start of 2003,according to the CEA.
Just as the CD replaced the audiotape, the DVD is rapidly replacing the VHSVideo tape. Now that DVD recorders have hit the market, the days of theVCR are numbered. According to Mercer Management Consulting, withintwo years, sales of DVDs reached levels it had taken VHS seven years toachieve. Sales in the US were $8.7 billion in 2002, compared with $4.8billion for VHS, according to Morgan Stanley. The same pattern is alsooccurring in Europe.
Top 10 Video Products Found in US Households, 2002
Color TVs 98%
VCR decks 92%
Color TV with stereo 69%
Monochrome TV 39%
DVD players 35%
TV/VCR combos 23%
Direct-to-home satellite 21%
Projection TV 18%
All LCD TV 13%
DTV sets 4%
Source: Consumer Electronics Association (CEA), January 2003
050453 ©2003 eMarketer, Inc. www.eMarketer.com
DVD and VHS Movie Sales in the US, 2002 (in billions)
DVD $8.7
VHS $4.8
Source: Morgan Stanley, 2002 as cited by Mercer Management Consulting,April 2003
050968 ©2003 eMarketer, Inc. www.eMarketer.com
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Adams Media Research estimates that by 2005, consumer spending on DVDrental and sales will total $22.5 billion in 2005, up from $4.7 billion in 2000.
The film industry has responded to the emergence of new deliverymechanisms by adjusting their film releases to maximize their returns oneach movie title. For example, movie titles typically do not becomeavailable on pay-per-view (PPV) (including VOD) until some 8 to12 monthsafter its theatrical release and 2 to 6 months after it is available for sale orrent, according to Mercer Consulting Group.
DVD rentals and sales have now become so lucrative for film studios that itexceeds revenue from domestic theatrical film releases. PPV and VOD havetherefore not emerged as a revenue priority for the major studios. This is alsowhy VOD has been relatively slow to market. With reluctance from thestudios to fully embrace VOD, there has been a corresponding reluctance toprovide an extensive movie library to content aggregators and operators.Combine this with the fact that the movie industry fears a Napster-typescenario occurring in the movie industry and one understands the reluctance.
US Consumer Spending on DVDs, 2000 & 2005 (inbillions)
DVD Rentals
$0.66
$8.27
DVD Sales
$4.03
$14.19
Total
$4.69
$22.46
2000 2005
Source: Adams Media Research, January 2001
031455 ©2001 eMarketer, Inc. www.eMarketer.com
Movie Release Schedule, by Distribution Channel,2003Theatrical release 0-6 months
DVD/VHS rental and retail 6 months
PPV (VOD/NVOD) 8-12 months
Premium Pay TV 10-21 months
Free TV 21-24 months
Note: This table is indicative only. Significant variations occur depending ontitle, studio and territorySource: Mercer Management Consulting, April 2003
050969 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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US ForecastseMarketer estimates there will be nearly 30 million VOD-enabledhouseholds in the US in 2006, up from approximately 7 million in 2002.While millions of households will have access to VOD in the coming years,a considerably smaller percentage will be regular users. It will take someyears for digital TV subscribers to be educated and comfortable about VODbefore all those households with it available use it regularly.
Video-on-Demand (VOD)-Enabled Households and VODUsers in the US, 2002-2006 (in millions)
2002
7.2
1.9
2003
15.8
6.0
2004
20.8
9.6
2005
25.6
13.3
2006
29.6
16.3
VOD-enabled households VOD users*
Note: *Purchasing at least one VOD program in the last monthSource: eMarketer, July 2003
050970 ©2003 eMarketer, Inc. www.eMarketer.com
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eMarketer has assembled a variety of comparative estimates for VOD-enabled households in the US, and the consensus among research firmsshows that in 2002 there were approximately 7 million VOD households,and this will rise to approximately 30 million by 2006.
Data from Morgan Stanley indicates that nearly 100% of households with digital cable in 2006 will have access to VOD services. This is asignificant rise from 2002 when less than 40% of digital cable subscriberscould access VOD.
Digital Cable and Video-on-Demand (VOD)-EnabledHouseholds in the US, 2002 & 2006
VOD-enabled households
7.4
31.2
Digital cable households
19.2
32.3
2002 2006
Source: Morgan Stanley, October 2002
050972 ©2003 eMarketer, Inc. www.eMarketer.com
Comparative Estimates: Video-on-Demand(VOD)-Enabled Households in the US, 2002-2007 (inmillions)
2002 2003 2004 2005 2006 2007
eMarketer, July 2003 7.2 15.8 20.8 25.6 29.6 –
Forrester Research, May 2002 8.5 18.1 24.3 29.2 32.9 36.7
Kagan World Media, 2001 4.0 8.8 17.5 28.4 – –
Morgan Stanley, October 2002 7.4 – – – 31.2 –
Multimedia Research Group, April 2003* 3.9 – – 18.0 – –
Strategy Analytics, March 2002 7.6 – – – – –
Yankee Group, March 2003 6.8 11.4 18.2 24.7 32.5 –
Note: *North AmericaSource: eMarketer, July 2003; various, as noted, 2001-2003
050971 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Kagan estimates that by 2010, there will be 67.7 million VOD householdsequating to 95% of digital cable subscribers.
US PPV RevenuesData from Paul Kagan Associates and Showtime Event Television indicatesthat the PPV market in the US was worth over $2.4 billion in 2002, up from$1.7 billion in 2000.
Video-on-Demand (VOD) Households in the US,2000-2005 & 2010 (in millions)
2000 0.2
2001 0.9
2002 4.0
2003 8.8
2004 17.5
2005 28.4
2010 67.7
Source: Kagan World Media, 2001
036680 ©2002 eMarketer, Inc. www.eMarketer.com
Pay-per-View* TV Revenues in the US, 2000-2002 (inbillions)
2000 $1,731
2001 $2,050
2002 $2,446
Note: *includes VODSource: Showtime Networks, February 2003
050974 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Appendix:Glossary of Acronyms
Index of Charts
Unsurprisingly, movies dominate the revenue in PPV, but growth was alsoexperienced in boxing and adult entertainment over the last couple of years.
“Convenience has always been considered anadvantage for pay-per-view and video-on-demand.We believe that the opposite is true and thatconvenience has actually hampered the pay-per-view market because it placed it in a morecompetitive environment.”— PricewaterhouseCoopers, Global Media & Entertainment Outlook, 2001-
2005, May 2001
Pay-per-View* (PPV) Revenues in the US, by ContentCategory, 2001 & 2002 (in millions)
Boxing
$93
$163
Wrestling
$179
$180
Total events
$286
$363
Pornography
$529
$609
Movies
$1,240
$1,474
Total PPV
$2,050
$2,446
2001 2002
Note: includes video-on-demandSource: Showtime Networks, February 2003
050976 ©2003 eMarketer, Inc. www.eMarketer.com
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US VOD RevenueseMarketer estimates that VOD revenues (including SVOD) will reach $1.76billion by the end of 2006, up from only $228 million in 2002.
The estimates eMarketer has assembled are widely divergent. In 2005revenues range from $1 billion to $3.5 billion. eMarketer’s estimate of$1.76 billion in 2006 is one of the more conservative estimates, butJupiter’s estimate of $2.2 billion in 2007 and PricewaterhouseCoopers’estimate are also on the conservative side relative to other firms.
Video-on-Demand (VOD) Revenues in the US,2002-2006 (in millions)
2002 $228
2003 $720
2004 $1,152
2005 $1,596
2006 $1,760
Source: eMarketer, July 2003
050978 ©2003 eMarketer, Inc. www.eMarketer.com
Comparative Estimates: Video-on-Demand (VOD)Revenues in the US, 2002-2007 (in millions)
eMarketer, July 2003
In-Stat/MDR, January 2002*
Jupiter Research, March 2003
Kagan World Media, 2001
PricewaterhouseCoopers,May 2003
Strategy Analytics, March2002
Yankee Group, June 2001
2002
$228
–
–
$490
$350
$287
$420
2003
$720
–
$349
$1,040
$680
$1,000
$970
2004
$1,152
–
–
$1,950
$840
$2,100
$1,430
2005
$1,596
$1,750
–
$3,010
$975
$3,500
$1,980
2006
$1,760
–
–
–
–
$4,900
–
2007
–
–
$2,200
–
–
$6,600
–
Note: *North AmericaSource: eMarketer, July 2003; various, as noted, 2001-2003
051073 ©2003 eMarketer, Inc. www.eMarketer.com
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eMarketer’s revenue estimate is based on the following scenario:Firstly, eMarketer estimates that 95% of digital cable subscribers will
have access to VOD in 2006, but only 55% of those will purchase at leastone VOD program per month. eMarketer estimates that the averagehousehold spend per month for VOD will be $10 for the next few years until2006 when the competitive marketplace will force a price reduction.Revenues will reach $1.76 billion in 2006.
PricewaterhouseCoopers has a conservative estimate for VOD revenuesrelative to other firms. Their revenue assumptions are based on the fact that the average annual spend per VOD household will fall from $175 in2002 to $60 in 2006. In contrast eMarketer assumes that average annualspend per VOD household will stay about the same ($120), at least for thenext three years.
“VOD will provide cable operators with a newrevenue stream that will be helpful, but it won’t bethe home run they were expecting.”— PricewaterhouseCoopers, May 2003
PricewaterhouseCoopers (PwC) Video-on-Demand(VOD) Revenue Scenario in the US, 2002-2006
2002 2003 2004 2005 2006
VOD/SVOD households (in millions) 2.0 8.5 12.0 15.0 18.0
Annual spend per household $175 $80 $70 $65 $60
Aggregate annual spend (in millions) $350 $680 $840 $975 $1,080
Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, May2003
050983 ©2003 eMarketer, Inc. www.eMarketer.com
eMarketer Video-on-Demand (VOD) Revenue Scenarioin the US, 2002-2006
Digital cable subscribers (in millions)
VOD-enabled households (in millions)
% of VOD-enabled households usingVOD
VOD users* (in millions)
Average monthly VOD spend
Annual revenue (in millions)
2002
19.2
7.2
27%
1.9
$10
$228
2003
22.5
15.8
38%
6.0
$10
$720
2004
24.5
20.8
46%
9.6
$10
$1,152
2005
26.9
25.6
52%
13.3
$10
$1,596
2006
31.2
29.6
55%
16.3
$9
$1,760
050981 ©2003 eMarketer, Inc. www.eMarketer.com
Note:*Households purchasing at least one VOD or SVOD program permonthSource: eMarketer, July 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Kagan World Media has looked at a number of scenarios, with the cableoperator in mind, which take into account costs and potential revenues ofVOD. Their analysis indicates that video-on-demand could be profitablefor cable companies in as short a time as 19 months or as long a time as 6years, depending on consumer demand.
By 2010, Kagan expects VOD revenues to exceed $5.5 billion.
Video-on-Demand (VOD) Payback Analysis in the US,2001
VOD revenue per VOD household/month
VOD users % basic subscribers
Revenue per basic subscriber
VOD cash flow margin
VOD cash flow per basicsubscriber/month
Server cost per stream
Network & infrastructure cost perstream
Total cost per stream
Maximum concurrent usage pernode
Cost per basic home
Months to pay back
Downside
Scenar-io 1
$10
15%
$1.50
45%
$0.68
$300
$200
$500
10%
$50
74
Scenar-io 2
$15
15%
$2.25
45%
$1.01
$300
$200
$500
10%
$50
49
Upside
Scenar-io 3
$10
25%
$2.50
45%
$1.13
$250
$150
$400
8%
$32
28
Scenar-io 4
$15
25%
$3.75
45%
$1.69
$250
$150
$400
8%
$32
19
Note: includes Subscription Video-on-Demand (SVOD), as well aspay-per-viewSource: Kagan World Media, 2001
036679 ©2002 eMarketer, Inc. www.eMarketer.com
Video-on-Demand (VOD) & Subscription VODRevenues in the US, 2000-2005 & 2010 (in billions)
2000 $0.03
2001 $0.12
2002 $0.49
2003 $1.04
2004 $1.95
2005 $3.01
2010 $5.55
Source: Kagan World Media, 2001
036682 ©2002 eMarketer, Inc. www.eMarketer.com
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Recent evidence of initial VOD offerings indicate that revenue per VODhousehold averages at $10 to $15 per home, per month. Kagan’s model isslightly more conservative, acknowledging the fact that whenever a newservice moves out to mass deployment, the per-home revenue tends to drop.Kagan’s forecasts assume per household, per month revenue of $11.40initially in 2000, which will fall to $8.82 in 2005 and $6.80 in 2010. As thenovelty factor of VOD wears off, price will need to move down accordingly.
Jupiter Research is one of the more conservative forecasters for the VODsector. It estimates that VOD revenues will total $2.2 billion in 2007, upfrom $349 million in 2003. Subscription VOD revenue will make up 36% ofVOD revenue in 2007, compared to only 16% in 2003, according to Jupiter.
Average Movie and Subscription Video-on-Demand(VOD) Revenues per VOD Household per Month in theUS, 2000-2005 & 2010
2000 $11.40
2001 $10.83
2002 $10.29
2003 $9.77
2004 $9.29
2005 $8.82
2010 $6.83
Source: Kagan World Media, 2001
036683 ©2002 eMarketer, Inc. www.eMarketer.com
US Video-on-Demand (VOD) and SubscriptionVideo-on-Demand (SVOD) Revenues, 2003 & 2007 (inmillions)
2003
$293
$56
$349
2007
$1,400
$800
$2,200
Video-on-demand Subscription video-on-demand Total
Source: Jupiter Research, March 2003
047775 ©2003 eMarketer, Inc. www.eMarketer.com
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Consumer SurveysCable TV providers are hoping VOD will stop the tide of churn to DBSproviders. Will it work? Leichtman Research Group surveyed cable TVsubscribers and DBS subscribers interested in on-demand services. Of cablesubscribers, 58% said that such services are more likely to keep them withtheir cable provider.
Of satellite TV subscribers interested in VOD, however, only 28% said theservices would be enough to make them switch from satellite to cable,while nearly one-quarter say the on-demand offering would make nodifference to them.
US Cable TV Subscribers’ Likelihood of Staying withCable TV If Video-on-Demand (VOD) Is Available, 2003(as a % of respondents)
1 (no more likely to stay) 6%
2 5%
3 16%
4 14%
5 (much more likely to stay) 58%
Source: Leichtman Research Group, Inc. (LRG), June 2003
050984 ©2003 eMarketer, Inc. www.eMarketer.com
US Satellite TV Subscribers’ Likelihood of Switchingto Cable TV If Offered Video-on-Demand (VOD), 2003(as a % of respondents)
1 (no more likely to switch) 24%
2 12%
3 18%
4 18%
5 (much more likely to switch) 28%
Source: Leichtman Research Group, Inc. (LRG), June 2003
050985 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Numerous surveys over the last three years have identified that consumersare interested in VOD. Accenture conducted a survey of almost 700 satelliteand cable households in 2001, revealing that video-on-demand and PVRfunctions are the most interesting iTV feature. The top three interactive TVservices are more interesting to people than high-speed Internet, accordingto the survey results.
US Consumers’ Interest in Selected iTV Services, 2001(as a % of respondents)
Video-on-demand
40% 20%
Personal video recorders
35% 20%
Enhanced TV
23% 18%
High speed internet
23% 13%
Interactive games
20% 12%
TV based e-mail
15% 10%
TV based commerce
9% 10%
Extremely interested Interested
Note: n=700Source: Accenture, 2001
036709 ©2002 eMarketer, Inc. www.eMarketer.com
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A study by the Yankee Group in March 2003, however, suggests that a lotof people still need convincing of the value of VOD. The study shows thatonly 21% of non-VOD users are somewhat or very likely to purchase a VODmovie for $3.95
It is clear that finding the right price-points to make video-on-demandattractive to both consumers and profitable to cable companies will be thechallenge ahead for those providing the service. The key question for VODproviders is: at what price are users prepared to pay for the convenience ofnot going to the video store, and not having to rewind the tape or pay for latereturn fees? Survey data from Accenture indicates that there is definitely apercentage of the population that is willing to pay a $1.50 to $3.00 premiumover video store rentals for the convenience of video-on-demand.
Accenture indicates that early adopters, unsurprisingly, are the mostinterested in VOD services, of the consumer segments. Their 2001 surveyreveals that between 48% and 58% of these consumer segments are willing topay a $1.50 to $3.00 premium over video store rentals for video-on-demand.
Very likely14%
Somewhat likely7%
Neither likely norunlikely15% Not very likely
55%
Not at alllikely10%
Non-Video-on-Demand (VOD) Users in the US Likely toPurchase a VOD Movie for $3.95, 2002 (as a % ofrespondents)
Source: Yankee Group, March 2003
050620 ©2003 eMarketer, Inc. www.eMarketer.com
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A study conducted by Leichtman Research Group shows that 42% of cablesubscribers are willing to pay $4.95 per month for subscription VOD, and29% are prepared to pay $9.95 per month. Nearly 40% of premium moviesubscribers would be prepared to pay $9.95 per month for SVOD, accordingto the survey.
A Yankee Group survey published in March 2003 indicates that only 21%of US Cable TV subscribers are very or somewhat interested in SVOD.
US Consumer Willingness to Pay for SubscriptionVideo-on-Demand (SVOD), 2002 (as a % ofrespondents)
$4.95 per month
42%
56%
$9.95 per month
29%
38%
Cable subscribers Premium movie subscribers
Source: Leichtman Research Group, Inc. (LRG), May 2002
050986 ©2003 eMarketer, Inc. www.eMarketer.com
US Cable Subscribers Interested in SubscriptionVideo-on-Demand (SVOD), 2002 (as a % ofrespondents)
Source: Yankee Group, March 2003
048105 ©2003 eMarketer, Inc. www.eMarketer.com
Not at allinterested
47%
Not veryinterested14%
Neither interestednor disinterested
17%
Somewhatinterested
11%
Veryinterested10%
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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According to Innovista, viewers who use VOD services are willing to pay $4for a recently released movie and $3 for documentaries and premiumnetwork shows.
Further findings from them show that $3 is the price point at which the most consumers are interested in paying for a newly released movie on VOD.
Amount US Consumers Would Pay for SelectVideo-on-Demand (VOD) Content, 2002
Recently released movie $4.00
Two-hour documentary $3.18
One-hour premium network shows $2.98
30-minute children's program $2.04
Source: Innovista Research, Inc., November 2002
050988 ©2003 eMarketer, Inc. www.eMarketer.com
US Consumers’ Willingness to Pay for RecentlyReleased Movies on Video-on-Demand (VOD), by PricePoint, 2002 (as a % of respondents)
$1
4%
$2
15%
$3
28%
$4
20%
$5
24%
$6
8%
15
30
Note: n=603Source: Innovista Research, Inc., November 2002
050989 ©2003 eMarketer, Inc. www.eMarketer.com
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Innovista data also shows that given the option, 62% of consumers wouldpay more than $10 per month for unlimited VOD per month, and 35%would pay more than $20 per month. Innovista suggests the optimal flatfee is $20 per month.
US Consumers’ Willingness to Pay for UnlimitedVideo-on-Demand (VOD) per Month, 2002 (as a % ofrespondents)
$0 6%
$1-$5 11%
$6-$10 22%
$11-$15 8%
$16-$20 19%
$21-$25 7%
$26-$30 9%
$31-$35 2%
$36-$40 5%
$41-$45 1%
$46-$50 7%
$51+ 4%
Note: n=994Source: Innovista Research, Inc., November 2002
050990 ©2003 eMarketer, Inc. www.eMarketer.com
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Parks Associates conducted a survey in July 2002 which revealed that 64%of respondents were very interested in a monthly subscription to VODservices, far more than for a pay-per-use basis.
Interest in Video-on-Demand (VOD) Services andPreferred Payment Method in the US, 2002 (as a % ofrespondents)
Very interested
36.1%
63.9%
Moderately interested
42.5%
57.5%
Slightly interested
50.8%
49.2%
Neutral
57.8%
42.2%
Pay-per-use Monthly subscription
Note: n=820Source: Parks Associates, July 2002
041439 ©2002 eMarketer, Inc. www.eMarketer.com
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Newly released movies and kids programming are the two content areasmost cable subscribers are interested in for VOD. Without newly releasedmovies and adult entertainment, VOD has little chance of succeeding. Mostoperators are offering new releases on VOD for $3.95 or $4.95 and librarytitles for $1.95 or $2.95.
Content Preferences among US Cable SubscribersInterested in Video-on-Demand (VOD), 2002 (as a % ofrespondents)
Newly released movies
20%
16%
Cartoons and kids programming
9%
6%
Classic films
6%
10%
Recent movies
6%
8%
Pre-recorded sporting events
5%
5%
Concerts
5%
5%
Foreign films
4%
3%
Exercise videos
2%
3%
Cooking and instructional shows
3%
1%
Very Interested Interested
Source: Yankee Group, March 2003
048106 ©2003 eMarketer, Inc. www.eMarketer.com
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E-Poll’s December 2001 survey shows that 18-34 year olds are moreinterested in iTV services than those aged 35-54. Interestingly, the onlyinteractive TV features that those between 35-54 are more interested inthan the younger age group are Internet, e-mail access and takingpolls/voting on the TV.
US Consumers "Very Interested" in Selected iTVServices, by Age, December 2001 (as a % ofrespondents*)
Ability to skip commercials
71.1%
64.6%
Simple recording of TV programming (easier than VCR)
60.2%
57.3%
Video-on-demand
62.5%
54.3%
Ability to pause live television programs
60.6%
52.4%
Ability to record shows relevant to interest
44.0%
43.7%
Instant replay function
43.7%
39.7%
Changing camera angles
41.7%
33.6%
Ability to search and record programs by actor, genre, etc.
40.5%
34.0%
Ability to play along with others on television game shows
40.0%
30.5%
Interactive program guides
37.0%
28.9%
Internet access
33.3%
34.5%
continued on page 70
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Take polls/voting
27.8%
32.4%
28.1%
28.5%
Message board or chat rooms to interact with other viewers
14.8%
9.1%
18-34 35-54
Note: *n=558 adults 18+Source: E-Poll, December 2001
036690 ©2002 eMarketer, Inc. www.eMarketer.com
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C. Personal Video Record (PVR)One would think that from the amount of talk and media column inchesdevoted to personal video recorders (PVRs) they were in every other UShome. PVR users are, without question, an enthusiastic and vocal group,but PVRs will be in less than 4% of US homes by the end of 2003.
PVRs, also called digital video recorders (DVRs), have the fullfunctionality of a VCR with additional storage and tools allowing users toautomatically record programs by time, genre, actor and other criteriawithout the ads, as well as allowing users to pause and fast-forward liveTV…and also ads, of course. Early PVR incarnations were just a stand-alonebox priced at nearly $500, but now PVR technology has been includedwithin set-top boxes that users require for cable or satellite TV. In fact, 70%of all PVR homes in the US are digital broadcast satellite (DBS) subscribersutilizing PVR technology through their set-top box.
DirecTV and EchoStar (Dish Network), the two leading DBS providers inthe US, have been very successful at attracting new subscribers with theirPVR set-tops, and they are counting on PVR technology to combat the‘threat’ of video-on-demand (VOD) being offered by cable providers. Onevery attractive subscriber statistic that has emerged from PVR subscribers isthat, on average, they contribute $10 to $20 per subscriber more than non-PVR subscribers, and churn is less than 1%. These two elements have madePVRs very attractive to DBS providers and cable operators are now activelytesting or deploying PVR set-tops in their markets.
“People like EchoStar have been very successful atdriving PVRs to the market because they arehitting a group of people that really care and enjoytheir TV experience.”— Toby Farrand, CTO Diego
DIRECTV Personal Video Recorder (PVR) US SubscriberStatistics, 2002
Non-PVR subscriber PVR subscriber
ARPU $60 per month $70-$80 per month
Churn 1.6% <1%
Source: Kagan World Media, company reports, March 2003
051019 ©2003 eMarketer, Inc. www.eMarketer.com
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US ForecastseMarketer estimates that by 2006 there will be 15.3 million PVR householdsin the US, up from 1.8 million in 2002.
This equates to 13.3% of households in 2006, compared to 3.3% in 2002.
Personal Video Recorder (PVR) Households in the US,2002-2006 (in millions)
2002 1.8
2003 3.6
2004 6.8
2005 10.4
2006 15.3
Source: eMarketer, July 2003
051020 ©2003 eMarketer, Inc. www.eMarketer.com
Personal Video Recorder (PVR) Household Penetrationin the US, 2002-2006
2002 1.7%
2003 3.3%
2004 6.1%
2005 9.2%
2006 13.3%
Source: eMarketer, July 2003
051021 ©2003 eMarketer, Inc. www.eMarketer.com
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Among the comparative estimates eMarketer has gathered, the one thatstands out is the estimate from Forrester Research. They are bullish on PVRgrowth, predicting 35.8 million PVR households in 2006, up from 3.3million in 2002. This compares to most other research firms that predictbetween 15 million and 24 million PVR households in 2006.
“By year-end 2008, there will be an estimated 28.6million PVR users that will penetrate 25% of US TVhouseholds. Of that amount, six companies willaccount from approximately 73% of the market.Those companies include Diego (Moxi), MetabyteNetworks, Microsoft, OpenTV, SONICblue and Tivo.”— Carmel Group, 2002
Breaking down PVR households by delivery platform, eMarketer estimatesthat DBS households will continue to make up the bulk of PVR householdsin the next three years. While cable operators are now actively deploying or testing PVR set-tops in their markets, eMarketer believes that their focus on video-on-demand and lack of expertise with this technology willdelay their deployment of these set-top boxes and consequently delayconsumer adoption. After 2006, however, it is very likely that cable, withtheir much larger footprint, will be the dominant platform in which toreceive PVR services.
Comparative Estimates: Personal Video Recorder(PVR) Households in the US, 2002-2006 (in millions)
Carmel Group, July 2002
Deutsche Bank, January 2003
eMarketer, July 2003
Forrester Research, May 2002
International Data Corporation (IDC),December 2002
Informa Media Group*, September 2002
Screen Digest, 2002
Yankee Group, October 2002
2002
1.6
1.9
1.8
3.3
–
1.4
2.3
1.8
2003
3.9
2.9
3.6
9.4
–
–
–
3.8
2004
6.7
7.4
6.8
17.2
–
–
–
7.8
2005
10.4
14.4
10.4
26.0
–
10.3
–
13.0
2006
15.0
24.0
15.3
35.8
23.0
–
15.3
19.1
Note: *North AmericaSource: eMarketer, July 2003; various, as noted, 2002 & 2003
050892 ©2003 eMarketer, Inc. www.eMarketer.com
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Stand-alone PVRs are coming down in price, which should encouragegreater adoption of these products. In conjunction with this, electronicmanufacturers such as Sony, Toshiba, Philips and Samsung haveannounced they will be putting PVR technology within new DVDplayers/recorders as well as other products, so the technology has a chanceto become widespread in the coming years.
Among the research firms who have broken their forecasts down bydelivery platform, there is a reasonable amount of consensus about wherethe PVR market is going. eMarketer and the Yankee Group predict that DBSwill be the dominant delivery platform for PVRs to 2006, but the CarmelGroup estimates that cable will take over DBS by 2006 as the dominantplatform. The Carmel Group also does not predict that stand-alone PVRdevices will grow very much over the next few years compared to estimatesfrom eMarketer and the Yankee Group.
Personal Video Recorder (PVR) Households in the US,by Delivery Platform, 2002-2006 (in millions)
2002 2003 2004 2005 2006
DBS 1.1 2.3 3.6 5.1 7.2
Cable 0.1 0.2 0.8 1.9 3.9
Stand-alone/other 0.6 1.1 2.4 3.4 4.2
Total 1.8 3.6 6.8 10.4 15.3
Source: eMarketer, July 2003
051022 ©2003 eMarketer, Inc. www.eMarketer.com
Comparative Estimates: US Personal Video Recorder(PVR) Households, by Delivery Platform, 2002-2006 (inmillions)
2002 2003 2004 2005 2006
DBS
Carmel Group, July 2002 1.0 2.2 3.3 4.9 6.8
eMarketer, July 2003 1.1 2.3 3.6 5.1 7.2
Yankee Group, October 2002 1.2 2.3 4.1 6.9 10.2
Cable
Carmel Group, July 2002 0.3 1.3 2.8 4.8 7.4
eMarketer, July 2003 0.1 0.2 0.8 1.9 3.9
Yankee Group, October 2002 0.1 0.4 1.0 2.3 4.4
Stand-alone/other
Carmel Group, July 2002 0.3 0.4 0.6 0.8 0.9
eMarketer, July 2003 0.6 1.1 2.4 3.4 4.2
Yankee Group, October 2002 0.5 1.2 2.6 3.8 4.5
Source: eMarketer, July 2003; various, as noted, 2002
051023 ©2003 eMarketer, Inc. www.eMarketer.com
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One of the major reasons why widespread consumer adoption of stand-alone PVRs has not occurred is cost. The Consumer Electronics Associationreports that the average unit price in 1999 was $459, and only 100,000units were sold. They forecast 554,000 units to sell in 2003, with theaverage price at $265. This price fall may just be the fillip the PVR sector islooking for to drive greater consumer adoption. A fall in cost inconjunction with greater consumer awareness and education are key ifPVRs are to become widespread.
TiVo and ReplayTV are the two best-known names in the PVR market, butthere are a number of companies that have developed their own technologyor are licensing the technology of others. TiVo’s partnership with DirecTVand EchoStar’s partnership with OpenTV are the leading technology/TVdistribution partnerships at the moment.
Personal Video Recorder (PVR) Sales to Dealers in theUS, 1999-2003
Unit sales(in thousands)
Averageunit price
1999 100 $459
2000 249 $311
2001 336 $429
2002 247 $312
2003 554 $265
Source: Consumer Electronics Association (CEA), January 2003
050893 ©2003 eMarketer, Inc. www.eMarketer.com
Competitive Position of Major Personal VideoRecorder (PVR) Vendors, End of 2002Company
Digeo (Moxi)
MegaByte Networks
OpenTV
ReplayTV/SonicBlue
TiVo
WebTV/ UltimateTV
Subscribers
25,000
200,000
575,000
120,000
575,000
140,000
Major Partners
Charter, EchoStar, AOL
Scientific Atlanta, Canal Plus, Thomson
EchoStar, BskyB, TPS
LG Electronics, Samsung
DirecTV, AOL, Sony, Toshiba, Philips,Samsung
DirecTV, Sony, Thomson
Source: Carmel Group, July 2002
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The Carmel Group reports that TiVo was the leading provider of PVRsworldwide in 2002 with 29% of the market. By 2006, however, TiVo will becompeting with OpenTV and Metbyte Networks for the leading position.
“Time shifting is just the beginning of a new form ofTV. PVRs will rapidly evolve to provide a home-based media gateway.”— Manu Mehta, President & CEO, MegaByte Networks
PVRs - Complimentary or Competing Against VOD?One worrying sign, perhaps, for digital TV operators deploying PVRs is thatthey may actually cannibalize those services with the greatest revenuepotential – pay-per-view and video-on-demand services. In a survey of itssubscribers, satellite TV operator EchoStar found that subscribers withembedded PVR units significantly reduced their pay-per-viewexpenditures. Users, it seemed, were getting more out of their existingsubscription and finding less need to pay extra for additionalprogramming. If this trend continues when VOD becomes more widelyavailable, then the revenue potential for video-on-demand may not be assignificant as digital TV providers hope. If TV viewers of the future havehundreds of national and international channels to chose from, and theycan find, sort, record and watch the programs they want to watch through adevice like a PVR, then the VOD proposition becomes less attractive,particularly if it is more expensive than renting a DVD or VHS tape.
“PVRs and VOD services that are offered today willend up being competing technologies. This isbecause ReplayTV is the first network PVR and it isgoing to have VOD services tied to it.”— Andy Wolfe, CTO, ReplayTV
US Personal Video Recorder (PVR) Vendors' GlobalMarket Share, 2002 & 2006
2002 2006
WebTV/Ultimate TV 7% 7%
TiVo 29% 20%
ReplayTV/SonicBlue 9% 6%
OpenTV 29% 17%
Metabyte Networks 10% 16%
Diego (Moxi) 0% 9%
Other 16% 25%
Source: Carmel Group, July 2002
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An alternative view:
“Essentially, VOD is more of a competition toBlockbuster, DVD sales and the sale ofprepackaged media than it is to what TiVo is tryingto provide. The basic PVR functionality iscomplimentary to VOD, not competitive with it.”— Bob Poniatowski, Product Marketing Director, TiVo
The Yankee Group put the value proposition of VOD side by side with PVR, and for both the consumer and operator they are two very different propositions.
US Value Proposition: Video-on-Demand (VOD) vs.Personal Video Recorder (PVR), 2003
Consumer interest
Device requirement
Cost
Content
Service provider value
VOD
Medium-high
None for digital cablesubscribers
No set up fee, $2-$9PPV, $0-$12 SVOD
Movies, some TVprogramming
Medium
PVR
Low
Required
$300 + for device, $10-$12service fee
Any and all TVprogramming
Very high
Source: Yankee Group, March 2003; Kagan World Media, April 2003
051025 ©2003 eMarketer, Inc. www.eMarketer.com
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Consumer SurveysInterestingly, survey data from the satellite broadcasting andcommunications association (SBCA) shows that PVR functionality is moreinteresting to consumers than any other advanced TV services.
Interest in Select Digital TV Services in the US, 2002(as a % of respondents)
PVR
21%
16%
VOD
18%
13%
SVOD
16%
14%
Digital audio
9%
7%
Very interested Somewhat interested
Note: n=1,006 householdsSource: Satellite Broadcasting and Communications Association(SBCA)/Taylor Research & Consulting Group, Inc., October 2002
051026 ©2003 eMarketer, Inc. www.eMarketer.com
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However, the level of interest in purchasing a PVR service (at $199 for adevice and $12.95 per month) is not as high as VOD or SVOD. The dataindicates that 31% of survey respondents would be very or somewhat likelyto purchase a hit movie on VOD for $3.95 but only 14% of respondentswere interested in subscribing to a PVR service. This gives a clearindication that many people are interested in PVR services, but far fewerare able to afford it.
LIklihood to Purchase Select Digital TV Services in theUS, 2002 (as a % of respondents)
VOD
14%
17%
SVOD
15%
12%
PVR
6%
8%
Digital audio
5%
4%
HDTV
1%
1%
Very likely Somewhat likely
Note: n=1,006 households; assumptions: VOD at $3.95 for 'hit' movie;SVOD at $9.95/month when subscribed to premium channels; PVR with$199 device plus $12.95/month for service; digital audio with $150 forradio plus $12.95/month for service; HDTV $2,000-$3,000 forrear-projection TVSource: Satellite Broadcasting and Communications Association(SBCA)/Taylor Research & Consulting Group, Inc., October 2003
051033 ©2003 eMarketer, Inc. www.eMarketer.com
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Numerous surveys have been conducted over the last three years whichindicate that one of the features consumers most like about PVRs is theability to skip ads in live TV as well as recording programs without the ads.This, unsurprisingly is why, advertisers and traditional media companieshave regarded PVRs as a serious threat to their traditional revenue models.
In 2000 the CEA conducted a survey which showed that 71% ofrespondents were interested in the ability to skip commercials.
More recent surveys also show the same findings.
“Advertisers have long since dropped theirconcerns over commercial skipping even thoughthere are VCRs in nearly every household. Weexpect advertisers will be equally unconcernedwith commercial skipping on digital recordingdevices once it is shown that incidence ofplayback remains low.”— PricewaterhouseCoopers
US Consumer Interest in Personal Video Recorder(PVR) Features, 2000 (as a % of respondents)
Ability to skip commercials
71%
Ability to pause TV programming and resume watching
59%
Ability to rewind or repeat a scene/instant replay
51%
Ability to skip parts of the show, similar to skipping from song tosong on a CD
36%
Ability to record programming with a specific actor or director
22%
Source: CEA Market Research, 2000
036676 ©2002 eMarketer, Inc. www.eMarketer.com
Features of Digital Video Recorders (DVRs) that USConsumers Find Appealing, December 2002 (as a % ofrespondents)
Ability to skip commercials 81%
Ability to watch a show regardless of normal air time 76%
Note: n=932 US adultsSource: eBrain Market Research/Consumer Electronics Association (CEA),June 2003
050171 ©2003 eMarketer, Inc. www.eMarketer.com
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A Myers survey conducted in 2003 showed that 30.9% of PVR ownersskipped or fast forwarded all commercials, and a further 21.7% indicatedthey did this to most commercials. This means that if 30% of homes have aPVR by the end of the decade and 50% of PVR users are skipping all ormost commercials, TV advertising will become less effective for mostadvertisers. Saying that, the Myers Group survey did also indicate that PVRusers skip commercials, but 15.3% will stop for selected ones. This gives aclear indication that if advertising is well targeted and appealing, TVviewers will watch.
Personal Video Recorder (PVR) Owners in the US WhoSkip/Fast Forward through Commercials, 2003 (as a %of respondents)
All commercials
30.9%
Most commercials
21.7%
Some commercials
12.6%
A few commercials
4.2%
I skip commercials but will stop on selected ones
15.3%
Almost no commercials
0.7%
Never
14.6%
Note: n=138Source: Myers Group, March 2003
048398 ©2003 eMarketer, Inc. www.eMarketer.com
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D. High Definition TelevisionHDTV greatly enhances the picture and audio quality of the TV signal if aviewer has the high-definition equipment to take advantage of it. Toreceive HDTV one needs a digital TV set, plus a digital TV tuner that iscapable of HDTV.
The National Cable & Telecommunications Association claims HDTVbroadcasts are now available to one-third of U.S. households. Last year’sagreement between TV makers and cable companies should boost thatnumber to 85% by 2006. At the moment cable and satellite TV operatorsare offering set-top boxes with the capability of receiving HDTV signalsand new digital TV sets will increasingly have a tuner in-built so they areable to receive HDTV signals. While the US has been waiting for HDTV forsome years, the increasing amount of HDTV content combined with thefalling prices of digital TV sets points to a market that will grow steadily inthe coming years.
Data from the CEA shows that the average price of a digital TV set in1998 was $3,147 but this has fallen to less than $1,500 in 2003. The CEAestimates that nearly 4 million digital TV sets will be sold to dealers in2003, up from less than a million in 2000.
Digital TV Set and Display Sales to Dealers*, 1998-2003Unit sales
(in thousands)Dollar sales(in millions)
Average unitprice
1998 14 $43 $3,147
1999 121 $295 $2,433
2000 648 $1,426 $2,201
2001 1,460 $2,648 $1,812
2002 2,535 $4,280 $1,688
2003** 3,846 $5,543 $1,441
Note: *includes direct-view and projection DTVs with integrated digitaldecoders and stand-alone DTV displays; **preliminarySource: Consumer Electronics Association (CEA), January 2003
050455 ©2003 eMarketer, Inc. www.eMarketer.com
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eMarketer’s analysis of CEA data reveals that the number of HDTV-readysets available to consumers has grown 195% over the last year, from 20products in 2002 to 59 products in 2003. In conjunction with this, theaverage price per HDTV-ready set has fallen from $5,105 in 2002 to $2,627in 2003.
Falling equipment costs, increases in HDTV content and a commitment bybroadcasters, cable companies and equipment makers all point to a sectorpoised for growth.
US ForecastsAccording to the NCTA, by 1 June 2003, cable operators offering HDTVservice passed 55 million TV households. The service was reaching 112 ofthe nation’s Designated Market Areas (DMAs), including 78 of the top 100DMAs, and 34 markets beyond the top 100. With HDTV also available viasatellite, 2003 will be the year HDTV begins to grow strongly.
eMarketer estimates there will be approximately 16.4 million HDTVhouseholds in the US in 2006, up from less than 1 million in 2002. AsHDTV-capable sets become more affordable, strong growth will occur inthe second half of this decade.
Number of Integrated High-Definition TV (HDTV)*Models on the US Market and Average Price per Set,2002 & 2003
# of integrated HDTV models onthe market
Average price
March 2002
20
$5,105
April 2003
59
$2,627
% growth
195%
-49%
Note: *includes digital decoderSource: Consumer Electronics Association (CEA), 2002 & 2003; interpolatedby eMarketer, July 2003
051074 ©2003 eMarketer, Inc. www.eMarketer.com
High-Definition TV (HDTV) Households in the US,2002-2006 (in millions)
2002 0.6
2003 2.2
2004 5.0
2005 9.6
2006 16.4
Source: eMarketer, July 2003
051036 ©2003 eMarketer, Inc. www.eMarketer.com
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By 2006, 14.3% of households will be receiving HDTV and penetrationshould increase rapidly after that date.
Strategy Analytics estimates that there were approximately 4.8 millionHDTV-capable households in the US in 2002 and this will rise to 29 millionby 2006, with approximately half of these households actually viewingHDTV programming.
US High-Definition TV (HDTV)-Capable Households,2002 & 2008 (in millions)
2002 4.8
2008 29.0
Source: Strategy Analytics, October 2002
044726 ©2002 eMarketer, Inc. www.eMarketer.com
High-Definition TV (HDTV) Household Penetration inthe US, 2002-2006
2002 0.6%
2003 2.0%
2004 4.5%
2005 8.5%
2006 14.3%
Source: eMarketer, July 2003
051037 ©2003 eMarketer, Inc. www.eMarketer.com
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By 2008, the number of HD-capable displays in US homes will havereached 33.4 million installed units (which includes multiple HDTVhouseholds). Of these displays, 27% will be connected to an HDTV servicevia cable, 14% via satellite, and 8% via digital terrestrial television,according to Strategy Analytics.
“HDTV has been a long time coming, But sufficientmomentum is now building at both content andoperator levels to ensure a successful nichemarket in the longer term.”— David Mercer, Vice President, Broadband Practice, Strategy Analytics
No HDTVservice
51%
Terrestrial8%
Satellite14%
Cable27%
Breakdown of US High-Definition TV (HDTV)-CapableHouseholds, by Platform, 2008
Source: Strategy Analytics, October 2002
044727 ©2002 eMarketer, Inc. www.eMarketer.com
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Alternative estimates from NBC indicate 16.3 million households will becapable of HDTV in 2006 and 15.3 million households will be actuallyusing the service.
The comparative estimates for HDTV in the US vary considerably.PricewaterhouseCoopers predicts only 5 million HDTV households in 2005,the Yankee Group predicts over 29 million. The divergent estimates reflect asector that is only just developing.
High-Definition TV (HDTV)-Capable and HDTVHouseholds in the US, 2001-2006 (in millions)
2001
0.3
1.7
2002
0.6
3.9
2003
1.7
6.5
2004
4.5
9.6
2005
9.1
12.3
2006
15.3
16.3
HDTV households HDTV-capable households (notuner)
Source: NBC, May 2003
051038 ©2003 eMarketer, Inc. www.eMarketer.com
Comparative Estimates: High-Definition TV (HDTV)Households in the US, 2001-2006 (in millions)
2001 2002 2003 2004 2005 2006
eMarketer, July 2003 – 0.6 2.2 5.0 9.6 16.4
NBC, May 2003 0.3 0.6 1.7 4.5 9.1 15.3
PricewaterhouseCoopers (PwC), 2001 0.8 1.5 2.4 3.5 5.0 –
Yankee Group, 2003 – 0.7 3.2 8.7 17.6 29.3
Source: eMarketer, July 2003; various, as noted, 2001-2003
051039 ©2003 eMarketer, Inc. www.eMarketer.com
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Analysis of Strategy Analytics data shows that they estimate there will be16.4 million HDTV-connected displays in the US in 2008, with cable takingthe lion’s share of all subscribers.
“In 2002, announcements from cable operators,programmers and consumer electronicsmanufacturers signaled a change in the HDTVmarket. Rapid deployment of HDTV by cableoperators and growing availability of HDprogramming will drive HDTV signals to more than41.6 million homes by 2007.”— Yankee Group
High-Definition TV (HDTV)-Connected Displays in theUS, by Distribution Platform, 2008 (in millions)
Cable 9.0
DBS 4.7
Digital terrestrial 2.7
Total HDTV households 16.4
Source: Strategy Analytics, October 2002; eMarketer interpolation, July2003
051040 ©2003 eMarketer, Inc. www.eMarketer.com
High-Definition TV (HDTV) Households in the US,2002-2007 (in millions)
2002 0.7
2003 3.2
2004 8.7
2005 17.6
2006 29.3
2007 41.6
Source: Yankee Group, April 2003
048910 ©2003 eMarketer, Inc. www.eMarketer.com
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“For many people, the final obstacle has been cable.With approximately 70% of Americans getting theirTV programming via cable, the cable industry’sacceptance of HDTV is the key to a successfultransition to digital.”— Gary Merson, Editor, The Perfect Vision Magazine.
Consumer SurveysNearly 50% of the population does not know how to receive HDTVaccording to a study conducted by CTAM. HDTV will not be widely adoptedfor as long as people are without an understanding of what it is and whatbenefits it has. Satellite TV providers were the first providers to offer HDTV,so it is little surprise to find that 38.4% of satellite TV customers think thatHDTV is available from satellite TV.
US TV Subscribers’ Beliefs Regarding HowHigh-Definition Television (HDTV) Is Delevered, byType of TV Subscriber, June 2002 (as a % ofrespondents)
Satellite TV subscribers
12.4%
38.4%
9.4%
40.8%
Digital cable subscribers
28.5%
20.9%
7.1%
47.2%
Cable subscribers
24.8%
16.5%
6.0%
51.0%
Total
21.3%
21.4%
7.0%
49.2%
By cable By satellite
Over-the-air with antenna Don't know
Source: Cable & Telecommunications Association for Marketing (CTAM),July 2002
051041 ©2003 eMarketer, Inc. www.eMarketer.com
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The CEA conducted a study in 2002 that showed consumer interest inHDTV-ready TV sets at different price points. At $2000 only 4% ofconsumers were interested in the concept, but at $1000, 37% were interestedand at $500 72% were interested. Clearly, the sooner the price of digital TVsets fall in price the quicker digital and HDTV adoption will take place.
Online Consumers Interested in High-Definition TV(HDTV)-Ready Sets at Different Price Points in the US,2002 (as a % of respondents)
$2,000 4%
$1,500 9%
$1,000 37%
$500 72%
Source: Consumer Electronics Association (CEA) as cited in SkyReport,December 2002
051042 ©2003 eMarketer, Inc. www.eMarketer.com
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According to a study from Dove Consulting, 13% of US consumerscurrently have a television set that is high-definition compatible, while81% are aware of high-definition TV (HDTV). Dove surveyed 1,658 peoplein the US and determined specifically that 30.4% of people who do not ownan HDTV would only be willing to spend between $3.00 and $5.00 permonth on HDTV programming, but HDTV owners are willing to go higher;21.3% say they would pay between $7.00 and $10.00 per month andanother 21.3% say they would pay $10.00 or more.
Horowitz Associates conducted a similar study to Dove consulting askingconsumers their willingness to pay $10.95 per month for HDTVprogramming. Only 20% of cable subscribers and 27% of digital cablesubscribers indicated they were interested.
Amount that US Consumers Are Willing to Pay perMonth for a High-Definition Programming Package,2003 (as a % of respondents)
Up to $3
23.7%
29.6%
$3-$5
21.3%
30.4%
$5-$7
12.4%
16.9%
$7-$10
21.3%
16.9%
$10+
21.3%
6.2%
HDTV owners Non-owners
Source: Dove Consulting, April 2003
049165 ©2003 eMarketer, Inc. www.eMarketer.com
US Cable and Digital Cable Subscribers Willing to Pay$10.95 per Month for High-Definition TV (HDTV), 2002(as a % of respondents)
All cable subscribers 20%
Digital cable subscribers 27%
Source: Horowitz Associates, Inc., June 2002
051043 ©2003 eMarketer, Inc. www.eMarketer.com
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The CEA conducted another survey in 2002 to assess the demographicprofile of those consumers likely to purchase HDTV equipment. Theirresults showed that music and movie fans and high-income consumers arethe most likely buyers.
US Consumers Most Likely to Buy High-Definition TV(HDTV) Equipment, 2002 (as a % of respondents)
Owns a home theater system
Satellite TV household
Attended 3 live arts performancesin past year
Eats out 2+ times per week
Paid $20,000 for a car
Average hours of TV/week
Self described music fan
Self-described movie fan
Overall
34%
21%
25%
22%
35%
17.6
48%
44%
Likely HDTVbuyer
45%
25%
30%
25%
45%
18.5
46%
53%
Short termlikely buyer
47%
23%
34%
30%
43%
20.6
57%
64%
Source: Consumer Electronics Association (CEA), June 2002
051044 ©2003 eMarketer, Inc. www.eMarketer.com
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E. US Competitive LandscapeCable companies have spent more than $80 billion dollars upgrading theirnetworks to be able to offer advanced TV and Internet services, and theyare now looking for a return on that investment. At the same time satelliteTV operators continue to erode their market share. The multichannel TVmarket in North America is entering a new digital phase where competitionbetween cable and satellite TV providers will increasingly be fought on thebattle ground of advanced TV services such as video-on-demand, high-definition TV and personal video recorder functions. Those companies thatare best able to educate the consumer of the benefits of these new serviceswill stand to reap excellent long-term benefits.
eMarketer’s assessment of the three major advanced TV services, VOD,PVRs and HDTV, shows that each service will grow strongly over the nextfew years with HDTV growing particularly strongly at a CAGR of 128.7%.
Cable Vs DBSDBS continues to erode the market share of cable TV for two reasons:
■ The service costs less■ Customer satisfaction is greater with DBS
Data from the Satellite Broadcasting and Communications Association(SBCA) shows that a monthly subscription to DBS (which is digital) isalmost $10 per month cheaper than a digital cable subscription.
Video-on-Demand (VOD), Personal Video Recorder(PVR) and High-Definition TV (HDTV) Households in theUS, 2002-2006 (in millions and CAGR)
2002 2003 2004 2005 2006 CAGR2002-2006
VOD* 1.9 6.0 9.6 13.3 16.3 71.1%
PVR 1.8 3.6 6.8 10.4 15.3 70.8%
HDTV 0.6 2.2 5.0 9.6 16.4 128.7%
Note: *Households purchasing at least one VOD or SVOD program permonthSource: eMarketer, July 2003
051014 ©2003 eMarketer, Inc. www.eMarketer.com
Mean Monthly Service Subscription Costs among USMultichannel TV Subscribers, by Type, 2002
Digital cable $59.50
DBS $49.70
Analog cable $41.20
Source: Satellite Broadcasting and Communications Association(SBCA)/Taylor Research & Consulting Group, Inc., October 2002
051045 ©2003 eMarketer, Inc. www.eMarketer.com
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Additional data from SBCA shows that satisfaction of DBS service isbetween 10 and 20 percentage points higher in every category measuredcompared with analog cable. What’s more, satisfaction of digital cable iseven worse than that of analog cable. These figures should provide awake-up call to all cable providers.
The combination of lower price and higher customer satisfaction is apowerful one for DBS operators. Combine this with the fact that they havebeen more willing to introduce interactive TV functions, and it is littlesurprise digital cable churn is so high.
US Multichannel TV Subscribers Who Are Satisfiedwith Their Services, 2002 (as a % of respondents)
Transmission quality and reliability
79%
67%
66%
Professionalism, knowledge, courtesy of people
74%
61%
63%
Value for money
68%
37%
36%
Problem resolution
68%
53%
57%
Making customers feel valued
64%
46%
44%
DBS Analog cable Digital cable
Source: Satellite Broadcasting and Communications Association(SBCA)/Taylor Research & Consulting Group, Inc., October 2002
051046 ©2003 eMarketer, Inc. www.eMarketer.com
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F. Leading US Multichannel TV Providers
ComcastWith Comcast’s recent acquisition of AT&T’s broadband network, Comcastis the largest mulitchannel TV operator in the US with over 21 million basiccable TV subscribers. As of Q1 2003, Comcast reported 6.8 million digitalsubscribers, 4 million cable Internet subscribers and 1.4 million cabletelephony subscribers. Comcast has carried out an ambitious deploymentplan for video-on-demand and has made VOD available to over 6 millionhomes as of Q1 2003. It is currently offering a ‘free’ package of VODcontent for new subscribers to digital TV while also offering new moviesfor $3.95.
Comcast is currently testing a PVR set-top box in selected markets andhas HDTV available to 9 million homes.
Comcast US Cable Subscriber Statistics andAdvanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content andpricing
SVOD deployments
SVOD content and pricing
VOD vendors/partners
PVR deployments
PVR set-top box
HDTV markets
HDTV content
21.3
6.8
19 (available to 6 million homes)
New releases $3.95; library movies $2.95
Philadelphia and Northern NJ; Alexandria,Arlington and Chesterfield, VA
Starz on demand, HBO on demand, Showtime ondemand. SVOD free with premium subscription
Concurrent, In Demand, TVN
Tests in Alexandria and Arlington, VA
Scientific-Atlanta Explorer 8000
15 (available to 9 million homes)
Showtime, HBO
Source: Kagan World Media, April 2003; company reports, 2003
051047 ©2003 eMarketer, Inc. www.eMarketer.com
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DirecTVDirecTV is the largest satellite TV (DBS) operator in the US and the secondlargest provider of multichannel TV. With all of its 11.4 million DBSsubscribers digital, DirecTV is the largest digital TV provider in the country.DirecTV has offered HDTV and PVR services for some years now as well asoffering enhanced and interactive TV services.
DIRECTV US Subscriber Statistics and Advanced TVServices, Q1 2003Digital subscribers(in millions)
PVR subscribers
PVR set-top box
HDTV markets
HDTV content
11.4
Approximately 500,000 (DirecTV's partner, TiVoreported 700,000 subscribers (which includesDirecTV's share) in April 2003
DirecTV/TiVo partnership
Available to all subscribers with a HDTV set-topbox
Discovery, ESPN, HDNet (sports and events) andHD Movies
Source: Kagan World Media, April 2003; company reports, 2003
051049 ©2003 eMarketer, Inc. www.eMarketer.com
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Time Warner CableIn the last 18 months Time Warner Cable has rapidly deployed VOD acrossnearly all its markets and is now beginning to actively market the service.Time Warner Cable is using a multi-faceted strategy by offering VOD,SVOD, PVR, HDTV as well as cable Internet packages in the hope of havingso many compelling offerings, customers won’t even think of going over tosatellite TV.
Time Warner US Cable Subscriber Statistics andAdvanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
SVOD content and pricing
PVR deployments
PVR pricing
PVR set-top box
HDTV deployments
HDTV content
11.0
3.9
33 of 34 markets
New movie releases $3.95; library movies $1.95;adult titles $6.95-$9.95
SeaChange, Concurrent, nCube, In Demand(content)
33 divisions
$6.95 per month for up to four services withpremium subscription such as HBO on demand;Showtime on demand; Cinemax on demand, theMovie Channel on demand
14 markets
$4.95-$9.95 per month
Scientific-Atlanta Explorer 8000
32 divisions
HBO, Showtime, ABC, NBC, CBS, PBS, Fox; variesby market
Source: Kagan World Media, April 2003; company reports, 2003
051054 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
EchoStarThe second largest satellite TV provider, behind DirecTV, EchoStar (DISHNetwork) has 8.5 million digital subscribers and offers customers a choice ofthree products: standard service, a HDTV set-top box, and a PVR set-topbox. Like DirecTV, EchoStar has had some success in driving PVR technology,although their exact PVR subscriber count has not been made public.
Charter CommunicationsCharter Communications has 6.5 million subscribers, of which 2.7 millionare digital. The company is exploring a variety of advanced TV servicesand already has VOD available in 18 markets. Charter recently partneredwith set-top box manufacturer Moxi to roll out a STB, which includesmultichannel TV, VOD, PPV and PVR functionality. This would be the firstof its kind in the market.
EchoStar/DISH US Subscriber Statistics and AdvancedTV Services, Q1 2003Digital subscribers(in millions)
PVR subscribers
PVR set-top box
HDTV markets
HDTV content
8.5
Approximately 550,000
33 of 34 markets
Available to all subscribers with a HDTV set-topbox
Discovery ($7.99/month), HBO, Showtime, NHL,NBA, Dish PPV programming
Source: Kagan World Media, April 2003; company reports, 2003
051056 ©2003 eMarketer, Inc. www.eMarketer.com
Charter Communications US Cable SubscriberStatistics and Advanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
SVOD content and pricing
HDTV deployments
HDTV content
6.5
2.7
18 markets
New movie releases $3.99; library movies $2.99;adult titles $8.99-$11.99; kids $0.99
Concurrent, nCube and TVN
Testing in two markets
$6.95 per month for one or more of HBO,Showtime, Starz, Cinemax, etc.; $3.99 for HBOand/or Showtime with existing premium service
18 markets
Networks including Showtime, HBO, HDNet,Discovery
Source: Kagan World Media, April 2003; company reports, 2003
051058 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Cox CommunicationsCox is experimenting with a number of technologies and business modelsacross it footprint. It has rolled out VOD to a few markets and PVRs tomarkets where VOD isn’t available. HDTV is available to 40% of its subscriberbase with the aim of having it available to 70% by the end of 2003.
Cox Communications US Cable Subscriber Statisticsand Advanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
SVOD content and pricing
PVR deployments
PVR pricing
PVR set-top box
HDTV deployments
HDTV content
6.3
2.7
4 markets have Entertainment on Demand plustwo in test
EOD free in some markets; New movie releases$3.95
In Demand, iControl
None currently, expected soon
$6.95 per month for one or more of HBO,Showtime, Starz, Cinemax, etc.
2 markets
$9.95 per month, plus set-top lease
Scientific-Atlanta
7 markets
Varies by market. Networks including Showtime,HBO, HDNet, Discovery HD Theatre ranges from$5-$6.99
Source: Kagan World Media, April 2003; company reports, 2003
051060 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Adelphia CommunicationsAledphia filed for bankruptcy not too long ago, which has obviouslyslowed it rollout of advanced TV services. Never the less, VOD is availablein two of its markets and HDTV should be widely available throughout itsnetwork by the end of 2003.
CablevisionCablevison has been relatively slow to upgrade its network to digital, butover the last 12 months digital customers have grown strongly. On-demandcontent is available in nearly all Cablevision’s markets and HDTV isexpected to be available in the next 12 months.
Cablevision Systems US Cable Subscriber Statisticsand Advanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
SVOD content and pricing
HDTV deployments
HDTV content
2.9
0.4
Throughout Long Island, NY, CT and NJ
New movie releases $4.95, library content $2.95;adult titles $8.95
Sea Change International
Throughout Long Island, NY, CT and NJ
$4.95 per month for IFC on demand, HBO,Showtime, Starz or Playboy; $3.95 each or $6.95for two or more
Plans to launch throughout footprint
HBO, Showtime, Fox Sports Net, MSG Network
Source: Kagan World Media, April 2003; company reports, 2003
051062 ©2003 eMarketer, Inc. www.eMarketer.com
Adelphia Communications US Cable SubscriberStatistics and Advanced TV Services, Q1 2003Basic subscribers(in millions)
Digital subscribers(in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
SVOD content and pricing
HDTV deployments
5.3
1.7
2 markets
New movie releases $3.99, library content $2.99
Sea Change International
1 market
$5.95 per month for HBO, Showtime or Starz;$3.95 each or $6.95 for two or more
Plans to launch
Source: Kagan World Media, April 2003; company reports, 2003
051061 ©2003 eMarketer, Inc. www.eMarketer.com
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
MediacomMediacom has been busy upgrading its network to digital and is only nowbeginning to rollout advanced TV services. Video-on-demand has beenlaunched in three markets and SVOD will also be launched later in 2003.HDTV is available to 23% of its footprint.
Insight CommunicationsInsight Communications was an early mover on VOD and interactive TVservices. VOD and SVOD are now widely available throughout its networkand they are also beginning to offer telephony services.
For additional information on digital TV in dozens of internationalmarkets, see eMarketer’s eStat Database.
Mediacom US Cable Subscriber Statistics andAdvanced TV Services, Q1 2003Basic subscribers (in millions)
Digital subscribers (in millions)
VOD markets
VOD content and pricing
VOD vendors/partners
SVOD deployments
HDTV deployments
1.6
0.4
3 markets
New movie releases $3.95, library content$1.95-$2.95; kids $0.99
Sea Change, Concurrent, TV Guide, Motorola
Throughout Long Island, NY, CT and NJ
5 markets
Source: Kagan World Media, April 2003; company reports, 2003
051063 ©2003 eMarketer, Inc. www.eMarketer.com
Insight Communications US Cable SubscriberStatistics and Advanced TV Services, Q1 2003Basic subscribers(in millions)
1.3
Digital subscribers(in millions)
0.4
VOD markets 10 of 14 markets
VOD content and pricing New movie releases $3.99, library content $2.99;adult $9.99-$11.99; Mag Rack, $7.95
VOD vendors/partners Sea Change, Motorola DCT-2000 set-top, Liberatemiddleware, SourceSuite IPG
SVOD deployments 10 markets
SVOD content and pricing $6.99 kids unlimited plus HBO on demand
HDTV deployments 8 markets
HDTV content HBO, Showtime, ESPN; $9.99
Source: Kagan World Media, April 2003; company reports, 2003
051064 ©2003 eMarketer, Inc. www.eMarketer.com
V
Methodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
IV US 39
V Appendix: Glossary of Acronyms 101
Glossary of Acronyms 102
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
101
Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
102
Digital Television 2003
Methodology
Key Findings
TV Technology &TV Households Worldwide
AdvancedTelevision Services
US
Appendix:Glossary of Acronyms
Index of Charts
Glossary of Acronyms■ ATSC advanced television systems committee■ DBS direct broadcast satellite■ DSL digital subscriber line■ DTH direct-to-home■ DTT digital terrestrial television■ DTV digital television■ DVB digital video broadcast■ DVD digital video disk■ DVR digital video recorder■ HDTV high-definition television■ IPTV Internet protocol television■ ISDB integrated services digital broadcasting■ iTV interactive television■ MSO multiple system operator■ NVOD near video-on-demand■ PPV pay-per-view■ PVR personal video recorder■ STB set-top box■ SVOD subscription video-on-demand■ VOD video-on-demand
Methodology 7
I Key Findings 11
II TV Technology & TV Households Worldwide 13
III Advanced Television Services 33
IV US 39
V Appendix: Glossary of Acronyms 101
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
103
Digital Television 2003
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
Methodology 7The eMarketer Difference 8
The Benefits of eMarketer’s Aggregation Approach 9
“Benchmarking” and Projections 9
I Key Findings 11
II TV Technology & TV Households Worldwide 13A. Understanding the Technology 14
B. TV Households 16Geographic Distribution of TV Households Worldwide, 2000 (as a % of totalhouseholds) 16
C. Global Digital TV Projections 17Digital TV Households Worldwide, by Region, 1995-2010 (in millions) 17
Digital TV Households Worldwide,by Region,End of 2002 & 2003 (in thousands) 17
Digital TV Households Worldwide, 2000-2008 (in millions) 18
Digital TV Households Worldwide, by Delivery Platform, End of 2002 & 2003 (inthousands) 19
Leading Digital TV Countries Worldwide Ranked by Penetration*, End of 2003 20
Leading Digital TV Countries Worldwide, End of 2003 (in thousands of households) 21
D. Digital Terrestrial Television (DTT) 22Digital Terrestrial Television (DTT) Start and Analog Switch-Off Dates forSelected Countries, 1998-2010 22
ATSC Digital Terrestrial TV (DTT) Deployments Worldwide, 2003 23
DVB Digital Terrestrial TV (DTT) Deployments Worldwide, 2003 24
E. IPTV – Internet Protocol TV 25IPTV* Subscribers Worldwide, 2000-2008 (in millions) 25
F. The Set-Top Box (STB) 26Categories of Set-Top Boxes 26
Categories of Set-Top Boxes (STBs) Worldwide, 2002 26
Cable Vs Satellite Vs Digital Terrestrial Set-tops 27
Global Set-top Box Projections 28
Digital TV Set-Top Box Market Forecast Worldwide, 2002 & 2008 (in millions ofunits) 28
Worldwide Cable and Digital Broadcast Satellite (DBS) Set-Top-Box InstalledBase, by Region, 1999-2005 (in millions) 28
Set-Top Box (STB) Shipments Worldwide, 2002 & 2008 (in millions) 29
Advanced Digital TV (DTV) Set-Top Box Market Worldwide, by Functionality, 2002-2008 (in millions of units) 29
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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G. Digital TV Sets 30Estimated Worldwide Digital TV Set Market Projections, 2001 & 2005(in millions) 30
Digital TV (DTV) Product* Sales in the US, 2002-2006 (in millions of units) 31
III Advanced Television Services 33A. Video-on-demand (VOD) 34
Households with On-Demand Television Services Worldwide, by Region, 2000-2002 & 2007 (in millions) 34
Worldwide Revenues 35
On-Demand Television Services Revenue Worldwide, by Platform, 2000-2002 &2007 (in millions) 35
Households Using On-Demand Television Services Worldwide, by Platform,2000-2002 & 2007 (in millions) 35
B. Personal Video Recorders (PVRs) Worldwide Forecasts 36Personal Video Recorder (PVR) Household Penetration Rate Worldwide, byRegion, 2001, 2002, 2005 & 2010 (as a % of digital TV homes) 36
Personal Video Recorder (PVR) Households Worldwide, 2001, 2002, 2005 & 2010(in millions) 36
Personal Video Recorder (PVR) Households Worldwide, by Delivery Platform,2001, 2002, 2005 & 2010 (in thousands) 37
Digital Video Recorder Sales in the US and Europe, 2002 & 2006 (in millions) 37
IV US 39Average Television Usage among Households in the US, 1990-2003 (inhours:minutes/day, hours/year, and as a % ncrease/decrease vs. prior year) 40
Television Households in the US, by Distribution Platform, 2003 40
A. Digital TV 41Comparative Estimates: Digital TV Households in the US, 2000-2005 (in millions) 41
Digital TV (DTV) Households in the US, 2002-2005 (in millions) 41
Broadband and Digital TV (DTV) Households in the US, 2002-2005 (in millions) 42
Digital TV (DTV) Households in the US, by Distribution Platform, 2002-2005 (inmillions) 43
Cable TV 44
US Cable Industry Statistics, 2003 44
US Digital TV Households, by Platform, 2002 & 2008 (in thousands) 44
Digital Cable Households in the US, 2001-2007 (in millions) 45
Digital Cable TV Households in the US, 2002-2005 (in millions) 45
Satellite 46
Satellite TV (DBS) Households in the US, 2002-2005 (in millions) 46
US Digital Cable and Satellite Penetration, 2001-2006 (in millions) 46
US Direct Broadcast Satellite (DBS) Households, by Major Provider, Q1 2003 (inmillions and % of total TV households) 47
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Direct Broadcast Satellite (DBS) Households in the US, 2003-2007 (in millions andas a % increase vs. prior year) 47
Digital Terrestrial Television 48
US Digital Terrestrial Television (DTT) Households, 1999-2005 (in millions) 48
Digital TV Sets 49
Digital TV Set and Display Sales to Dealers*, 1998-2003 49
Digital TV (DTV) Product* Sales in the US, 2002-2006 (in millions of units) 49
B. Video-on-Demand (VOD) 50US Sales of Select Digital Video and Audio Products, 2002 & 2003 (in millions ofunits) 50
DVD and VHS Movie Sales in the US, 2002 (in billions) 51
Top 10 Video Products Found in US Households, 2002 51
Movie Release Schedule, by Distribution Channel, 2003 52
US Consumer Spending on DVDs, 2000 & 2005 (in billions) 52
US Forecasts 53
Video-on-Demand (VOD)-Enabled Households and VOD Users in the US, 2002-2006(in millions) 53
Comparative Estimates: Video-on-Demand (VOD)-Enabled Households in the US,2002-2007 (in millions) 54
Digital Cable and Video-on-Demand (VOD)-Enabled Households in the US, 2002 &2006 54
US PPV Revenues 55
Pay-per-View* TV Revenues in the US, 2000-2002 (in billions) 55
Video-on-Demand (VOD) Households in the US, 2000-2005 & 2010 (in millions) 55
Pay-per-View* (PPV) Revenues in the US, by Content Category, 2001 & 2002 (inmillions) 56
US VOD Revenues 57
Comparative Estimates: Video-on-Demand (VOD) Revenues in the US, 2002-2007(in millions) 57
Video-on-Demand (VOD) Revenues in the US, 2002-2006 (in millions) 57
eMarketer Video-on-Demand (VOD) Revenue Scenario in the US, 2002-2006 58
PricewaterhouseCoopers (PwC) Video-on-Demand (VOD) Revenue Scenario inthe US, 2002-2006 58
Video-on-Demand (VOD) & Subscription VOD Revenues in the US, 2000-2005 &2010 (in billions) 59
Video-on-Demand (VOD) Payback Analysis in the US, 2001 59
US Video-on-Demand (VOD) and Subscription Video-on-Demand (SVOD)Revenues, 2003 & 2007 (in millions) 60
Average Movie and Subscription Video-on-Demand (VOD) Revenues per VODHousehold per Month in the US, 2000-2005 & 2010 60
Consumer Surveys 61
US Satellite TV Subscribers’ Likelihood of Switching to Cable TV If Offered Video-on-Demand (VOD), 2003 (as a % of respondents) 61
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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US Cable TV Subscribers’ Likelihood of Staying with Cable TV If Video-on-Demand (VOD) Is Available, 2003 (as a % of respondents) 61
US Consumers’ Interest in Selected iTV Services, 2001 (as a % of respondents) 62
Non-Video-on-Demand (VOD) Users in the US Likely to Purchase a VOD Movie for$3.95, 2002 (as a % of respondents) 63
US Cable Subscribers Interested in Subscription Video-on-Demand (SVOD), 2002(as a % of respondents) 64
US Consumer Willingness to Pay for Subscription Video-on-Demand (SVOD), 2002(as a % of respondents) 64
US Consumers’ Willingness to Pay for Recently Released Movies on Video-on-Demand (VOD), by Price Point, 2002 (as a % of respondents) 65
Amount US Consumers Would Pay for Select Video-on-Demand (VOD) Content,2002 65
US Consumers’ Willingness to Pay for Unlimited Video-on-Demand (VOD) perMonth, 2002 (as a % of respondents) 66
Interest in Video-on-Demand (VOD) Services and Preferred Payment Method inthe US, 2002 (as a % of respondents) 67
Content Preferences among US Cable Subscribers Interested in Video-on-Demand (VOD), 2002 (as a % of respondents) 68
US Consumers “Very Interested” in Selected iTV Services, by Age, December2001 (as a % of respondents*) 69
US Consumers “Very Interested” in Selected iTV Services, by Age, December2001 (as a % of respondents*) 70
C. Personal Video Record (PVR) 71DIRECTV Personal Video Recorder (PVR) US Subscriber Statistics, 2002 71
US Forecasts 72
Personal Video Recorder (PVR) Household Penetration in the US, 2002-2006 72
Personal Video Recorder (PVR) Households in the US, 2002-2006 (in millions) 72
Comparative Estimates: Personal Video Recorder (PVR) Households in the US,2002-2006 (in millions) 73
Comparative Estimates: US Personal Video Recorder (PVR) Households, byDelivery Platform, 2002-2006 (in millions) 74
Personal Video Recorder (PVR) Households in the US, by Delivery Platform, 2002-2006 (in millions) 74
Competitive Position of Major Personal Video Recorder (PVR) Vendors, End of2002 75
Personal Video Recorder (PVR) Sales to Dealers in the US, 1999-2003 75
PVRs - Complimentary or Competing Against VOD? 76
US Personal Video Recorder (PVR) Vendors’ Global Market Share, 2002 & 2006 76
US Value Proposition: Video-on-Demand (VOD) vs. Personal Video Recorder (PVR),2003 77
Consumer Surveys 78
Interest in Select Digital TV Services in the US, 2002 (as a % of respondents) 78
LIklihood to Purchase Select Digital TV Services in the US, 2002 (as a % ofrespondents) 79
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Features of Digital Video Recorders (DVRs) that US Consumers Find Appealing,December 2002 (as a % of respondents) 80
US Consumer Interest in Personal Video Recorder (PVR) Features, 2000 (as a % ofrespondents) 80
Personal Video Recorder (PVR) Owners in the US Who Skip/Fast Forwardthrough Commercials, 2003 (as a % of respondents) 81
D. High Definition Television 82Digital TV Set and Display Sales to Dealers*, 1998-2003 82
US Forecasts 83
High-Definition TV (HDTV) Households in the US, 2002-2006 (in millions) 83
Number of Integrated High-Definition TV (HDTV)* Models on the US Market andAverage Price per Set, 2002 & 2003 83
High-Definition TV (HDTV) Household Penetration in the US, 2002-2006 84
US High-Definition TV (HDTV)-Capable Households, 2002 & 2008 (in millions) 84
Breakdown of US High-Definition TV (HDTV)-Capable Households, by Platform,2008 85
Comparative Estimates: High-Definition TV (HDTV) Households in the US, 2001-2006 (in millions) 86
High-Definition TV (HDTV)-Capable and HDTV Households in the US, 2001-2006 (inmillions) 86
High-Definition TV (HDTV) Households in the US, 2002-2007 (in millions) 87
High-Definition TV (HDTV)-Connected Displays in the US, by DistributionPlatform, 2008 (in millions) 87
Consumer Surveys 88
US TV Subscribers’ Beliefs Regarding How High-Definition Television (HDTV) IsDelevered, by Type of TV Subscriber, June 2002 (as a % of respondents) 88
Online Consumers Interested in High-Definition TV (HDTV)-Ready Sets atDifferent Price Points in the US, 2002 (as a % of respondents) 89
US Cable and Digital Cable Subscribers Willing to Pay $10.95 per Month for High-Definition TV (HDTV), 2002 (as a % of respondents) 90
Amount that US Consumers Are Willing to Pay per Month for a High-DefinitionProgramming Package, 2003 (as a % of respondents) 90
US Consumers Most Likely to Buy High-Definition TV (HDTV) Equipment, 2002 (asa % of respondents) 91
E. US Competitive Landscape 92Cable Vs DBS 92
Mean Monthly Service Subscription Costs among US Multichannel TVSubscribers, by Type, 2002 92
Video-on-Demand (VOD), Personal Video Recorder (PVR) and High-Definition TV(HDTV) Households in the US, 2002-2006 (in millions and CAGR) 92
US Multichannel TV Subscribers Who Are Satisfied with Their Services, 2002 (as a% of respondents) 93
F. Leading US Multichannel TV Providers 94Comcast 94
Comcast US Cable Subscriber Statistics and Advanced TV Services, Q1 2003 94
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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DirecTV 95
DIRECTV US Subscriber Statistics and Advanced TV Services, Q1 2003 95
Time Warner Cable 96
Time Warner US Cable Subscriber Statistics and Advanced TV Services,Q1 2003 96
EchoStar 97
Charter Communications 97
Charter Communications US Cable Subscriber Statistics and Advanced TVServices, Q1 2003 97
EchoStar/DISH US Subscriber Statistics and Advanced TV Services, Q1 2003 97
Cox Communications 98
Cox Communications US Cable Subscriber Statistics and Advanced TV Services,Q1 2003 98
Adelphia Communications 99
Cablevision 99
Adelphia Communications US Cable Subscriber Statistics and Advanced TVServices, Q1 2003 99
Cablevision Systems US Cable Subscriber Statistics and Advanced TV Services,Q1 2003 99
Mediacom 100
Insight Communications 100
Insight Communications US Cable Subscriber Statistics and Advanced TVServices, Q1 2003 100
Mediacom US Cable Subscriber Statistics and Advanced TV Services,Q1 2003 100
V Appendix: Glossary of Acronyms 101Glossary of Acronyms 102
Index of Charts 103
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
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Europe E-Commerce: B2B & B2CProvides a comprehensive review of data from leading research firms andgovernment organizations regarding revenue forecasts for B2B and B2C e-commerce.
(208 Pages, 209 Charts)
CPG OnlineA comprehensive review of how CPG companies are working with each other andwith the consumer online. It is the ideal resource for retailers, wholesale/distributors, consultancies and marketers.
(76 Pages, 80 Charts)
Europe Online: Access, Demographics and UsageAn overview of Internet users and usage in the 12 "core" countries that bestrepresent the region's market, including Internet penetration rates in each country,how users are accessing the Internet, and why.
(188 Pages, 195 Charts)
The Benefits of BroadbandA review of all available research quantifying the economic benefits of broadband.The report covers supply and demand for broadband in the US, and analyzes directand indirect benefits of widespread adoption.
(138 Pages, 124 Charts)
©2003 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.
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Digital Television 2003
North America E-Commerce: B2C & B2BA comprehensive overview of e-commerce in the US and Canada, including analysisof online shoppers versus buyers, the factors that influence people to buy onlineand the demographics of online buyers.
(212 Pages, 250 Charts)
PDA Market reportReviews the status of the worldwide PDA/handheld computer market from theperspective of data-centric devices, and analyzes the trends that are shaping itsfuture growth.
(124 Pages, 128 Charts)
Interactive TV: Reality & OpportunityAn overview of worldwide iTV usage and revenue prospects, television commerce,iTV advertising, video-on-demand, personal video recorders and iTV services.
(194 Pages, 200 Charts)
E-Commerce Trade and B2B ExchangesA comprehensive update of the leading trends shaping e-business decisions in2002, focusing on the multiple channels businesses are using to migrate theirbusiness-to-business (B2B) trade onto the Internet.
(127 Pages, 134 Charts)
Online AdvertisingA definitive, objective look at the online ad market, including the pros and cons of emerging ad formats and the role of online advertising within a traditional media campaign.
(272 Pages, 318 Charts)
North America OnlineA comprehensive overview of the North American Internet user and market,focusing on US and Canadian user demographics, access and usage.
(252 Pages, 333 Charts)
Travel Market WorldwideProvides a clear picture of the current situation in the travel industry, withinformation and statistics regarding travel purchased both online and offline.
(186 Pages, 205 Charts)
For more information, or to order a copy, contact eMarketer at:
Phone: 212.677.6300 Fax: 212.777.1172
eMail: [email protected] Web: www.emarketer.com
For Sales Inquiries: For Media Inquiries:Nick Lovett David [email protected] Director of Media Relations212.763.6031 [email protected]
212.763.6038