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19 March 2015

15 years after launch, HDTV penetration hits 81% in US Homes

While 4K proponents would have you believe that its success is just around the corner, survey results from the Leichtman Research Group show just how far it has to go – as HDTV penetration for US homes has just reached 81%, some 15 years after first launching in the market.

The good news is that this figure is up from 46% five years ago, and the portion of homes that own more than one HD set has risen from 17% five years ago to 52% today. There seems to be a strong link between HD-readiness and pay TV subscriptions, as 89% of those homes with a single HD set are also pay TV customers, climbing to 91% in homes with more than one HD set.

The rate for pay TV subscribers in non-HD homes is at 69%, which is too high to definitively say there’s a strong correlation between TV picture quality and subscription rates – but it seems much more likely that the link between HD TVs and pay TV bills is simply down to disposable income, meaning that customers with the money to spare to buy a new TV, overlap with those who have the cash to take out a subscription.

“While HDTV now seems commonplace in the US, much of the growth of HD has come in recent years,” said Bruce Leichtman, the president and principal analyst at the group. “Over the past five years, more than one-third of all US households got their first HDTV, and HDTV’s share of TV sets used in households grew from about 24% to 65%.”

According to the findings, 24% of US homes purchased a TV in the past year, with 4K/UHD awareness increasing to 41% in the US from 30% a year ago. Some 26% of respondents who had seen a 4K TV said they were interested in buying one – compared to only 6% of those who hadn’t seen one in the flesh saying they were interested in making a purchase. Evidently, seeing a 4K TV in person is a persuasive experience for consumers.

A very back-of-the-napkin comparison of 4K with the adoption rate of HDTVs won’t inspire much confidence in the new technology. According to Leichtman, the HD adoption rate in 2004, some 5 whole years after the first commercial HD sets were available to buy, was only 3%. And as we are fond of mentioning it takes time for the content industry to retool around a new format, and it was not until 2007 or so that HD content was available in volume, showing it is a precursor to filling out the market. Hence our constant reminders that there is little UHD content around.

However while the shape of the HD curve is established, there is no real reason for UHD to follow the same curve. TV is in a transition from fixed managed networks to OTT, and UHD content will often be used as the carrot to drag people to the new world, so uptake could be considerably faster this time around.

With ongoing bandwidth constraints inhibiting the adoption of the larger resolutions, with homes typically unable to stream 4K content over their last-mile connection on in-home network, more disruptive technologies such as full-array backlighting and quantum dot color filters are targeting the TV themselves, rather than the content pipe in order to convince consumers to invest their paycheck into a better picture rather than a larger resolution.

Most 4K sets don’t meet the full UHD standard recommendations and are the same picture quality as HD in all but resolution – requiring upscaling technologies within the set itself to adapt the 720p or 1080p image to the 3840x2160p screen.

Until 4K content is pervasive, the showroom will be a battleground that the TV makers will compete in, while at the mercy of ISPs and OTT vendors when it comes to providing content to justify purchasing a 4K unit over a Full HD model with a nicer picture – thanks to HDR, quantum dots and full array LED backlighting. Those technologies can dramatically improve the image on the screen in ways that expanding the resolution can’t match – unless the buyer in question is looking at super-large models that encounter pixilation on 1080p images.

Leichtman also found that 11% of all US TVs were now connected smart TVs, which is largely down to the fact that most TVs sold are smart by default, rather than the connectivity providing a compelling feature – as most US viewers still use a dongle, net top, set top or console to connect a TV. We can’t help but think there should be much more of a market for dumb TVs that much more resemble computer monitors – devoid of an OS but full of inputs.