Trends 

• Digital TV sales pace video industry growth.
• 109.6 million U.S. Home have TV sets.
• 15 million homes continue to receive TV over-the-air.
• DVD and new optical disc players finish off the VCR.

In the early weeks of 2006 President George W. Bush signed into law a budget reconciliation bill that included a hard date of February 17, 2009 for the end of analog broadcasting which will mark the country’s completed transition into the digital television age.

Establishment of “the date certain” for the return of analog TV spectrum means consumer electronics manufacturers have a fixed date to begin planning the next phase of television hardware and services, including models that will bring new levels of interactivity with multi-channel television service equipment. It will also enable CE makers to begin work on converter boxes that will be needed to support those consumers who continue to rely on over-the-air TV broadcast signals.

Now entering the seventh year of the DTV transition, market adoption of the new sets has surpassed the adoption rate of color TV, with DTV reaching a 15 percent (32.5 million DTV sets to-date) household penetration level in six years, compared with color TV which took ten years to reach five percent of homes. The accelerated activity can be attributed to the new advanced capabilities of the medium as well as to a number of government mandates and deadlines for broadcasters and consumer electronics manufacturers.

According to the Federal Communications Commission’s video competition report in 2005, the U.S. had 109.6 million TV households, 94.2 million of those subscribed to some form of multi-channel video service (typically cable TV or satellite TV). During the year, cable TV subscriptions dropped to 69 percent of homes, as direct broadcast satellite services rose to 28 percent, and all other multi-channel TV services dropped from 3.3 percent to 2.9 percent.

The report said 15 million households continue to rely exclusively on off-air reception – a factor that will become important in 2009, when analog signals go dark and terrestrial TV watchers are forced to add a multi-channel video service, replace their sets with new digital receivers or purchase a digital-to-analog converter box (potentially with government assistance).

Meanwhile, wholesale revenue from all video products sold in 2005 topped $23.2 billion. The CEA is forecasting that will rise to 11.6 percent to $25.2 billion in 2006, as digital products become even more entrenched.

The benefits to adopters of more advanced digital displays with high-definition resolution include crystal clear pictures, multi-channel surround sound and wide picture frames that resemble movie theater screens. Additionally, many viewers are taking advantage of an ability to personalize the viewing experience with new interactive peripheral products that give greater control over programming, and even tap into the Internet.

Meanwhile, other analog video categories – such as VCRs – continue to disappear through the immense popularity of DVD players, and in 2006, a new generation of high-definition optical disc players is scheduled to arrive on U.S. retail shelves.