Kagan: HDTV Sales To Rebound In Late '09

In another sign that the economy is showing at least some
signs of improvement, a new SNL Kagan study predicts that improved HDTV
sales of in the second half of 2009 will boost overall unit sales to 29.0

That's a healthy uptick from the 26.2 million HD sets soldin 2008.

"People who have put off these kinds of purchases for the
last year and a half will hopefully be looking at some of these new sets during
the holiday shopping season," said SNL Kagan media and communications analyst
Justin Nielsen.

Besides improved economic conditions, the transition to
digital broadcasting and growing consumer interest in purchasing additional
sets for bedrooms and other parts of the home were factors in the improved
sales climate, he said.

The overall HDTV penetration
rate will increase to about 82.3 million homes, or 71% of U.S. TV households, by
year-end, up from only 16% in 2005. That will put more pressure on
broadcasters, programmers and multichannel providers to make more HD content

"Looking past 2012, we project that almost all TV households
will have at least one HDTV," Nielsen said. "With
the proliferation of HD sets in the household, there will be more demand for HD
content and that will open up new areas for programmers and multichannel

Falling prices -- sets have dropped from around $1,100 to
the $700 to $800 range -- and the popularity of midsized budget displays have
hurt overall sales and profits, though. HDTV
retrial revenues will drop to $25.5 million in 2009, from $28.4 million in 2008,
and revenues are expected to flatten to roughly $24 million in 2010-11.

The growing penetration of high-definition sets and increasing
demand for additional HDTV in other parts of
the house is a mixed blessing for operators. For those with strong high-definition
lineups, it will provide opportunities to sell more video services to HD-equipped
homes. But it will also put additional pressure on bandwidth, particularly as consumers
want to watch HD content on more than one set in each home.

"It could pose some limitations on their networks,
especially if they are shooting an analog, digital and an HD stream as well as
a data packet as well," Nielsen said.

Newer HDTVs are increasingly offering Internet connectivity,
higher-resolution screens, interactive and 3-D features that will also  affectthe multichannel business over the next
few years.

Nielsen added that more sets with Internet widgets and
interactive features are set to hit the market this year. Those sets could
achieve significant penetration in the future, he said.

"They provide a definite opportunity for programmers to
offer another layer of interactivity with consumers," Nielsen said.

HDTVs that come with easy-to-set-up Internet connections could
also make it easier for MSOs to provide additional HD content on demand via the
very high-speed DOCSIS 3.0 connections that Comcast, Time Warner Cable, and
other cable providers have been deploying.

The interactive features on those sets could also be
used to deliver targeted advertising, which would generate revenue to cover the
cost of upgrading networks to handle more HD content and interactive features,
Nielsen said.