Retail After the DTV TransitionOctober 28, 2009 By Ben Arnold, Senior Research Analyst, CEA
On June 12, 2009, the nation underwent a monumental change years in the making as television broadcasts switched to an all-digital format. For households receiving over-the-air broadcasts, the transition allowed viewers to receive a higher quality picture and expanded channel line-up, among other benefits.
For all households, the switch to a smaller bandwidth digital signal will allow for improved public safety communications as well as more advanced high-speed wireless internet access. While most consumers were prepared for the transition, households with analog sets connected to an antenna were required to take action to ensure their televisions would continue to receive programming.
The transition clearly affected the way viewers receive programming going forward, but how did consumers respond? How did retailers and manufacturers benefit?
As a result of the marketing and educational efforts aimed at raising awareness, very few consumers were caught unaware or unprepared for the transition. According to CEA’s recent DTV Transition Impact study, nearly seven in ten (67 percent) of all households had some degree of familiarity with the transition and more than eight in ten (82 percent) affected households knew of the transition for a year or more. This level of familiarity translated into action with 35 percent taking some kind of purchase action (obtaining a coupon for a DTV converter box, purchasing a DTV converter box, purchasing a digital television, or purchasing an indoor or outdoor antenna) as a direct result of the switch.
While the low cost (and for some free) option of obtaining a government-issued coupon for a converter box was popular among almost a quarter of respondents needing to take action, a surprising number of consumers (23 percent) opted to subscribe to a cable, satellite, or fiber optic to the home provider as a way to receive programming and 14 percent said they purchased a digital television. In the midst of the nation’s worst economic recession, why are consumers taking on these added expenses?
Perhaps this is another effect of “cocooning”, where consumers concentrate their entertainment dollars in the living room instead of on travel and other leisure activities away from home. The popularity of subscribing to a paid programming service (ahead of obtaining a government issued coupon for a converter box or purchasing a converter box) speaks volumes to the place television - and television programming- holds in our daily lives.
The switch to digital provided benefits to retailers and manufacturers as well as consumers. When asked about their response to the transition in the 12 months leading up to the deadline, over 20 million households reported obtaining a government-issued coupon for a converter box, while 17 million said they actually purchased a box. An estimated ten million households purchased a digital TV in the past year as a result of the transition with eight million of these homes acquiring a high definition set.