For several years now, trend watchers and tech gurus have been assuring Americans that the digital age is upon them. This despite the fact that, according to a 2008 study by Parks Associates, 21 percent of Americans have never looked at a Web site or never sent or received an e-mail. In other words, one-fifth of the country’s population has avoided setting foot in the digital world. But come Feb. 17, most of those people will set foot in it — or, more accurately, be pulled, dragged or thrust into it — whether they like it or not.
At the stroke of midnight, all full-power TV stations in the United States will shut off their airwave broadcasting signals, bringing analog transmission to an end after 78 years. The 20 million households that still use antennas to pull in a signal will be staring at screens of nothing but confetti.
They will, that is, if they don’t do something to prevent it. The “digital transition,” as it’s come to be called, puts the onus on consumers to make sure that their TVs are ready to receive an all-digital signal. Since September 2007, the National Assn. of Broadcasters has spent in excess of $1 billion to tell consumers that they have to act. NAB has launched some 16 spots that alert Americans to the imminent transition and the need to purchase a converter box if they expect their old sets to keep working.
It’s a straightforward plan, but so far it seems to have generated just as much confusion as awareness. Observers now say that, while most Americans know that the change is coming, millions of them have no idea what to do about it.
According to Nielsen data, 6.8 percent of U.S. households were, as of last month, unprepared for the changeover.
Maybe that’s no wonder. Converter boxes, for example, can be purchased with the help of $40 coupons (up to two per household) that are free from the Federal Communications Commission. The easiest way to get the vouchers is to go online and visit www.dtv2009.gov, but the digitally illiterate populations most in need of the converters are also the least likely to have Web access. Nor is a consumer who’s still using rabbit-ear antennas likely to pop on over to www.DTVAnswers.com to check out the FAQs. This federally sponsored catch-22 has resulted in a number of YouTube parodies, one of which shows an elderly woman wrapped in wires, who asks: “How many w’s are there in the Web address?”
Another problem, according to Martin Franks, CBS evp of planning, policy and government relations, is the basic human tendency to put things off. “Judging by the amount of people filling out tax returns at 11 p.m. on April 14,” he says, “procrastination is part of the American psyche.”
This is why, during these final days of the “100-day countdown,” the networks, consumer electronics manufacturers and the FCC have joined forces to get everyone up to speed. A change this huge is bound to have plenty of winners and losers, but who’s who isn’t always obvious. Below, a rundown:
Winner: High-definition television manufacturers. As of Nov. 30, nearly a quarter (23.3 percent) of U.S. households owned a HDTV. Sales have accelerated quickly from the first time Nielsen tracked these TV sets in July 2007. At that point, only 10 percent of households had a high-def display. That number’s expected to surge, especially with the impending digital switch in the news. “An occurrence like this is an opportunity for consumers to rethink the TV that they have,” says Christine Amirian, marketing vp for Panasonic. Nearly 11 million high-def units were sold for the first 10 months of the year, per the NPD Group, up 37 percent compared to the year prior. Nate Kraft, senior marketing manager for Sony LCD TVs says that the sale should be not about fear of not being able to watch TV. Rather, “If you’re the guy with the rabbit-ears TV in the garage, want to watch football and need an excuse to buy a 32-inch LCD, I’m happy to sell you one.”
Loser: Landfills. As consumers upgrade, they will be looking to ditch their old sets, and few will be discarded properly. “There will be a disposal problem,” predicts Rob Enderle, principal at the Enderle Group, San Jose, Calif. TVs, he says, will be “dumped all over the place.”
Winner: Retailers. Consumer electronics retailers have a big chance to sell a high-ticket item in a recession. “It’s good for retailers to capitalize on the opportunity,” says Ross Rubin, director of industry analysis for the NPD Group, Port Washington, N.Y., who adds that even people who come in just for converter boxes could mean an opportunity for sales. TVs could even be somewhat recession-proof because they’re “like a member of the family,” says Amirian. As Americans back away from vacations and spend more time entertaining themselves at home, the TV becomes akin to a value purchase, especially as manufacturers radically reduce prices. A 42-inch display, once tagged at $4,000, can be had for $600. “It’s an additional reason for them to rethink and potentially upgrade their equipment at home,” says Amirian.
Loser: The networks, in the short term. February’s switchover chaos is likely to result in lost ratings. Anticipating those problems, Nielsen moved its February sweeps to March. Most stations have added public service announcements, crawls, snipes and news programming alerting consumers about what steps to take. The NAB has been spurring the FCC to add more call center personnel on Feb. 17. During a test in Wilmington, Del., on Sept. 8, the call center received 8,200 inquiries from people looking for help. “We’re encouraging the FCC to ratchet up resources for the hotline,” says Shermaze Ingram, rep for the NAB.
Winner: The networks, in the long term. The digital switch will mean crystal-clear programming, which will ultimately be good business for the content creators. Every station will have the ability to multicast four or more additional channels. “There are going to be problems,” CBS’ Franks says, “But whatever they are, I’m enormously grateful for not being stuck in analog.”
Loser: Marketers. Almost all ads are now shot digitally, but the higher picture quality comes at greater expense. “It’s a big issue in the ad community,” says Gary Bellis, Television Bureau of Advertising rep, who asks: “If people are watching a beautiful program and your not-so-beautiful ad pops up, will it encourage them to click away?” Cropping is another problem. In terms of what’s called “aspect ratio,” the average HD picture is more elongated (like a movie screen) than the standard TV’s. This means that a HD spot running on an old set either has to be trimmed on the sides or have letterbox bars at the top and bottom. Either way, advertisers will have to ensure that all the branding action happens in the center of the screen.
Winner: The government. According to the PR spin, the digital transition will improve TV viewing and help during crisis situations, since some channels are restricted to emergency messages. The reality is that Congress approved the big switch as part of the Deficit Reduction Act of 2005. That old analog signal isn’t disappearing; the government sold the 700-megahertz band for $19.6 billion to Verizon Wireless and AT&T, which will use the spectrum to bolster their networks.
Loser: Wireless customers. Initially, the government’s sale of a full spectrum of airwaves led many to hope that a new wireless provider would be born, hence lowering prices via the creation of competition. It never happened. Neither did a winning bid from Google (rumored to have been a contender.) T-Mobile and SprintNextel also walked away with nothing. Meanwhile, the public safety “D-block” — which will broadcast emergency messages — still has no owner. Experts say potential bidders were turned off by the FCC’s attaching (guess what?) regulations.
Winner: Cable, satellite, telecom providers. Because cable and satellite customers need not worry about converter boxes, companies like Comcast and DirectTV have spent a lot of energy promoting the fact that they offer a slew of HD-quality channels. “These companies are the natural winners,” says Enderle. “Their customers won’t be affected and the easiest way to come into compliance is to subscribe to one of those services.”
Loser: Millions of TV viewers come February. As of Dec. 15, more than 40 million coupons have been requested through the Department of Commerce’s Converter Box Coupon Program — but only 16 million have been redeemed. The National Telecommunications and Information Administration has spent $5 million since the fall prompting consumers to “Apply, buy and try.” But, according to Ingram, the average lag time between ordering the coupon and getting the box installed is six weeks — which means that, right about now, time’s up.
At press time, Congress was considering legislation that would extend the analog signal’s life by 30 days, during which time a looped message would tell consumers how to make the conversion. Yet even those who follow the directions may still find themselves without a picture. Because the TV signal may now have a different point of origin, viewers may have to rescan their TV set or converter box. The NAB is planning a new public service announcement alerting households to this fact. In addition to running traditional ads, the NAB struck an extensive deal with CBS Outernet to place ads in high-visibility public locations such as gas-pump islands and inside supermarkets.
Ultimately, however, Franks believes that even the rabbit-ear crowd will come through. “There will be a week or 10 days that are messy and then it will be OK,” he says. “One thing Washington frequently underestimates is how badly people want their TVs.”