A Response To A Reporter: Dale Cripps Answers Fundamental Questions About HDTV's Future

by Dale Cripps
Friday, October 9, 1998

I received an Email request from a newspaper reporter the other day containing a few fundamental questions regarding HDTV. I took a moment and provided the response below, and include it here for your evaluation and comments.

Dale Cripps
October 9, 1998

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I'm the business editor of the News & Observer in Raleigh, NC. They are starting to roll out HDTV here. WRAL-TV is already broadcasting in HDTV. I'm not sure if this is the real deal, or if it's the Beta of the future. The World Wide Web, with the right bandwidth, could broadcast TV. Why do I need to buy a 4,000 TV set. Also, how fast do you see the cost of the sets coming down?

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Hello,

I hope I can offer some answers or at least thoughts regarding your questions.

First: Is this the real deal?

It is today. Keep in mind that technology is advancing so rapidly that products barely hit the street before they are overcome by still newer, better, and usually unforeseen technical improvements. But if a product moves quickly into the marketplace, the technology becomes "stable" enough from broad usage that a period of apparent market grace ensues. A resistance builds in this way to the assault by competitive ideas and provides an extended period of tranquility for even clearly outmoded technologies. We see that condition exemplified today with the analog NTSC installed base and the difficult time digital has in displacing it. But in time new benefits do add-up which force a new revolution furiously fueled by escalating demand.

If the product gets off to a slow start, an instability allows entrance of new ideas to peck away at the marketplace, causing it to flounder until a major breakthrough comes to define a new course. Stability allows for growth of demand and offers immunity to obsolecence from any incremental technical changes.

So, the long answer to your question is that the WRAL-TV's roll out is the real deal NOW. If the public doesn't take to it quickly inventors of newer "real deals" will rush into the marketplace with intent to overthrow the old "real deal." That is happening now, in fact. Since knowledge is increasing at a faster pace than ever, the term "paradigm shift" takes longer to say than occur. I would suspect that the public will demonstrate some wisdom and wait to see how "real" the current "deal" is. If today's standard (ATSC) stabilizes through either industry-wide cooperation/agreement, or aggressive consumer buying, then prices will tumble as rapidly as our collective knowledge of advanced manufacturing and distribution methods grows. It was only 20 years ago that this nation said the manufacturing of the VCR was impossible. "No one could hold such tight tolerances on the machined parts and assemblies needed for the recording and playback mechanism at any reasonable price," said all but the Japanese. Today, you can buy an entire VCR for what it once cost to make just one of the needed machined parts. So, will prices for HDTV come down? Answer: yes. Will they come down fast enough to cause enough widespread market penetration to set up a dam against new and unforeseen technical developments flowing down the pipeline? I certainly don't know, nor can anyone answer that question accurately. My guess is that the broadcasters will use all of their public relations power to instill in the consumer an "unwavering confidence" in this particular standard (ATSC). But that is not to say that someone of Bill Gates' prominence doesn't have the power to shatter that "unwavering confidence" and sell their own brand of newer technology to fit the "solution." I personally think we are in for a rough ride and some heavy industry dog fights.

When you talk about the World-Wide-Web delivering TV, I think you are suggesting that ANYTHING that is alternative to broadcast distribution may impact the ATSC "real deal." Broadcasting is just one of many delivery mechanism suitable for HDTV signal distribution. Satellite, cable, fiber, coax, pre-recorded media, microwave can carry the images and sound in any number of possible standards (or one open standard). Broadcasting has certain economic advantages in delivering televised images (bandwidth) since infrastructure cost is limited to a single transmitter. No one has to dig up streets and lay new cables. As soon as that economic benefit becomes out-distanced by another method, the broadcaster must chose to be in the new distribution business or the "channel-program" business, or go out of business. They need to brand and sell their channel or program supply to whatever system will carry it to whatever places that system serves. Broadcasting is typically a localized medium and works quite efficiently as long as their is a large receiver base enabled with a complimentary decoder of the broadcast standard. Without that receiver base, broadcasting is dead in the water. The move by broadcasters today to HDTV is motivated by the vision that alternative methods are beating down their unique local standing and that quality will draw fresh attention and offer them a lasting distinction from the competitors. They clearly understand that their would-be HDTV competitors are strangled today by inadequate bandwidth. But that bandwidth shortage in all mediums is a short term condition, as we will be reading about in days to come. So, being first in something is counted upon as a salvation strategy by the broadcast industry.

It was also decided by all of the set makers throughout the world that 'broadcasting' would be the pioneering service for HDTV since the fifth estaters were the standard bearer for so much new technology in the past. People would trust broadcasting, it was thought, and believe that this particular breed of HDTV was indeed the "real deal." Broadcasting could also cover a large local area faster than any other method. For these reasons, though mostly for consumer confidence-building, the broadcast industry was chosen to pioneer HDTV. Technically, the method of satellite delivery makes much more market sense, but the satellite or cable industry does not have a history of establishing any consistent consumer electronic standards. Indeed, all standards set by the satellite industry—and many within cable—are proprietary. .

The computer industry introduced a serious stumbling block just as the completed and tested ATSC broadcast standard was being sent to the FCC for approval. Computer people did not want certain formats included in the FCC standard and cause the government to mandate their nemisis into America's future. In accommodation to computer's belated petitioning, the FCC chose the ATSC standard but left it free of any particular transmission formats—a decision the market would theoretically take care of via demand, but which, in my view, can only produce marketplace confusion. As a result, broadcasting has likely lost their once-powerful consumer confidence-building potential, leaving that job to a new and yet-to-be recognized leader (who understands that simplicity enables a buying decision in the consumer and that complexity dulls and destroys the consumer's ability to make an informed decision, especially about an expensive appliance). The one who best realizes this unalterable fact will hold the banner of simplicity high above those who are breeding confusion with their promotion of complexity. Broadcasters are even advertising today their respective format differences rather than closing ranks upon one clear-cut choice. Not even the major networks have chosen the same format for HDTV. This appalling fact can only result in paralyzing confusion within the informed consumer. And the winner is...the simplest to understand with no compromise in quality.

There has always been a large question in my mind as to whether broadcasters were the best choice to pioneer HDTV. HDTV must be expensive at first— a fact which unalterably limits set penitratioin rates for years to come. Broadcasting attracts a great deal of attention due to its historic role in society. In this day of instant expectations and gratifications any appearance of failure due to the rate of market diffusion will be prematurely reported upon to compound the problem.

The best of all pioneers for HDTV would have been Hollywood. Their high-profile programming could have been distributed network-style via direct broadcast satellite to an exclusive and appreciative audience. That combination would have produced the most powerful formula imaginable for separating a consumer from his/her entertainment allowance. A consciously limited audience (thus introducing the idea of exclusivity and high subscription prices) enabled by encryption to receive only first run motion pictures on HDTV sets (on a global distribution basis) is the superior pioneering model equal to the enormous task of uprooting the old standards—at least in my book. That model would do far more to establish a positive reputation for the new medium than will Jay Leno viewed on unaffordable sets merchandised in the middle of a darkening recession to the general public. The CBS effort with the NFL is, however, and excellent choice or program attraction married with the technology. So, I cannot say that broadcasting is not doing something right here. Radio was not economically viable until a group of investors were invited to hear a radio demonstration in the ball-room of the Waldorf Astoria in NYC. The program was boxing. That moved serious money into the new medium, and the NFL may do the same. The big question in my mind is whether the highest quality HDTV format will prove essential to seeing their score?

As to your last question: You don't need to buy a $4000 TV set unless you want to upgrade the quality of your lifestyle. Since many people do have that ambition, HDTV is a fulfillment of a personal objective more so than a necessity. If television is a necessity, then that category is fulfilled entirely by the current standard, and will be for a long, long time to come. We have to remember that THE only thing HDTV is about is QUALITY. That is what is to be sold unless you chose to venture into the unkown and try to sell something like interactivity or other digital options. If quality is not part of one's quest, they need it not. Theoretically there comes a time when the economics will force old standards off-the-air. At that time those who have made no provision for digital will see an increasing loss of programs available to them until the day there are none. But this is years off and I am quite certain by that time the internet will be selling programs of many differing grades at many different price points. HDTV will never be a necessity until a Mercedes is as well.

Set prices: Japan introduced HDTV to its public on November 25, 1991 with a 36" receiver costing $38,000. The introduction of a 56" inch set today in this nation is $7000. The cost is in the display, not so much in the electronics (though there will be some high rate of recovery for engineer expense embedded in early sales). Once the development costs are recovered, the electronics will be measured in the tens of dollars, not hundreds of them. The large, and high-quality display is more costly to manufacturer since it is being asked to deliver upwards of 2 million pixels accurately and brightly. There are always new methods for manufacturing being created, so we can presume some economies (on the heals of the elimination of early development costs) on any horizon. Certainly, quantity will do much to inspire more advanced manufacturing R & D than has been done to-date. Breakthrough manufacturing technologies are clearly foreseeable in the display category. Even today there are systems, like micromirror technology from Texas Instrument for projectors, or the flat panel plasma for wall screens from Fujitsu becoming cheaper to produce and improved quality.

There may be many technical changes, as suggested in my paragraphs above, to the signal and the electronics. But the image of 2 million pixels will not likely change to say 4 million. At 2 million pixels the human eye, when positioned at 3 times the height of the picture, cannot resolve any more resolution than the two million pixels deliver. You could put up 20 million pixels and no one at this prescribed viewing distance will be able to tell you which was the superior in a comparison test as long as there was equal brightness . So, that 2 million pixel target is what will be focused on within the world display business. I think we will have wondrous results much like the overcoming of the tight tolerances in the VCR example given above. So, with each cost/price breakthrough the sets will sell like a new stack of hot cakes. Anyone who has seen HDTV wants it. All hesitation and critical commentary about HDTV to date has been over price. If HDTV were free, there would be such a stampede to the stores that history books would find it impossible to describe. But that stampede is moderated dramatically by price. As the price barriers dwindle the stampede will escalate. HDTV is one of the most sought-after new appliances anyone of us will likely see in our lifetimes. The internet, and ALL other information age services, will find their destination in the HDTV set. HDTV IS the image of and for the 21st century, and far beyond. That makes HDTV one of the truly great new growth segments on the horizon and one that is able to turn the tide on this deadly global economic crises we are struggling through. It is said by our administration and the IMF that the global economic crises can be solved only through real growth, which comes only through REAL demand. With a right pricing vision HDTV will enjoy vast new growing demand globally for itself and its accessories for years and years to come.

At least that is the way I see it today.

Dale Cripps
HDTV Newsletter
October 8, 1998