2001 Pace Report Shows
Digital Television Trends
by Ken Freed.
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Gallup surveys in the UK and US reveal public demand for quality and choice in digital TV.
 

American viewers expect digital TV to provide better quality pictures and sound along with more choices in TV content. They also would prefer to shop from home on a TV rather than on a computer.

That's the state of the marketplace according to the 2001 Pace Report, a Gallup survey of U.S. adults expressing their views about digital cable television. Commissioned by Pace Micro Technology, the UK-based digital set-top manufacturer, the survey findings provide a taste of the American appetite for interactive TV.

Pace first commissioned the Gallup Organization to produce a Pace Report for the UK in 1997. The findings educated operators on the types of digital services to offer TV customers, says Pace, showing what would cause analog viewers to go digital. The UK and western Europe currently lead the world in interactive TV subscribers.

Gallup conducted U.S. surveys for the 2001 Pace Report last October and November through phone interviews with a national sampling of 1,000 adults. Gallup allows for survey sampling errors of 5 percent.

Comparing the U.S. and UK results unveils critical similarities and differences in the two markets.

 

US Findings

What were the key findings of the Pace Report for the USA?

The digital TV features most likely to appeal to consumers are topped at 27 percent for better quality sound and pictures, 24 percent for a greater choice of channels, and 22 percent for more choice in types of programming.

Regarding "T-commerce," like "e-commerce" on a computer but on a television screen, two-thirds told Gallup they would consider buying books, CDs, DVDs, vacations, and movie or theater tickets over their computer or television. Further, 41 percent actually have purchased goods or services through a television or a computer -- 25 percent using a PC, 10 percent using a TV, and 6 percent using both.

Here's a telling point: Slightly more than one in four, 27 percent, said they would prefer to shop at home using their television rather than using their computer.

As for types of T-commerce, 75 percent would be interested in pay-per-view movies and other forms of video on-demand, 56 percent would be interested in educational programming, 50 percent in live music events, and 50 percent in sports events. More women than men said they'd prefer using the television for home shopping.

Indicating the general audience preferences among the sample, 34 percent watch news and current affairs programs, 29 percent sports, 23 percent comedy, 23 percent movie channels, and 21 percent watch general entertainment channels.

Finalization and implementation of the U.S. OpenCable hardware and OCAP software standards are a chief cause for delays in deploying digital cable TV, Wallace says. Satellite and digital terrestrial deployments are advancing as rapidly as technology and public acceptance allows.

"Europe is a more cohesive, heterogeneous market based on DVB," says Wallace, "yet I see no reason for the U.S. to adopt DVB for the sake of having one unified global standard. If the U.S. is open and progressive, do we really need unity for unity's sake?"

 

UK Findings

Compare the U.S findings with key results from the UK survey.

About a quarter, 28 percent, said they receive digital television services -- more than double the 13 percent figure from the 2000 survey. One percent of UK households receive no television at all.

As their reason for adopting digital television, apart from the Crown switching off analog TV, 51 percent cited better quality sound and pictures, 43 percent cited more movie channels, and 40 percent cited a greater choice in types of programming.

About a quarter of the respondents, 23 percent, reported having actually used either a computer or digital television to buy goods or services, half of them buying holidays ahead of any merchandise.

Among this group, 77 percent have done transactions by computer, and 23 percent by TV, which includes Teletext.

While 37 percent said they'd prefer using a computer for home shopping, 32 percent said they'd prefer using a digital TV, and 22 per cent in the UK said they would use neither for their shopping.

A year ago, 23 percent reported accessing the Internet at home. A year later, the number has jumped to 42 percent. Of these, only 6 percent used a digital TV for Internet access. Internet access on a digital TV has been available in the UK for less than a year.

As for types of T-commerce, 71 percent told Gallup they were likely to request pay-per-view movies. Surprisingly, 57 percent said they were willing to pay for news and current affairs programming, more than those willing to pay for music or sports.

Suggesting cultural preferences, 43 percent watch news and current affairs, 42 percent movies, 36 percent sports, 36 percent general entertainment channels, and 33 percent watch music and arts.

 

Comparing US & UK

What can be deduced from the findings of the Pace Reports for the U.S. and UK?

Interpretations come from Andrew Wallace, senior VP for worldwide marketing at Pace Micro Technology. "The main trend for the UK is a willingness to buy digital television services that continues to grow."

Wallace spots two important UK market trends.

"The increase in the UK is being driven by high levels of competition for interactive TV services over cable, satellite, digital terrestrial, DSL, and even wireless," he said. "Because of aggressive marketing and improved interactive content, more people who do not have digital TV are now thinking seriously about getting it."

Second, he says, "Many more people want to do home shopping on the TV than the PC, and a reason is that 75 percent of the homes in the UK do not have Internet access. A computer is more complicated and expensive than a TV, so there's more openness to the TV."

American trends for digital TV are influenced by the fact 41 percent of all U.S. TV households now contain a computer, Wallace says, "but there's disproportionate popularity in both the U.S. and the UK for transactions driven by the simplicity and comfort zone of TV."

"In the States," he says, "there are promising signs of a maturing market as 'couch commerce' takes hold, but penetration percentages in the U.S. will continue to lag behind the UK for some years."

"Europeans have adopted interactive TV and T-commerce without getting into the infrastructure issues that we have in the U.S.," says Jim Stroud, interactive TV analyst at The Carmel Group. "That's why America will always be 18 to 24 months behind the UK and western Europe, at least for the foreseeable future."

"The 2001 Pace Report shows us what we already knew," he says, "that consumers want better quality sound and pictures, and that consumers value greater choice in channels and programming, even if they don't always take advantage of all their choices, like mostly watching just ten channels out of the hundreds available."

Missing Information

Stoud is intrigued by what's missing from the 2001 Pace Report. "I'd like to know how happy consumers are with the digital TV services they're now getting. I'd also like to see some pricepoints, whether products and services must be subsidized. Consumers want to get interactive services over the TV, but how much are they willing to pay for them?"

He adds, "In the UK, recent generations grew up interacting with the TV using Teletext. Here in the States, recent generations have grown up interacting with the computer. Since TV has been such a passive medium here, we can't tell exactly what to expect here from a mass launch of interactive TV services. If there's consumer confusion, will the customer service and technical support systems be in place to help U.S. consumers take full advantage of the rollouts?"

The UK is generally ahead of the U.S. in customer relations, he says. "In the U.S. we hear over and over about consumers being unhappy with the quality of customer care they get from cable companies. So, what will happen as cable launches new services that they don't yet have much experience in offering? We'll have to wait and see."
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