Insight Media - the leading source for information on the microdisplay industry, and DisplaySearch - the worldwide leader in flat panel display (FPD) market research consulting are proud to announce that the second annual HDTV Forum sold out last week in Los Angeles at the Westin Century Plaza. The three-day event hosted 338 attendees from 12 different countries and featured 11 corporate sponsors, 14 exhibitors, 10 media sponsors, two audio/visual sponsors and 15 media organizations. Attendees, speakers and participating companies represented a diverse group from across the TV food chain, including representatives from TV and cable networks, content creators, government agencies, satellite and cable providers, retailers, distributors, TV brands, TV OEMs, panel/tube/engine manufacturers and IC manufacturers. If there was a theme it was that:

• HDTV is quickly moving into the homes of a growing number of consumers
• Those that have HDTV can't get enough content and are hungry for more
• Improvements in HDTV performance and transmission quality are in demand
• Flat panel TVs, including microdisplay RPTVs, are expected to benefit the most from HDTV adoption
• Retailers, networks, cable and satellite providers and TV brands need to work together to educate the consumer, simplify the message, and make it easier to buy an HDTV and subscribe to HDTV service.

HDTV Forum 2004 was highly interactive with the audience asked 70 questions covering a wide range of HDTV and TV related topics. Through the use of wireless keypads and audience polling software, the answers appeared on the screen within 15 seconds. Topics ranged from premiums people are willing to pay for thinner form factors, flat panel TVs and 1080p TVs, to recommendations for accelerating HDTV adoption, problems with the current HDTV retail experience, etc.

Some of the highlights and observations from the 3-day conference and exhibit were:

Sports is the 'killer app' for HDTV. Day 1's keynote address, Bryan Burns Vice President, Strategic Business Planning and Development of ESPN HD described the growing prevalence of HDTV as a, "Tsunami that will hit the beach in 2010." He sees sporting events as the key driver for the demand of HDTV. ESPN HD will produce 6000 hours of HD programming in 2004, while other broadcasters in the following panel session also expressed their commitment to the HDTV format. HDTV production remains a "loss leader" for many, however and advertisements are still not in HD.

1080p resolution sets will begin to grow rapidly from 2005. Both keynotes, ESPN HD's Bryan Burns and HD Net's Mark Cuban, touted the advantages of 1080p. In one audience survey, attendees said that by 2006, sales of 720p RPTV sets will equal those of 1080p sets. In another survey, more than 80% of attendees indicated they would buy 1080p LCD and microdisplay RPTVs over lower priced 720p LCD, PDP and microdisplay RPTVs. In another session, it was revealed that 720p content will look better on a 1080p than a 720p set. Some view this as potentially confusing issue for consumers as there will then be three "standards" for HD (720p, 1080i and 1080p) on the market. Others viewed this more pragmatically as an opportunity to offer 1080p as the crème de la crème of HD consumer options much along the lines of the traditional "good, better, best, model". However, the broadcast industry still has many challenges to capture and transmit 1080p content.

HDTV content delivery should break the mold. Day 2 keynote Mark Cuban, Co-Founder and Chairman of HDNet, promoted his company's strategy for HDTV content as "break the mold, not stick to it" by delivering a higher quality viewing experience through his push towards the 1080p format and removable media which features less compression than broadcast, cable or satellite. He asked TV manufacturers to constantly strive to provide the finest quality viewing experience to the consumer, the same goal HDNet holds. Cuban also goaded attendees to "Ignore Hollywood" when it comes to content protection. In fact, he encouraged anyone to record his HDNet programming - "just don't sell it." Cuban plans to offer simultaneous distribution of HDNet-funded movies in theaters, on DVD and other systems because, "I don't want someone telling me when I have to watch a movie." Cuban also challenged the TV industry to "make next generation DVDs unnecessary" by developing removable media which features less compression and higher quality and can hold libraries of content which simply plugs into a TV.

Infrastructure and legislative issues remain barriers to faster HDTV adoption. Many issues involving global and regional US HDTV infrastructure issues were presented, which have been one of the bottlenecks to more rapid adoption. Dr. Jeffrey Hart of Indiana University, who recently authored a book on the politics of DTV called Technology, TV and Competition, Adam Watson Brown of the European Commission and Yuzuru Haga, President and Executive Director of the Japan Association for the Promotion of Digital Broadcasting discussed the progress of HDTV worldwide and key challenges. Hart indicated that "Legislators aren't technically savvy, and they're being lobbied by the large money interests who aren't necessarily looking at the public's best interests." In an audience poll, 76% of attendees indicated the 85% loophole should be closed and a mandatory deadline should be set for ending analog broadcasting. A majority of the audience also voted for the formation of a global HDTV association to promote common HDTV standards in order to promote HDTV adoption worldwide. Industry standards could help ensure interoperability amongst a growing number of devices. The audience also thought the United States government should focus its efforts on accelerating HDTV rather than DTV adoption, like Japan, and on helping to overcome the bandwidth issues which limit the number of HDTV channels and HDTV quality.

Confusion amidst HDTV consumers. Audience members were polled to reveal that most want ATSC tuners in their HDTVs, but when asked which delivery system offered the best overall quality of service, there was no clear winner with 44% favoring satellite, 34% favoring cable and 16% preferring broadcast delivery. ABC's Randall Hoffner responded with "Hello its Free" and "Hello its Wireless" referring to over-the-air transmission, but acknowledged the industry needs to explain these benefits better to consumers and retailers.

TV vs. PC? In the TV vs. PC "dilemma", Scott Ramirez of Toshiba asserted consumers don't want to "re-boot" their TV, run Excel or PowerPoint or "surf the net as a group." But consumers will accept the advancements brought on by the PC/digital revolution including some form of hard drive storage, wireless connectivity and download capabilities.

Average TV prices will first climb then drop. As the revenue share of HDTVs quickly climbs to over 50% of TV sales, the average TV selling price will actually climb from $450 to $623 between 2004 and 2008 according to DisplaySearch. Blended prices are expected to peak in 2007. This trend will be driven by a shift to new TV technologies, rapidly falling prices due to excessive investments by LCD and PDP manufacturers, sharply improved picture quality, and rapid growth of HD content and programming. DisplaySearch provided shipment, pricing and revenue forecasts by technology, size and region. Flat panel TVs are expected to account for a 36% unit share and 72% revenue share in 2008 as prices fall. The 40"-49" category is expected to enjoy the fastest growth as LCDs, PDPs, and microdisplay RPTVs all price aggressively to lead this segment. In 2008, DisplaySearch expects CRTs to lead at 10"-32", LCD TVs to lead the 33" - 39" category, PDPs to lead the 40"-49" category and RPTVs to lead to 50"+ market. By region, LCD TVs are projected to lead in Japan and North America with CRTs leading in Europe, China and ROW. China is projected to enjoy the fastest growth.

Consumers need HDTV experts. On one hand, HDTV technology is becoming much more affordable and consumer choice is expanding quickly. Mass merchants and more cost efficient resellers will benefit from this trend. On the other hand, the increasing choices in both hardware and services required to take advantage of the new displays will also offer opportunities to those resellers that can simplify and ensure a satisfying experience for those customers willing to invest in a higher degree of personal service and attention. Other internet/direct and brick and mortar retailers are poised to become the consumer's expert. High return rates on DTVs at club warehouses underscores this need.

The LCD may be the future of HDTV. LCD TVs can easily achieve 1080p resolution across a wide range of size categories, offers superior brightness and contrast, and there will be enough LCD capacity in place in 2008 to meet non-TV market demand as well as 80% of the demand of the entire TV market. As a result, LCD prices will fall aggressively over the next few years as LCD suppliers try to keep their multi-billion dollar fabs operating at high utilization levels. On the other hand, this holiday season, PDPs and 1080i CRTs will be more affordable than ever. With some speakers forecasting pricing of 42" ED PDP TVs as low as $1,599 for the holidays, and with 42" 1080i rear projection CRT HDTVs already available today for below $900, HDTV can be available for the masses by end of year!

Are RPTVs going to be the HDTV wild card? Mitsubishi Electric VP Frank DeMartin noted that in 2005 more than 50% of RPTVs sold will be microdisplay-based and that in displays of over 50 inches, microdisplays will be a clear winner over plasma. Bill Burnett, CEO of D2M thinks that the first microdisplay technology that gets to a 50-inch HDTV for a street price of $999 will win - and the thinks LCOS has the best chance.

Projection supply chain shortage to prevent future sales. Insight Media's Chris Chinnock explained that lamp production is falling well short of the expected demand, based upon a new model the company has developed. Unless lamp makers step up investment in capacity, projection system makers may not be able to sell all the systems they might be able to. An audience survey shows most think the projection supply chain is immature today.

TV makers need to move beyond existing strategies. Toshiba's Tim Kiser said that TV system makers need to, "Think outside the box to break the traditional CE mindset that takes a year or more to introduce new features and models."

TV technologies and the consumer's use of TVs are evolving very quickly. Pricing is falling quickly within technologies and new technologies will be quickly enabling wider use of TVs beyond simple program and movie viewing. IT companies such as Dell will leverage their customer franchise and increasing standardization of key component subsystems to drive outstanding value for consumers. On the higher end, custom installers will continue to grow their businesses by offering a one stop solution for the purchase, installation and installation of easy to use home theater systems.

TV branding will grow more competitive. As TV technology is adopted at a faster pace than ever by consumers, brands need to re-prove their value in each emerging technology with performance, stunning industrial design and competitive prices.

Widescreen sales will grow in CRTs. While total CRT sales will decline on a worldwide basis, the CRT business will remain strong in China and other emerging economic regions where average household income will remain a barrier to flat panel sales. Widescreen CRT TV sales will increase to 74% of shipments 30" and larger by 2008. The price/value of widescreen HD tube TVs will continue to be a visible segment in advertising and retail stores, at least for the short-term future. DisplaySearch expects wide aspect ratio shipments to account for 37% of worldwide TV shipments in 2008.

The flatter the better. New reduced-depth CRT TVs such as LG.Philips Displays' Superslim and Samsung SDI's Vixslim technology will emerge within a few months as a very compelling alternative to flat panel displays in the 28-32" HD widescreen size range. At prices as low as $599 with depths as shallow as 17", these TVs will challenge the depth gap, fit on many slim profile AV stands, and have the advantage of long-term consumer trust and experience.

Display electronics to play a critical role in HDTV adoption. Dr. Nikhil Balram, CTO at National Semiconductor challenged the electronics community to produce a "Digital TV sub-system to fit in my shirt pocket" based on very high mixed-signal integration, software and packaging innovations. Atul Batra of Mitsubishi also threw down the gauntlet for a single HDTV chip solution, but panel members agreed that this kind HDTV chip solution would be more practical for mainstream and low-end sets than for full-featured products. Brian Alger of Pacific Growth Equities help put things in perspective by bringing the group back to the reality of sustainable growth and profitability in the HDTV market. He emphasized that delivering electronics for HD display is only one of many services providing opportunity in the DTV revolution and that vendors just focusing on MPEG delivery were going to lose out. Many people believe display electronics suppliers are best positioned to benefit from HDTV adoption as they benefit from increased adoption in all progressively scanned technologies. Dr. Balram also pointed out that 720p content should look better on 1080p than 720p sets.

DVD-HD: new category or feature? GK Parish-Philip of DivXNetworks weighed in on the next generation DVD debate to ask if it was a new category or a feature. Categories require infrastructure change and standards, whereas features are simply upgrades that rely on existing platforms. Richard Doherty of Panasonic explained the benefits of Blu-Ray, and indicated they will adopt advanced video codecs with an announcement expected in the near term. However, even with MPEG-2, 1080p movies can fit on a 2-layer Blu-Ray DVD.

Digital content mobility made easier. As consumers increasingly seek ubiquitous access to their digital content throughout their home, they already have some choices for moving video, audio, images and other content via Ethernet or WiFi though such devices as Roku's Soundbridge and Sharp's wireless Aquos TV.

A robust 2004 holiday season for HDTV. As presenter after presenter offered their company's outlook on future hardware technology roadmaps, it seems quite clear that HD technology will always continually improve each year, but is clearly no longer a limiting bottleneck to adoption. With presentations from ABC, Discovery HD Theater, ESPN HD, HDNET and many more, what is quite clear is that more and more content is becoming available daily. And while future technologies offer even more features at more aggressive prices, the currently available, affordable technologies, coupled with the growing content, can make the 2004 holiday season a robust one for the HDTV industry.