The HD Revolution that fizzled

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In my attempts for financial and business education, I have been trying to recognize trends, coming and going, like an Industry Captain on his boat overlooking these waves and ripples. Since most things in business tend to be cyclical, it is highly profitable to place your business IN FRONT of a trend and let that wave help propel you. I have heard business executives care so much about trends that some associate with high school students because they know that is where the next trends begin: in the very young.

Everyone has told me that the trend of HD television is the entertainment wave of the future. “Believe, Mr. Pook!” they said. “Believe! For the HD revolution is upon us! Estimates show that most households will have a HD TV in the next few years.” Skepticism filled me. First of all, television viewing has been falling like a rock in recent years. Advertising money is decreasing on television but increasing on the Internet. HD TV content is only around 6% of all broadcasts now which still puts the number low. I saw no desire among the mass consumer to rush out and buy a HD TV. I still have no desire to buy such a TV. The only people I saw enthusiastic were those who desired the ultimate home theater and gadgeteers. I believe the next huge tidal wave (tsunami size) will be the Internet being used for entertainment (rather than just information).

Content streamed from the Internet will be big. …But HD television? Most people don’t even see a difference in the picture quality. But what do I know? I am just a shmuck from the boonies. I am not a ‘learned’ expert.

Apparently, the huge wave of HD TVs penetrating most homes is ending up to be only a ripple. These TV builders have overestimated the demand and are stuck with surpluses. This isn’t surprising to me since if TV viewership is falling, wouldn’t the demand for new televisions?

Interestingly, I see more and more digital TVs occupying the ads more now than HD sets. This could indicate that people are jumping the digital revolution, not the HD revolution. HD is still an unstable format and still not defined.

What is interesting is that two video game console companies have hitched their wagon to the ‘HD Revolution:’ Microsoft and Sony. What is unfortunate for Sony is that they are literally betting their company on Blu-Ray and the Cell Chip for the PS3. I think Bill Gates was correct in his prediction that both Blu-Ray and HD-DVD will lose and digital viewership from the Internet (or other means) will be the format to replace DVDs. Hopefully, Sony has a contingency plan if their current plans go awry.

It looks like their contingency plan is Da Vinci Code II and Da Vinci Code III. Ugh.

This doesn’t mean that High Definition won’t eventually be in all televisions. But it does mean that the HD adoption has been drastically over-estimated for the present. If most people are not going to rush out and buy a new HD TV, what makes these companies think they will rush to replace their DVD libraries with HD DVD or Blu-Ray?