Televisions

INDUSTRIAL CODES

NAICS: 33-4310 Audio and Video Equipment Manufacturing

SIC: 3651 Household Audio and Video Equipment

NAICS-Based Product Codes: 33-43102, 33-431020, 33-43102000, 33-43102001, 33-43102004, 33-43102007, and 33-43102011

PRODUCT OVERVIEW

A television receiver or set is a device that receives radio signals and reproduces these signals as visual images on a screen. These images are accompanied with audio signals. In the early twenty-first century, television receivers may vary from the smallest of cell phone screens to a ceiling-mounted projector capable of displaying a high-definition image more than a dozen feet wide.

Philo T. Farnsworth is credited with the invention of the first electronic television receiver. In 1927 Farnsworth patented the dissector tube, which is the basis for all television broadcasting. Farnsworth's device allowed for the transmission of a television image consisting of sixty lines. The young farmer and inventor is believed to have come up with the idea for the transmission of moving electronic images as a teenager while he plowed rows with a horse-drawn harrow on the family potato farm in Idaho. He realized that an electronic beam could be made to scan across a photo-active screen in similar rows. If the beam's intensity changed as it scanned across the rows an image could be created. After the first image had been created, a new image could be created to replace the first, then another, and another, until a series of changing images created the illusion of motion. Early televisions used a cathode-ray tube as the screen onto which the rows were projected. The rows themselves can be further broken down into the number of times the intensity of the beam varies.

A pixel is the basic composition of an image on a television and can be thought of as the potato in Farnsworth's rows. Individual pixels were switched on and off to create the first black-and-white televisions. Color televisions use the same principles but use signals of varying strength to pixels of different colors, such as red, green, and blue—to create a full color palette. Modern television sets use a wide variety of screen technologies, but the transmission principle remains the same: an image is built pixel-by-pixel, row-by-row on a screen, and is then replaced by a series of new images that create the illusion of motion.

In the United States, the very nature of the pixels and rows is undergoing a massive change as the longstanding analog transmission standards for standard television (STV) broadcasts are being replaced by digital television (DTV) standards for high-definition television (HDTV). The United States analog standard is also known as the National Television System Committee (NTSC) standard and has been in use in many other countries, including Canada, Mexico, and Japan.

Television transmission standards reflect:

• Number of rows (480, 720, or 1,080)
• Length of the rows and the number of pixels they can contain (4:3 or 16:9 aspect ratio)

• Order in which the rows are laid down (interlaced or progressive)
• Frequency at which the entire picture is renewed (image refresh rate)

480, 720, and 1080

The NTSC analog broadcast standard for STV television in the United States calls for approximately 480 rows of pixels stacked one atop the next. The exact standard calls for 486 visible rows of 525 rows that are broadcast, with the non-visible rows used for other information. Digital television signals can also be broadcast in the 480-row standard. The two main HDTV standards call for either 720 rows of pixels or 1,080 rows of pixels. The 720-row standard provides 50 percent more vertical rows per image than the 480-row standard, while the 1080-row standard provides 125 percent more vertical rows per image.

4:3 versus 16:9 Aspect Ratio

The NTSC analog broadcast standard for STV television in the United States calls for 640 pixels in each of its 480 rows. This level of definition is therefore often identified as 640 × 480. The resulting ratio is four to three (4:3), a screen is four units wide for every three units tall. The U.S. HDTV standard calls for a 16:9 ratio for its image transmissions. This means that an image that is 720 rows tall will be 1,280 pixels wide (1280 × 720) and an image that is 1,080 rows tall will be 1,920 pixels wide (1920 × 1080.) An image of 640 × 480 pixels contains 307,200 distinct pixels. An image of 1280 × 720 pixels contains 921,600 distinct pixels, an increase of 300 percent over the NTSC standard. An image of 1920 × 1080 contains 2,073,600 distinct pixels, an increase of 675 percent over the NTSC standard. The greatly increased number of pixels in HDTV creates a much sharper picture on the screen. These high-definition standards also push the very limits of the human eye. From more than ten feet away it is practically impossible for a person with 20/20 vision to distinguish the difference between a 720 display and a 1080 display on a 40-inch-diagonal 16:9 ratio screen.

Interlaced versus Progressive

The rows of pixels can be replaced in two different ways, by an interlaced scan or by a progressive scan. Interlacing the rows means that an image is refreshed in alternating rows. Every other row of an image is refreshed, then the alternate rows are refreshed in a second scan. An interlaced signal can take less bandwidth than a progressive scan signal, which allows it to carry more data per image. Because only half of the pixels are replaced at a time, the moving images of an interlaced scan can appear to have less clarity than a progressive scan with the same number of pixels. The NTSC 480-row standard uses interlaced scan, as does the new HDTV 1080-row standard. This interlaced signal is indicated with an i that follows the number of rows, so these standards are known as 480i and 1080i.

In a progressive scan each row is replaced in order. A progressive scan signal takes more bandwidth than an interlaced scan signal, but on television sets with the same number of pixels it creates a sharper looking picture than an interlaced scan image, especially when motion is involved. Computer monitors have long used a progressive scan. The 720-row standard for HDTV uses a progressive scan. This progressive signal is designated with a p that follows the number of rows, so this standard is known as 720p.

Progressive scan signals can also be used with a 480-row image or a 1080-row image. Some newer STV television sets use a 480p image. Video games generally transmit a 480p image to older televisions for crisper images and motion. Progressive scan DVD players improve the image from DVDs by transmitting a 480p image to older televisions. Some high-end HDTVs can receive a 1080p signal, however, the limits of broadcasting bandwidth mean that a 1080p signal is not generally used by over-the-air, cable, or satellite broadcasters. HDTV signals are broadcast with either a 720p signal that gives the illusion of a sharper moving picture with fewer pixels, or a 1080i signal that creates an image with more pixels.

Both the 720p and 1080i standards can create an excellent high-definition television picture, but manufacturers of high-end video equipment will always be willing to push the standards. In 2007 an increasing number of manufacturers began making high-end 1080p HDTV sets. Although broadcasters aren't expected to adopt the 1080p standard, as televisions evolve the 1080p standard is likely to be used for the display of high-end digital applications such as high-definition DVDs and computer games. And in January 2007 Westinghouse introduced a $50,000 2160p television at the Consumer Electronics Show (CES). The television was marketed for niche industrial applications, as its $50,000 price tag puts it well outside of the range of consumer pocketbooks, but the continuing evolution of television standards has shown that other manufacturers will likely follow the leader into every higher definition territory.

Image Refresh Rate

The rate at which each image is replaced, approximately 30 times per second, is the same for both the NTSC standard and the new U.S. HDTV standards. This rate was originally selected because it matched well with the 60 cycles per second (Hertz, abbreviated Hz) transmission standard for alternating current (AC) electricity in the United States. Matching the image refresh rate to the rate of the alternating current minimizes electrical interference with the television picture. In Europe, which has a 50 Hz AC standard, a 25-image-per-second standard was adopted for television.

This rate differs from the 24-image-per-second rate that is used for motion pictures in theaters. Although the celluloid image itself only changes 24 times per second, modern film projectors often replace this image 48- or 72-times per second by reilluminating the same image two or three times. This reduces the flickering effect created when an image is replaced. The 30-image-per-second refresh rate in the United States matches fairly well with the 24-image film standard, as five television images do the work of four film images. The 25:24 television-to-film refresh ratio in Europe sounds as if it should be a close match, but the 4 percent difference has made the smooth conversion of films for European television broadcast more challenging technically.

The Analog-to-Digital Conversion Schedule

The new U.S. digital HDTV broadcast standards were defined by The Telecommunications Act of 1996. Digital television broadcasts began in 1998, and the shutdown of analog broadcasting was originally scheduled for 2006. Delays in the spread and implementation of digital television broadcasting and digital television purchases by consumers have led the federal government to push out the scheduled shutdown of analog television broadcasting from 2006 to 2009. Widespread consumer adoption of digital and HD televisions in the middle of the first decade of the twenty-first century was expected to minimize the impact of the 2009 analog shutdown. During the changeover the Federal Communications Commission (FCC) was licensing two channels to television broadcasters, one for analog broadcasts and another separate channel for digital broadcasts. After analog broadcasting stops the analog television portion of the spectrum will be returned to the FCC's control and then licensed for other uses.

Analog television broadcasting in the United States is scheduled to end at midnight on February 19, 2009. The FCC is taking several steps to ensure as smooth a changeover as possible for consumers. After the transmission of analog broadcasting ends, the only way a television without a digital tuner will be able to receive a picture is if it receives the picture from some other source such as a set-top digital tuner, a cable box, a satellite box, or a DVD player. The analog shutdown has been delayed several times to ensure full preparation. The FCC required all televisions shipped within the United States to contain a digital tuner as of March 1, 2007. On May 25, 2007, the FCC required retailers to post a point-of-sale warning notice about any television that does not contain a digital tuner. The notice warns consumers that the set they are purchasing will be unable to receive broadcast transmissions after February 2009. To help U.S. households that still have analog televisions at the time of the change, the National Telecommunications and Information Administration (NTIA) is administering a coupon program to defray the purchase of set-top conversion boxes. Between January 1, 2008, and March 31, 2009, every U.S. household that requests such devices will be able to receive two coupons worth up to $40 towards the purchase of an analog-to-digital broadcast signal conversion box.

The Sets Themselves

Television sets come in five main varieties: cathode-ray tubes (CRT), plasma displays, liquid-crystal displays (LCD), rear-projection sets, and front-projection sets. In addition to these types of television sets, newer technologies such as organic light-emitting diodes (OLED) are still emerging with advantages and drawbacks of their own.

The cathode-ray tube (CRT) is the oldest type of television receiver. The CRT set contains a vacuum tube that has been covered with phosphors, which glow when struck by an electron beam. CRT sets have dominated the television market since the creation of the industry. They are generally inexpensive, and are also capable or producing sharp, bright pictures. The vacuum tube does, however, mean that the screen can not be too large. A large vacuum tube would require a bulky, heavy set that would not be attractive to consumers. Shoppers are becoming increasingly interested in plasma and LCD televisions because they are thin and light. Industry analysts expect CRT sets to continue to lose market share to these new television formats.

Plasma televisions use very small gas-filled cells, similar to miniature fluorescent lights, sandwiched between two panels of glass. When an electrical signal is sent to an individual plasma cell, the cell lights up and displays the appropriate color. The ability of plasma cells to refresh quickly gives plasma sets the ability to display smooth motion with vivid colors and dark blacks. Plasma televisions have become a leading choice for big-screen displays, though some problems from image burn-in have made them a less popular choice for computer gamers.

Liquid-crystal display (LCD) televisions also offer flat screens and have some similarities to plasma displays. In an LCD set, the two panels of glass sandwich tiny liquid-crystals. An electronic signal, sent to each crystal, tells the crystal whether it should permit light to pass through or not. Unlike the cells in a plasma television, the crystals themselves do not glow. Light is instead provided from a separate backlight source. The backlighting can cause some LCD displays to have trouble displaying dark images. LCD has been a leading computer monitor technology, but technical restrictions have made the construction of large-screen LCD televisions difficult and costly. In 2007 LCD technology has improved and overall costs have been reduced.

Projection televisions often use digital light processing (DLP) displays to create the projected image. Rear-projection televisions use a projector within the set box to display an image on a screen. Several different technologies can be used to create the projected image, but digital light processing displays lead the market in the latter half of the first decade of the twenty-first century. DLP displays use tiny hinged mirrors for each pixel. Rear-projection televisions usually offer the largest screen size for the price, but these television sets are bulkier than flat-screen TVs and have a more restricted field of view due to the limits created by the angle of the projection.

Front-projection televisions use a projector that is entirely separate from the screen. The projector is often hung from the ceiling and projects its image onto a screen attached to a wall. They offer the largest possible screen size, since the size of the screen is often only restricted by the size of the wall onto which the image is projected. The small size of the projector and the possibility of a retractable screen means that this technology offers the benefit of an unobtrusive installation. However, that installation can be difficult and expensive. As the projected image grows larger, the amount of light per square inch decreases, which means that these televisions do best in a dimly lit room. Front-projection televisions are very similar to computer projectors used for PowerPoint presentations or the digital theater projectors used in some cinemas.

MARKET

There were 268 million homes in the United States in 2004, or an average of 2.5 TV sets per home, according to the Census Bureau. This means that televisions were in 98.2 percent of all U.S. households in 2004. This deep penetration has been a long-standing feature of the television market. In 1960 87.3 percent of U.S. households contained a television. Two decades later a television was in 97.9 percent of all U.S. households.

The number of televisions per household in the United States continues to increase. In 1980 the average U.S. household contained 1.7 televisions. There were 2.0 sets per home in 1990, 2.4 sets per home in 2000, and 2.5 sets per home in 2004. The increasing number of televisions has also resulted in an increase in television viewing. The average U.S. resident watched 1,546 hours of television in 2004, an average of 4.2 hours per day. This figure was forecast to increase to 1,562 hours in 2009 as the average increases to 4.3 hours per day.

All of that television watching creates a large and steady demand for televisions. Consumers in the United States purchased 50.8 million televisions in 2005, based on a calculations of apparent consumption using data from the Annual Survey of Manufactures. Those televisions were valued at $16.6 billion at the time they left the factory. In 2002 U.S. consumers purchased 38.3 million televisions valued at $9.7 billion wholesale.

Much of the increase in television sales has been driven by the shift from analog CRT televisions to newer digital, high-definition, and flat-screen models. In 2004 CRT sets represented 75 percent of television set sales in North America. By 2005 CRT sets claimed only 64 percent of the market. By 2006 CRT sets had only a 46 percent market share of television sales in North American, according to a 2007 report by research company iSuppli. By 2009 CRT sets may no longer be produced, according to the Consumer Electronics Association.

As CRT sales fall, the market share held by LCD, plasma, and front-projection televisions continues to grow. From 2006 to 2007 global sales of LCD televisions were forecast to increase 56 percent to 69.7 million units and plasma television sales were forecast to increase 33 percent to a total of 12.8 million units, according to market research firm DisplaySearch. LCD television shipments increased by 90 percent from the first quarter of 2006 to the first quarter of 2007 while plasma television shipments increased by 41 percent over the same period. In 2006 Corning, a leading manufacturer of glass for flat-screen televisions, forecast the market share of LCD televisions to grow from 11 percent of unit sales in 2005 to 25 percent in 2007. These global trends are reflected in North America. Plasma television sales in North America rose 85 percent from the first quarter of 2005 to the first quarter of 2006, according to Display-Search. Unit sales of front-projection televisions increased from just 18,000 units in 2001 to 306,000 in 2005 and 452,000 in 2006, according to Quixel Research. In 2007 most forecasters expected the sales of LCD televisiones to see the fastest increasing share of the television market as prices for LCD units fall and screen sizes grow.

Rear-projection television sales have been strong in first half of the first decade of the twenty-first century as U.S. consumers have favored the large screen size and lower costs of rear-projection sets. But the market share of rear-projection sets is expected to fall in the second half of the decade as LCD and plasma television prices become more competitive with rear-projection prices. Global plasma television sales overtook rear-projection sales for the first time in the second quarter of 2005 as plasma market share in that period increased from 2.0 percent to 2.9 percent and rear-projection market share fell from 2.9 percent to 2.5 percent, according to DisplaySearch.

More than 21 million HDTVs were purchased in the United States in 2005, according to the report Economics of High-Definition Cable Networks, published in 2006 by Kagan Research. These growing numbers of HDTV sales mean that more than 30 percent of U.S. households had at least one HDTV in 2006. That study also projected total sales of HDTVs in the United States to reach nearly 180 million sets and more than 80 percent of U.S. households by 2010.

KEY PRODUCERS/MANUFACTURERS

The rapid shifts in television technologies have created a good deal of market share volatility in the first decade of the twenty-first century. As of the first quarter of 2007 Japanese manufacturer Samsung led the world in global television unit shipments with 11 percent of the 45.9 million units shipped in that quarter, according to a 2007 report by iSuppli. LG Electronics trailed closely with 10.7 percent of total global television shipments, followed by TCL Corp. with 8 percent; Philips with 7.4 percent, and Sony with 5.3 percent. Samsung's leading market position in 2007 was based on a lead position in the growing LCD market and a still-strong CRT business, especially in developing nations.

Samsung led all manufacturers in global LCD television shipments with 16.8 percent of the 15.2 million units shipped in the first quarter of 2007, according to iSuppli. Sony had a 13.7 percent share of the total. Philips saw its share of global LCD television shipments fall to 12.2 percent from 15.1 percent in the fourth quarter of 2006. Sharp held the fourth largest share of the market with 11.3 percent during the first quarter of 2007 market, while LG Electronics held down the fifth largest market share at 7.8 percent of unit shipments.

Matsushita Electric Industrial, the manufacturer of the Panasonic brand, led all plasma manufacturers in the second quarter of 2006 with 28.3 percent of 2.2 million units shipped during the quarter. Market share for all of its nearest competitors, including LG Electronics and Samsung, fell during the period. In early 2007 LG Electronics, the second largest plasma manufacturer, announced that its plasma division had lost $158 million and that it would not expand production beyond its existing 550,000 panel per month capacity.

The improvements in computers and digital technology that have affected all consumer electronics have also been a key factor in improving television technology for all types of televisions and tuners. Microchip manufacturers that target television manufacturers include larger companies such as Texas Instruments and smaller companies such as Zoran Corp. Large flat-screen televisions place a premium on computing power as tuners encode, decode, and translate a variety of digital signals into specific commands to individual pixels. Texas Instruments carved out a large niche of its own in the rear-projection television market with its digital-light processing (DLP) technology.

In addition to digital investments, television manufacturers have invested heavily in the emerging flat-screen technologies. In 2004 and 2005 Asian manufacturers invested $35 billion into flat-screen manufacturing improvements as they sought to build larger and cheaper LCD and plasma televisions. One of the key areas for improvement in flat-screen television has been the size of the glass panels used to manufacture televisions. In 2000 the largest glass LCD panels for manufacturing were only 27 inches by 35 inches, and the largest LCD television manufactured was just 22 inches across. At the start of 2005 joint venture LG Philips LCD Co. made glass panels that could each be used to create three 42-inch LCD televisions. In late 2005 LG Philips LCD Co. opened a glass panel factory in Paju, South Korea, that manufactured large 77-inch by 89-inch glass panels that could each be used to create eight 42-inch LCD televisions. These sorts of continued investments in manufacturing technology allowed manufacturers to continue to turn a profit on larger and cheaper televisions.

The high cost of investment in a modern television manufacturing facility has led to an increasing concentration of manufacturing among market leaders such as Samsung, LG Electronics, Philips, Sony, Matsushita and some Chinese and Taiwanese manufacturers. However, while manufacturing has become more concentrated, the number of brands available in the U.S. retail market has greatly expanded during the first decade of the twenty-first century. The number of LCD television brands available in the United States grew from 26 in 2002 to 102 in 2006, according to Pacific Media Associates. Many of these brands belong to companies that have no manufacturing facilities of their own, but instead sell and market televisions built for them by manufacturing subcontractors.

Two examples of companies with important presence in the market and no manufacturing capacity of their own are Westinghouse Digital and Vizio, Inc. Westinghouse Digital began in 2003 as a startup that licensed the well-established Westinghouse brand from Westinghouse Electric Corp. for use on televisions. Despite having only 120 employees, Westinghouse Digital climbed to fifth in the U.S. LCD television market by the start of 2007 with a market share of 7.7 percent of units and sales totaling $650 million. Vizio, Inc., which was started in 2004, closely trailed Westinghouse Digital with 7.0 percent of the LCD unit market share. Vizio, which had only 55 full-time employees as it entered 2007, didn't start by licensing an established brand, but it used a similar business model to build its business, which relies on selling televisions at a low cost because of its ultra-low overhead. Vizio also relies on its retail partners to provide the bulk of its marketing to customers.

MATERIALS & SUPPLY CHAIN LOGISTICS

Television manufacturing follows the same pattern as many other electronic devices, with both component manufacturing and final assembly concentrated in Pacific Rim countries such as Japan, China, Taiwan, Korea, and Malaysia, and some additional manufacturing for the North American market, concentrated in Mexico. Many of the electronic components in televisions, such as circuitry, wires, switches, microprocessors, and tuners, can be found in all sorts of electronic devices. However, television manufacturing demands special types and shapes of sophisticated glass to display a picture.

For most of the history of television, the physical limitations created by the vacuum in cathode-ray tubes limited television display sizes. Air pressure exerts a substantial force on a vacuum tube. This force is based on the tube's volume, which means that the force grows much more quickly than the display size of the screen as a CRT's diameter is increased. The strength and weight of the glass needed to keep a tube with a vacuum from collapsing meant that in the 1950s and 1960s television display screens more than twenty inches in diameter were rare and expensive. Improvements in glass strength and tube design made larger televisions possible and more affordable. By the early 2000s CRT television display screens with a screen diameter of more than forty inches were still rare and expensive.

The rapidly growing market for flat-panel televisions has created a boom for glass panel manufacturers. Flat-screen LCD and plasma technologies rely on special glass panels to transmit images. These glass panels sandwich light-emitting, gas-filled cells similar to miniature fluorescent lights in plasma televisions and tiny liquid-crystals that let through light from an independent light source for LCD televisions. Although producing these large and sophisticated flat glass panels is complicated and expensive, they are not subject to the physical limitations that restricts the size of CRT displays. The limitations in flat-screen television display size are based on manufacturing scale and economics. Television manufacturers have addressed these limits by investing heavily in new glass factories.

Many television manufacturers and glass suppliers expanded or built new facilities in the first decade of the 2000s to keep apace of the growing demand. The glass panel factory opened in Paju, Korea, by LG Philips LCD Co. in 2005, specializes in large 77-inch by 89-inch glass panels, each of which can be used to create eight 42-inch LCD televisions. Sharp Corp. spent more than $1 billion to create a new glass manufacturing plant that it opened in 2006 in Kameyama, Japan. The new Kameyama plant, which creates large glass panels for televisions in the 40- to 50-inch range, supplemented an existing plant that created glass for 30-inch diameter televisions. In 2007 leading glass panel manufacturer Corning Display Technologies announced expansion at its LCD glass substrate plants in Taichung, Taiwan, and Shizuoka, Japan, and planned to build a new LCD glass substrate finishing plant in Beijing, China.

Although the majority of television assembly still takes place on the Pacific Rim, manufacturer Syntax Brillian Corp. moved some of its manufacturing from Taiwan in October 2006 when it opened North America's first flat-screen television assembly plant in Ontario, California. The company expects the shipping volume of the component pieces of the televisions it will assemble in the United States to be only one-tenth the volume of the assembled televisions that it previously shipped from Taiwan already assembled. In addition to the transportation cost savings, the company expected the North American location to allow it to respond more quickly to new trends and developments in the rapidly evolving television market.

DISTRIBUTION CHANNEL

Televisions are distributed through a distribution channel consisting of three tiers, manufacturers, wholesalers or distributors, and retailers. In many cases, two of the functions of this channel are carried out by a single entity. In the case of Vizio, for example, the company that holds the brand name serves as both the manufacturer and the distributor. Vizio contracts with manufacturing subcontractors and manages the distribution of the televisions to the retail outlets.

Televisions are available through a number of retail outlet categories, the electronics specialty store chains (Best Buy, Circuit City, CompUSA), the general merchandise chains (JCPenney, Sears), and the mass merchandisers (Costco, Sam's Club, Target, and Wal-Mart). According to data published in Market Share Reporter 2007, the top electronics stores by sales in the United States in the middle of the first decade of the twenty-first century were Best Buy, Wal-Mart, Circuit City, Dell, and Target. Census Bureau data on the retail sector provides sales figures for radio, television, and other electronics stores. In 1997 these outlets sold $32 billion and by 2005 this figure had almost doubled, reaching $59 billion. These retail outlet sales include all electronic sales and not just the sales of televisions but they do provide an idea of the health of electronic product sales generally.

The Internet as an outlet for the sale of electronics is also a part of the distribution channel. The ranking of Dell as the fourth largest retailer of electronics, when Dell does not have brick-and-mortar stores brings up the online distribution channel. A small but important segment of television sales take place by online distribution via the Internet. While this channel plays a role with television sales it plays a far larger role in the sale of personal computers and computer peripherals.

KEY USERS

With nearly 99 percent household penetration in the United States, nearly everybody is a television user. In fact, a 1997 study by the American Federation for the Blind found that the 3 percent of Americans who are partially or fully visually impaired had their televisions on for just as many hours as fully sighted people.

Television viewing statistics from a 2005 survey presented in the U.S. Census Bureau's Statistical Abstract of the United States: 2007 show that television viewers tend to be older, middle class, and slightly less educated than non-viewers. More than ninety percent of the membership in all demographic groups reported watching television at least once during the week preceding the survey. Ninety-two percent of those eighteen to twenty-four years of age watched television in the previous week. This percentage increased to 97.3 percent for those aged 65 years or older. College graduates watched slightly less television than non-graduates. While 94.6 percent to 95.0 percent of those with less than a college degree watched television in the previous week, just 92.6 percent of college graduates watched television in the same period.

Television viewing is also a widely spread middle class phenomenon. Approximately 95 percent of Americans in income levels between $10,000 per year to $100,000 per year watched television in the preceding week. Viewership dipped slightly among those making less than $100,000 per year (92.4%) and for those making more than $100,000 per year (93.1%).

ADJACENT MARKETS

Markets which are adjacent to the television market include all the peripheral equipment used in home theaters. These include sound systems, Digital video recorders (DVRs), digital DVD players, and video game consoles. Because of their direct use with televisions, these products tend to see sales patterns move in parallel with those of televisions.

Cable and satellite television subscriptions are also an adjacent market. Both of these markets have been strong and growing in the United States during the early 2000s and are expected to see continued growth through at least 2009. According to the Census Bureau, average spending per person per year on cable and/or satellite television increased from $189 in 2000 to $255 in 2004, and was projected to reach $321 by the year 2009. These increases represent both increased prices for the service and increased numbers of subscribers.

Entertainment center furniture and equipment used to wall mount flat screen televisions are additional products whose markets are adjacent to televisions. Because the newer flat screen televisions require less distance from the wall but are often wider than the televisions they replace, the purchase of a new television frequently leads to the purchase of new furniture on which to set that television.

RESEARCH & DEVELOPMENT

Most of the research and development in televisions at the end of the first decade of the twenty-first century is focused on providing sharper, brighter images at ever less expensive prices. This goal is pursued both through improvements to existing technologies and the development of new technologies.

Early generations of plasma televisions developed image burn-in problems from persistent images on the screen such as video-game banners or framing needed around the picture to adjust to the different sized images coming in from the broadcaster, a problem that also affected CRT televisions to a lesser degree. Plasma television manufacturers have reduced this problem with improved materials, image-shifting adjustments, and screen savers. The early generations of LCD televisions often had difficulty displaying blacks on screen due to the constant backlighting that is filtered through the LCD crystals. Manufacturers have consistently improved the opacity of the crystals to produce darker blacks. LCD televisions also can be prone to flickering during fast motion sequences.

In 2007 some manufacturers began releasing televisions that increased the refresh rate of the LCD image from forty-eight or fifty frames per second to ninety-six or one hundred frames per second. Although the broadcast signal remains at twenty-four or twenty-five frames per second, the increased refresh rate creates smoother looking motion on the screen. The 2160p television unveiled by Westinghouse at the 2007 Consumer Electronics Show (CES) promised images more than twice as sharp as 1080p televisions, although a 2160p signal was not commercially available in 2007. The television was expected to find its initial use in industrial displays.

Organic light-emitting diodes (OLED) represent a promising new technology for flat-screen televisions. OLED displays are most often found in portable electronics such as cellular telephones and personal digital assistants. They contain luminescent diodes that emit a light of their own when the diode is switched on. Because they combine the self-luminescence of plasma displays with the solid-state design of LCDs many industry analysts believe that they may one day prove to combine the best features of both technologies. However, the high cost of large OLED displays has made it difficult for manufacturers to produce television-sized displays at a competitive price. In January 2007 Sony unveiled a 27-inch OLED television at the Consumer Electronics Show (CES) though they had yet to announce an OLED television model that was ready for sale.

Canon and Toshiba invested heavily in a joint venture to develop the Surface-Conduction Electron-Emitter Display (SED) televisions that they unveiled at the 2006 CES. The SED screen uses the equivalent of a tiny CRT for each individual pixel, an approach that analysts believe may create flat-screen televisions with the vivid colors and smooth motion of CRTs. Development of consumer-ready SED screens has been slowed by technical challenges, cost issues, and lawsuits involving the SED technology itself. In February 2007 Canon lost a patent licensing lawsuit to Nano-Proprietary, a small nanotechnology company based in Texas. Canon has bought out the Toshiba portion of its joint venture and its planned 4th-quarter 2007 introduction of SED televisions has been delayed until at least 2008.

CURRENT TRENDS

At the end of the first decade of the twenty-first century, the television market is dominated by the shift from analog to digital broadcasting and the shift from cathode-ray tubes (CRTs) to various flat-screen technologies. Within those broader trends some additional trends point toward the future of television.

The shift to digital standards and technologies has hastened the convergence of the television and the personal computer. In many ways the advent of the digital television has made it increasingly difficult to distinguish a television from a computer monitor. The differences are expected to continue to diminish. Technical incompatibilities often prevented consumers from using their analog television as a computer monitor, but many digital televisions include connections for computer signals and an increasing number of televisions are being used for the display of video signals broadcast over the Internet. Digital signals can be quickly converted to alternate formats and transmitted via computer networks. This alternate way of viewing video signals is rapidly growing into a major competitor for traditional television delivery services. The online video repository and service YouTube.com was founded in 2005, and was acquired by Google in 2006. By mid-2007 consumers watched more than 100 million videos per day on YouTube and its competitors. Many of those videos are snippets of television broadcasts that have made their way from television to the Internet.

Internet broadcasting is expected to become an increasingly important source of television signals, especially for niche markets such as sporting events. In early 2007 Major League Baseball announced a deal to air its Extra Innings package of out-of-market baseball games exclusively on satellite provider DirecTV. The announcement included the expectation that all baseball fans who didn't subscribe to DirecTV would subscribe to the MLB.tv Internet video package of out-of-market game broadcasts. The Setanta sports channel broadcast all of the games of the 2007 Rugby World Cup to North American cable and satellite users over its subscription network, but also provided pay-per-view Internet broadcasts for those rugby fans who didn't subscribe to the network. The Internet rugby broadcasts also provided live broadcasts of those games that were tape-delayed on the broadcast television network. In 2007 NBC announced plans to stream more than 2,200 hours of video from the 2008 Summer Olympics over its NBCOlympics.com Web site.

Internet video is becoming an increasingly important delivery mechanism for other types of content as well. In 2007 movie provider Netflix announced the launch of a service that would download movies for customers directly over the Internet. Blockbuster Video has provided video downloads in several forms since 2001 and its expansion into the Internet channel expanded with the acquisition of movie download company Movielink in 2007. Although many viewers watch these video streams on their computer monitors, the increasing interconnectivity and compatibility provided by digital televisions is expected to result in widespread viewing of these sources on televisions by the second decade of the twenty-first century.

Time-shifting technologies have also experienced a shift to the digital formats. The analog video cassette recorder (VCR) once stood alone atop the television recording device market. However, new digital technologies such as the digital video recorder (DVR) have made recording television shows for future use into a much simpler proposition for consumers. This technology was first introduced by TiVo, which claimed 4.4 million subscribers in 2007. However, other subscription services and device manufacturers have moved into this market. Cable and satellite providers often offer these DVR devices as free or low-cost enticements for new customers, then bundle the cost of the service into a user's monthly subscription. As a result, TiVo has lost some market share of the DVR device and service market, although their overall subscription base may continue to increase in this rapidly growing market.

The convergence of computers and televisions is also apparent in the screens themselves. Liquid-crystal display (LCD) monitors found their first widespread use as flat-screen computer monitors, where they replaced bulkier cathode-ray tube (CRT) devices. A big-screen LCD television is essentially an LCD computer monitor with a sophisticated video tuner attached. Video signals have also made their way onto the smallest of screens. Sprint launched its MobiTV service in the Spring in 2003 with news, sports, and weather clips. By 2007 the service had expanded to offer more than 100 television channels. Major cell phone providers Verizon and AT&T also offered streaming video over their networks in 2007. The iPhone, launched by Apple Inc. in 2007, featured streaming video and a high-quality picture as a major selling point. The two-inch by two-inch digital display screen of a portable cell phone has become, for all practical purposes, a small television.

TARGET MARKETS & SEGMENTATION

With market penetration of more than 98 percent in the United States television sales truly target all people. Within this broad market there are specific television models and styles that target special groups.

Most emerging consumer products rely on a group of early adopters to spearhead consumer acceptance, and digital televisions have been no exception. Early adopters of technology tend to be young (18 to 35 years old), college-educated males with disposable income. Consumers from this demographic led the shift to large, flat-screen televisions and television marketers continue to aim high-end televisions with new, cutting-edge technologies at this group. These early adopters are important to all aspects of the home theater market. The purchase of a new big-screen TV often accompanies the purchase of devices such as progressive scan DVD players, 7-to-1 Dolby Digital surround-sound receivers, or wireless speakers.

Sports fans, especially football fans, have also proven to be a key target market for HDTV manufacturers. Football and other sporting events were among the first television programs to be broadcast in HDTV. The desire to watch these sporting events in HDTV motivated many of the early HDTV purchases. In 2007 DirecTV broadcast more than 200 NFL football games in HDTV as part of its out-of-market Sunday Ticket package. Most of the devoted fans who paid to watch those games certainly did not plan to do so on a small television. An estimated 70 percent of all television purchases take place during the football season.

As prices for HDTVs continue to drop, mainstream consumers have become increasingly interested in them. Companies such as Vizio and Westinghouse Digital have grown quickly by targeting this market with mid-level televisions at an extremely competitive price. Lower cost televisions also have an important place in the television marketplace. Though their share of the North American market has continued to fall—down to 46 percent in 2006—CRT televisions hold a share of the North American television market by offering a sharp, bright picture at an extremely inexpensive price. In 2007 they continued to be an important option for consumers seeking a second television for a kitchen or child's bedroom. These televisions also hold an important share of the market in developing nations where their inexpensive price makes them an attractive option for first-time television buyers. However, these low-end and developing-nation markets are also shifting to LCD televisions as LCD prices continue to fall. In April 2007, for example, Panasonic manufacturer Matsushita Electric Industrial Corp. announced that it had converted its CRT television plant in Shah Alam, Malaysia, to the manufacture of LCD televisions intended for sale in Asia, Africa, the Middle East, and South America.

RELATED ASSOCIATIONS & ORGANIZATIONS

Association of Home Appliance Manufacturers, http://www.aham.org

Consumer Electronics Association (CEA), http://www.ce.org

National Electrical Manufacturers Association, http://www.nema.org

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