TV-set brands carefully enter digital future

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TV set marketers are taking a calculated approach to rolling out the first digital TVs, eyeing early models as halo products to drive retail traffic and position brands for leadership when--an assumption--the mass market finally emerges.

With the debut this month of high-definition digital broadcasts in 10 major cities, marketers are beginning to ship sets. The TV picture features images through the digital shorthand of zeros and ones, which also approximates early sales prospects.

Thomson Consumer Electronics, the No. 1 set maker, projects first-year industry sales of 20,000 to 100,000 sets--in an industry that this year expects to sell a record 29 million regular, or analog, TV sets.


Shifting to digital, said John Revie, director of marketing for consumer TV products at Sony Electronics, is "going to be a slow transition . . . a trial-and-error experience over the next few years."

Set on reducing the errors, marketers are steering carefully to promote new technology while striving to keep analog sales humming. The result is distinctly different approaches in how consumer electronics marketers are packaging their new products and how they're promoting them.

Philips Consumer Electronics, ranked by industry watchers as No. 2 in sales to Thomson, claims to be first to market with an all-in-one HDTV set, a 64-inch projection set shipping to the 10 cities this month. Price: $8,999.


Philips this month will add a national TV spot on the HDTV set to its ongoing campaign, featuring HDTV as one of its "star products," said John Strobel, VP-marketing for digital TV. Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, is the agency.

Mr. Strobel said Philips took the all-in-one approach for its new flagship product based on research finding that "early adopter" prospects want the ultimate in audio/video for entertainment and then sports and that customers prefer HDTV be packaged in one set rather than split into components.

Next year, Philips will add smaller, somewhat less expensive HDTV sets. It also will introduce a set-top box that allows analog sets to receive digital signals for customers not wanting to pay the price of a car for a TV.

Thomson won't get its RCA and Proscan sets into stores till early 1999, but it will put demos into "dozens" of stores in New York, Los Angeles and Washington by mid-December, a spokesman said. Thomson's sets, starting at $6,999, will be all-in-one devices that can receive digital and analog broadcasts as well as direct-broadcast-satellite feeds.

Thomson also plans a $700 converter box for analog sets.

"We know the game will be played next year, not this year," said a Thomson spokesman, since digital won't be broadcast in the top 30 markets till November 1999.

Sony will ship its first set, a 34-inch model for $8,999, mid-month, concentrating on the 10 key markets.

Like others, Sony hopes the lure of digital will drive customers into stores to see other wares; Sony will push retailers to display its HDTV next to a new $1,699 Sony 34-inch flat-screen analog set, betting customers not ready for HDTV will be impressed by the high-end analog set.

"We think it's an excellent way for the dealer to raise his average ticket" by pushing sales of premium analog models, Mr. Revie said.


Mitsubishi Consumer Electronics America, the leader in projection TV, is using that natural base to push into HDTV with products now entering stores. However, Mitsubishi is packaging the screen, selling for $3,895 to $9,000, separate from the HDTV receiver, priced at $3,000.

Director of Marketing Robert Perry contends the prime market opportunity today is selling these "HDTV upgradeable" screens to customers who can use the analog set today, then upgrade with the receiver when more digital programming becomes available down the road.

Mr. Perry said the strategy addresses the biggest concern among high-end TV buyers: technological obsolescence. Mitsubishi is focusing on HDTV in a multimillion-dollar fourth-quarter print campaign developed in-house.


Panasonic, rolling out a $6,500 package of screen and set-top box, has used aggressive PR and events to position itself as the digital leader. On Nov. 22, it debuts a TV spot promoting HDTV, from Grey Advertising, New York.

Panasonic VP Communications Robert Greenberg said Panasonic has two corporate goals with HDTV: Promote digital leadership and become the nation's No. 1 seller of HDTV sets.

Establishing leadership early is crucial, Mr. Greenberg said. "Once the dealer has shelf space allocated to a brand," he said, "it's very hard to knock that brand off."

Copyright November 1998, Crain Communications Inc.

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