While BSkyB plans to launch a 3-D HD channel in the United Kingdom as early as next year, the reality is that the adoption of HD remains fairly low, and some analysts predict that it might be a while before there is significant growth.
    “I would surmise a late-2010-to-2011 timeframe for the inflection point and solid growth rates from 2012 onward,” said Michael Inouye, industry analyst, digital home, ABI Research. “Supporting this timeline are the HD deployments over DTT (digital terrestrial television) the spread of HDTVs and eventual ramp-up from the pay-TV operators,”.
    Most analysts believe the growth of HD has been disappointing – but not surprising. “The market requires the junction between supply (HDTV channels’ availability) and demand (consumer premise equipment). Europe has succeeded in terms of HD-ready TV sets in households, with more than one-third of TV households in Europe are HD ready, but the transformation of these HD-ready households in active customers takes time,” said Jacques Bajon, media analyst, Idate.
    There are some promising signs. Shane Walker, senior analyst at IMS Research, said HD set-top box shipments are likely to see strong growth this year. “For 2008, we estimate that 13 percent of all set-top boxes deployed across all platforms in EMEA were HD, this includes one-way and two-way boxes as well as HD DVRs. We forecast 102 percent growth in these boxes between 2008 and 2009. By 2012 we expect to see HD STB shipments in EMEA approaching 60 percent of all shipments for that year,” he said.
    Inouye also is confident that the HD set-top box market will begin to heat up. “The growth prospects are quite good. The rise in HD set-top boxes, however, does not necessarily equate to an equitable growth in HD viewing. As the divide between the bill-of-materials for HD and SD boxes decline and considering that many pay-TV operators work through a leasing model, the HD option is fast becoming a compelling option. Most set-top boxes are depreciated in a three-to-five-year period, although the useful life could extend beyond those years. If my timeline rings true, then that timeframe extends well into the high growth period for HD, which would mean an accelerated rate of box replacements if the operator continues to favor SD boxes,” he said.
    Inouye believes certain European Union (EU) moves could trigger HD adoption. “If the EU does in fact mandate MPEG-4 (or equally efficient encoding) for all DTT receivers, this too will help spur the movement towards HD. Naturally, one of the impediments to HD in [over-the-air] broadcasting has been available capacity, further compounding the problem is the large installed base of MPEG-2 set-top boxes. Since the [over-the-air] market is largely retail driven, a complete transition to MPEG-4 could mirror the transition from analog to digital.”
     Bajon believes the economic crisis also culd have had an impact on the HD landscape this year, with broadcasters perhaps pulling back from plans to launch HD channels. “HDTV is in a transition process. Increasingly, new programming will be shot and mastered in HD for immediate transmission and/or to anticipate the future HD needs. However, the 2009 crisis could slow this process in particular for free-to-air channels relying on advertising revenues,” he said.
     In terms of how satellite is shaping up in HD markets across Europe, Walker said, “The growth of pay-satellite services has been much stronger in the countries with little [free-to-air] content such as the United Kingdom and Italy and more difficult in markets with a significant amount of free content such as Germany. This may begin to change as pay-satellite operators gain a competitive advantage over [free-to-air] satellite by offering additional HDTV channels, multi-play service packages and advanced services such as HD and HD DVR. However, some operators will be limited in enhancing their respective HDTV channel bouquets as a result of their MPEG-2 networks.”