Turned-Off Buyers Await Digital TV Age

Digital television may be a boon to consumer electronics manufacturers and retailers in the long run, but companies are seeing early signs that sales of TV sets will drop between now and late next year, when the first digital models come on the market.

Federal regulators on Thursday gave television stations the go-ahead to prepare for digital broadcasts. Already, some consumers are heading to stores to inquire about the new TVs--which promise crisper pictures and CD-quality sound--and leaving empty-handed when told the first digital TVs won’t be in stores until December 1998. And many are deciding not to buy a TV at all until then.

A survey released Monday by Harris Corp., a Melbourne, Fla., firm that makes digital TV transmitters, shows that customers are planning to defer new TV purchases. Nearly 40% of customers responding to the survey said they plan to replace their current televisions with digital sets almost immediately after they come on the market, and 86% said they will switch to the digital standard within the first two years.

“Why would you go out and buy one now if you know that two or three years from now you’ve got to buy one anyway?” said Lewis Alton, managing partner of L.H. Alton & Co. in San Francisco, who estimates that TV sales will decline between 5% and 20%. “The answer is you won’t.”

The Consumer Electronics Manufacturing Assn. in Arlington, Va., had already projected that television sales would grow less than 1% in 1997 compared with 1996. CEMA and its member companies are trying to head off a decline by emphasizing that a TV bought today will be usable for many years to come.

The association is putting together a program to educate retailers and customers about digital TV. Several companies are planning to sell set-top boxes for about $150 that will allow analog TVs to receive digital signals, said CEMA spokeswoman Amy Kozlowski Hill.

“There are people out there thinking, ‘There’s a breakthrough right around the corner, so I’ll buy something cheap now, because down the road it won’t be usable’--but in reality that’s not true,” said Marty Zanfino, manager of product development for Mitsubishi Consumer Electronics America in Norcross, Ga. “The better a TV you have today, the better a picture you’re going to get when this set-top box is connected.”

Not all manufacturers agree that the threat of slowing sales is imminent, but few are willing to dismiss it altogether.

Jeff Cove, vice president and group general manager for TVs at Panasonic Consumer Electronics in Secaucus, N.J., said he doesn’t expect consumers to delay TV purchases until next year.

Sony Electronics Vice President Rick Clancy said he doesn’t think TV sales will be affected at all.

Manufacturers spent a decade developing the technology for digital television and a top-of-the-line version called high-definition TV, and it will be several more years before digital sets are common in American homes.

Zanfino said he fielded calls at the rate of one every five minutes from Mitsubishi retailers who worried that the digital TV news would prompt consumers to defer purchases of new TV sets for more than 18 months. One store in San Diego reported that a customer who bought a big-screen TV last week returned over the weekend seeking a refund.

The first digital TVs to come on the market will cost several thousand dollars, about the equivalent of today’s large-screen projection sets. That has some companies worried that big-ticket big-screen TVs and home theater systems will be most vulnerable to declining sales.

But Ken Gassman, a retail analyst with Davenport & Co. in Richmond, Va., expects sales of basic models to bear the brunt of the slowdown.

“It’s going to be the third or fourth TV in a house that won’t be bought,” said Gassman, who needs a new TV himself but has decided to wait for a digital model.

That attitude is not universal. Robert Studman, a salesman at Fry’s Electronics in Woodland Hills, said a few customers have asked about digital TVs, but “when they hear the price, they say, ‘I’m not going to go that way.’ ”

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