September 15, 2008

Manufacturers Weigh in on DTV Boxes

By Monta Monaco Hernon

As the countdown to the digital TV transition continues, experts are pleased with the coupon program for digital-to-analog converter boxes.

But what has surprised some is the number of converter box models available for purchase with these coupons. To date, there are more than 100 to choose from, according to John Taylor, vice president public affairs and communications, LG Electronics USA.

"If you had asked me a year ago how many boxes would be approved, I would have guessed a couple of dozen," Taylor said. His company already has shipped more than 1 million Zenith-branded boxes.

Why so many?

There are so many different models, despite the fact that the boxes are not huge money-makers for vendors. "(Manufacturing the boxes) is not a money-losing proposition, but there isn't a lot of margin in a $60 product," Taylor added.

So why have so many companies thrown their hats in the ring? "It's a very important part of our nation's transition to digital television. It's the right thing to do to provide a good quality box," Taylor said.

"Given RCA's TV presence, heritage and installed customer base, it's a natural fit for the converter box category," said John Caffrey, director, product management, Alco Electronics, which manufactures the RCA box.

Besides, while the boxes might offer relatively low profit margins, that doesn't mean companies don't benefit from offering them. Channel Master by PCT International manufactures TV antennas.

"The converter box is a perfect fit for our antenna business because many customers are using old, damaged or underrated antennas and choose to upgrade to a better antenna when they find out what digital broadcast has to offer over snowy and ghostly analog reception," said Wayne Massengill, product manager, Channel Master Terrestrial products.

Standing out?

In such a competitive market, how are companies differentiating? Name recognition doesn't hurt. "There are tens of millions of analog TVs out there that are still connected to an antenna," Taylor said. "A huge number are Zeniths. The consumers for the boxes, many of them are elderly consumers that remember the Zenith name."

Distribution also counts. The DTA800B1, for example, is available at select Wal-Mart stores, giving it "huge" consumer exposure, Caffrey said.

And, of course, added features are attractive. The Zenith models, for example, have electronic program guides and carry an Energy Star rating. Channel Master's CM-7000 offers S-Video output. And, the DTA800B1 has a universal remote and a smart antenna interface.

"DTA800B1 also has analog pass-through, allowing you to continue to watch NTSC broadcasts, if available," Caffrey said. "Analog pass-through is becoming more common in this category, but currently is not a standard feature."

- Monta Monaco Hernon

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