Kagan Research Releases Exclusive Study on the Economics of HD Cable Networks

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Several early high definition TV cable network entrants are banking on the burgeoning growth potential of the HD market. In spite of current limitations on bandwidth, programmers are ready to capitalize on what could be an explosive area of growth. A few networks already offer a full array of HD programming completely distinct from what’s available on either cable's or satellite's current channel lineups, while others are delivering merely a high-def feed of their current standard def lineup. Whether cable networks focus on an HD simulcast or a channel with new content, all programmers must eventually move viewers from analog-based programming to digital.

The first edition of Kagan's Economics of High Definition Cable Networks 2005 signals the beginning of a new era fusing dedicated cable networks with HDTV-quality programming. This timely databook offers a clear assessment of market opportunities, revenue prospects and programmer/operator partnerships driving this technology toward a higher level of viewer adoption. "The market is still nascent for HD cable networks. Currently over twenty non-broadcast networks are offering HD programming on a daily basis, up from just six in the years between 1998 and 2003. 2005 has already seen the launch of another HD network: ESPN2 HD - a simulcast of ESPN2 - launched its service on January 6. Going forward into 2005, plans are under way for launching nine additional HD networks, as detailed in this book,” said Kagan Research Associate Patrick Johnson. http://www.kagan.com/pub/hdcn1

The eight networks classified as pure HD services, are expected to grow revenues at a CAGR of 88% over the next 5 years and produce total revenues of $943 mil. The bulk of the revenue in 2009, Kagan estimates, will come from ESPN HD with HDNet and Discovery HD taking second and third, respectively. “We define pure HD networks as those that receive a license fee for their HD content and are not merely simulcasts,” said Johnson.

On the expense side, Kagan estimates that by 2009, total expenses for the pure HD networks will be $627 mil. or $5.26/subscriber. The 2009 per sub figure will be 68% lower than the 2005 figure of $16.43. Through 2009, we expect total expenses to increase at a CAGR of 42%; while expense per sub should decrease at a CAGR of 25%.

With over 16 mil. digital sets shipped to retailers since 1998, more than 12 mil. of which are HDTVs, movement to advanced compression technologies such as MPEG-4 and VC-1 under way and HD awareness among consumers at record levels, the vision of an all-digital/HD country is taking hold.

Some key factors on the side of HDTV cable network growth:

  • More than 12 mil. HDTV sets have been sold to U.S. consumers; bringing penetration of HD sets into TV households to 10%.
  • On the broadcast side, 1,373 stations are now broadcasting in digital in 211 markets serving 99.98% of TVHHs.
  • DBS operators garnered 672K HD tier subs in 2004; this is expected to reach 11.5 mil. by 2009, Kagan estimates.
  • Network migrations to high-definition feeds are prompted by the limited amount of bandwidth available on cable systems and satellite transponders.
  • MPEG-2 remains the dominant codec in the market; however, a migration to MPEG-4 and/or VC-1 is just around the corner.

Economics of High Definition Cable Networks 2005 features:

• an examination of eight existing pure HD networks;

• exclusive Kagan 10-year projections for HDTV to 2015;

• a technical primer and an historical timeline;

• details on HD network launches and ownership;

• ROI forecasts based on a number of factors, including license fees;

• profiles of pure HD networks, simulcast networks and HD spinoffs of basic cable networks.

Kagan has published its annual databook on the subject titled:

Economics of High Definition Cable Networks 2005

186 pages. 58 tables & 18 charts.

For more information:


Table of Contents:

-Executive Summary

-HDTV Projections

-Technical Primer

-HDTV Timeline

-HD Network Launches and Ownership

-License Fees

-Network Profiles-Pure HD Networks

-Network Profiles-Simulcast Networks

-Basic Cable Networks and HD Spinoffs


About Kagan Research, LLC

For over thirty-five years media and communications operators, content programmers and developers and investment advisors have relied on Kagan Research for expert intelligence, independent analysis and leadership in media business research from tech to finance. Kagan's consulting and publishing services offer exclusive financial data and analysis, relevant market advisories and accurate 5- to 10-year projections for TV, radio, cable, DBS, wireless, movie and sports sectors, as well as insightful perspectives on emerging media technologies, digital communications and advertising.

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