Catching the Consumer HDTV as the application that drives user demand for broadband

Friso van Wieringen, Erik Huizer and Lidwien van de Wijngaert Institute of Information and Computing Science, Utrecht University, The Netherlands
This article describes the results of a research among a sample of Dutch consumers in order to find out which factors drive the adoption of HDTV. Rather than using a single theoretical framework we look at concepts that are used in a wide variety of theories that are relevant to our problem. This leads to a questionnaire that we presented to our test sample. The results of this research show that situational factors (and especially, the provision of sufficient content) have the strongest explanatory power with regard to the degree to which people are inclined to switch to HDTV. Although Perceived Performance Expectancy also has significant influence on the willingness to adopt HDTV, this variable tells us much less about why some people will and others will not switch to HDTV in an early stage.

1. INTRODUCTION
High Definition Television (HDTV) has been around for many years. In the late eighties, an analogue version of HDTV was introduced but never became successful. Now we again stand on the verge of an HDTV introduction. Of course many things have changed since the earlier attempt. Especially the technical infrastructure is now ready for the introduction of HDTV: a (digital) broadband infrastructure and HD-ready flat screens are widely available. Moreover, the required processing power in displays is available and cheap. However, many things are still uncertain. On the supply side, for example, it is still unclear which and how much content should be provided in HD-quality. On the demand side it is unclear when and for what prize people are willing to adopt screens, set-top-boxes and subscriptions. In sum, the success of HDTV, the broadband application par excellence, depends on a large number of technical, socio-economic, organizational and regulatory issues. In this paper we focus on the perspective of the user. The research question we pose is: Which factors, from the perspective of the user, influence the diffusion of HDTV? Before we will describe the theoretical framework for understanding the diffusion of HDTV, we will first shortly describe what HDTV is from the perspective of the user.

1.2 High Definition Television

Current television as we know it (SD=Standard Definition) is limited in the amount of detail it can provide due to its relatively low resolution. HDTV (High Definition Television) offers an up to 5 times as high resolution which allows the user to see every detail clear and sharp. Moreover, the aspect ratio is 16:9 (also referred to as widescreen) in comparison to the standard 4:3 aspect ratio. Figure 1 illustrates both the effect of aspect ratio as well as resolution. The digital and detailed image of HDTV requires a high bandwidth as well as considerable processing power. Only recently have these two become available and affordable in such a way that HDTV stands a chance as being the next breakthrough broadband application to reach consumers. Figure 1. Comparing SD to HDTV: different aspect ratios and resolutions

1.3 Current market developments in The Netherlands

A report of FIAR/GfK (2006) states that in 2005 25% of all expenditures on consumer electronics was spent on electronics with regard to entertainment on LCD, Plasma and TV projectors. All other types of equipment (such as digital cameras, surround systems and DVD-players) have smaller proportions. The same report states that in 2005 36% (477.000 sets) of the screens that were sold and 70% of the value (637 mln Euro) of the total television market consisted of flat screens and projectors. Currently there are a small number of foreign channels broadcasting in HD. In June and July of 2006 the World Championship soccer was distributed in SD and HD in The Netherlands. Although there were some problems in the delivery of set-top-boxes, approximately 30.000 households were able to view the event in High Definition (Referentie, 2006). Recently GfK announced that it expected that by the end of 2006 about 12% of the Dutch households will have an HD Ready screen. On the production side we see that all broadcasters now aim for HD when replacing equipment.

2. THEORETICAL FRAMEWORK
In order to understand the potential user value in terms of adoption and use of HDTV, we will first present our theoretical starting points.

2.1 Assumptions and starting points

Rather than picking a single theoretical framework to look at the adoption and use of a new technology, we will discuss concepts that are used in a wide variety of theories that are relevant to our problem. We include Diffusion of Innovations, Uses and Gratifications theory, the TAM/UTAUT model, Media Richness Theory and the Social Influence Model, Social Shaping of Technology and domestication and accessibility in our analysis. Table 1 provides an overview these theories, their main representatives and the subjects that they focus on.
Table 1. An overview of existing theories on adoption and use of new technologies from the user perspective Theory Diffusion of innovations Uses and Gratifications TAM/UTAUT Media Richness and Social Influence Model Social Shaping of Technology Domestication Accessibility Main representant Rogers, 1995 Palmgreen, Lawrence, Wenner and Rosengren, 1985 Davis, 1989; Venkatesh, Morris and Davis, 2003 Daft, Lengel and Trevino, 1987; Schmitz and Fulk, 1991 William and Edge, 1996; Lievrouw and Livingstone, 2002, Winston, 1998 Silverstone and Haddon, 1996; ManteMeijer and Haddon, 2001 McCreadie and Rice, 1999a and 1999b and Van de Wijngaert, 2004 Focus Study of how, why, and at what rate new ideas and technology spread through cultures Study of how people use the media to get specific gratifications. Study of the effect of perceived usefulness and perceived ease of use on (intention) to use technology. Study of the relation between tasks and technology characteristics, while controlling for situational factors and social influence. Studies the relation between the design of artefacts and systems and in the direction of innovation programs." Study of how artefacts are tamed within the household context. Study of how easy or difficult it is to obtain and use technology and information

If we analyse the assumptions, strengths and weaknesses of these different theoretical approaches we can distinguish a number of central themes: - how (one time) adoption and rejection processes take place; - how the interaction between the emergence of user needs and technology use works in a day-today basis; - how time influences these processes; - how individual, behavioural, situational and technology characteristics influence these processes and - how context factors on higher the meso and macro level of society influence the process. From this list of themes we can conclude that the diffusion of an innovation like HDTV is a complex process. Even more so because here we have only listed the themes that are relevant from the perspective of the user.

2.2 Research focus

In this paper we would like to focus on the relation between individual, behavioural, attitude and situational characteristics as independent variables and the intention to adopt HDTV as the dependent. This choice is based on the development of how technology use has been conceptualised in the theories mentioned in the previous section. - Demographics: starting point of our research is to understand the intention to adopt HDTV from differences between individuals. Examples are gender, age, education, income and household situation. - Media behaviour: as a second step we will focus on the relation between behavioural motivation and intention to adopt HDTV. For this approach we use Uses and Gratifications as our background theoretical paradigm. We will investigate to what degree factors like frequency and nature of TVwatching behaviour influence the likeliness to adopt HDTV. - Attitude: As a third step we will use the TAM/UTAUT model to explain the adoption of HDTV from perceived performance expectancy en perceived effort expectancy. - Situational: The fourth and last set of variables explains the adoption of HDTV from a contextual approach. We will investigate to what degree external factors influence the adoption of HDTV. In the next section we will explain how we intend to obtain insight into these clusters of factors.

3. RESEARCH METHOD
In order to obtain an answer to the research question we have gathered data in May 2006 from a convenience sample of respondents that were asked to participate in the research at several consumer electronics retail stores. Data was also gathered at a national conference on broadband. In total 139 people were included in the sample. The sample consisted of 81% men and 19% women, their average age was 37 years, with a standard deviation of 11,6 years. The respondents on average were quite high educated and had relatively high incomes. Clearly, this sample is not representative for the Dutch population as a whole. The explanation for this result is the straightforward consequence of gathering our data at consumer electronic stores and the broadband conference. With this information we are aware that the sample may not represent the Dutch population as a whole but does represent the public that is more than average interested in new technologies, i.e. the potential innovators and early adopters of HDTV. Respondents were presented with an HDTV demo in order to make sure that people knew what they were giving their opinion about. The demo consisted in a trailer that contained examples of different genres in HD quality. The questionnaire contained questions on demographics, current television behaviour and attitude towards new technologies. Intention to adopt HDTV was measured by using the conjoint procedure. In this procedure respondents are presented with cases (or vignettes) that describe a specific situation in which respondents are asked to choose whether or not they would adopt HDTV. The method allows us to understand the effect of factors like price, supply of HD-content on HDTV adoption.

3.1. Characteristics of the respondent: demographics

Characteristics of the respondent were measured with regard to gender, age, education, income, and household situation. The last one consisted of three variables: family with children younger than 12 years, family with children older than 12 years and singles and/or couples without children. Both open- and close ended questions were used to measure each of these variables.

3.2 Behaviour: possession of new technologies and TV behaviour

In order to establish TV-watching behaviour a number of questions were included in the questionnaire. First of all we made an inquiry about the amount and diversity of consumer electronic that a respondent possesses. Secondly, a number of questions were added that relate to [1] the amount of TV-watching (frequencies at different times of the day), [2] type (favourite genres on a ten-point scale) and [3] favourite channels.

3.3 Attitude: perceived performance and effort expectancy

In order to measure the attitude of the respondents towards digital- and HDTV we created two sets of items. Table 2 provides an overview of the items that were included to measure perceived performance expectancy and perceived effort expectancy. For each of the items we asked the respondents to what degree they thought it is an important aspect of digital- and HDTV on a five point scale (not important very

important).
Table 2. Scale items for Perceived performance expectancy and Perceived effort expectancy Perceived performance expectancy Cronbachs = 0,80 the higher quality of the image1 the higher quality of (surround) sound1 the electronic program guide2 the possibility to receive extra channels2 the possibility to receive extra packets of channels2
1 = Items related to HDTV 2 = Items related to Digital Television

Perceived effort expectancy Cronbachs = 0,49 the use of one remote control the ease of use of the decoder (set-top-box) the higher costs of HDTV subscription the costs of purchasing an HD-ready screen the fuss of switching to a new system

After the data was collected we performed reliability analysis to test homogeneity of the two scales. Perceived performance expectancy yielded a Cronbachs of 0,80. Based on this we developed a scale by taking the average score for each respondent. Perceived effort expectancy however provided a much lower Cronbachs . Deleting one or two items did not lead to an acceptable . Consequently we decided to include the items independent from each other.

3.4 Situational factors: price structure and content supply

The fourth set of variables measured the intention to switch to HDTV, based on a small number of scenarios. Basically we performed a small conjoint measurement study, using only two variables: price structure (with two levels) and supply of HD programs (three levels). The combination of the two variables leads to a set of six scenarios. Respondents were asked to state to what degree they were inclined to switch to HDTV.
Table 3. Six scenarios Supply HD programs Low Price structure Price Subscription low Price Set-top-box high Your cable television provider offers you a low-cost HD subscription. Additionally you have to buy the set-topbox, which will cost you about 300 Euro. The availability of HD-content is low. Six months later an additional HD channel becomes available. This channel broadcasts many content in your favourite genres. The availability of content still is low, but it has been increased with content in your favourite genres. Another six months later HDTV is widely used. A large amount of HD channels is being offered. Price Set-top-box low Price Subscription high Your cable television provider offers you a set-top-box at the relatively low price of 50 Euro. Additionally you have to pay for an HD subscription, which will cost you about 10 Euro per month. The availability of HD-content is low. Six months later an additional HD channel becomes available. This channel broadcasts many content in your favourite genres. The availability of content still is low, but it has been increased with content in your favourite genres. Another six months later HDTV is widely used. A large amount of HD channels is being offered.

In genre

High

In order to analyse this data we used multi-level regression. This procedure corrects for the fact that responses with regard to the six scenarios are nested within one person. As a consequence, the cases are not measured independently from each other. In order to predict likeliness to switch to HDTV (a five-point scale) we entered three independent variables (price structure (50/300), provision of content (low, high) and content in popular genre (yes/no)) as dummy coded variables into the model. All variables were entered uncentered.

3.5 The dependent variable: Intention to adopt HDTV

As said in the previous section, respondents were asked to state how likely it is, given the six scenarios, that they would switch to HDTV. We established homogeneity of these six answers using Cronbachs . With an of 0,83 we concluded that it is possible to calculate the average value of the six items. In the following four sections we will describe the results of our analysis clustered in four sections: demographics, behaviour, attitude and contextual factors. In each of the paragraphs we will use Ordinary Least Square Regression analysis to investigate to what degree the independent variables explain the likeliness to adopt HDTV.

4. RESULTS
4.1 Characteristics of the respondent: demographics
Characteristics of the respondents turn out to be bad predictors of likeliness to adopt HDTV. Neither the model as a whole, nor any of the variables provide significant results. From this we can conclude that demographic variables have virtually no explanatory power with regard to the intention to adopt HDTV.

4.2 User behaviour characteristics

The second set of variables we use to explain HDTV adoption are behavioural characteristics. Also in these set of variables regression analysis did not yield a significant model. Bivariate analysis (using independent ttest and Pearsons R) showed a few significant differences though. People who own a personal video recorder are for example more interested in HDTV. However, this significant result should be treated with care. There were no significant differences for many other relations that seem to be obvious (such as possession of digital photo or video camera). Also, there were no differences in the amount of TV-watching. Moreover, only people that watch Talpa on a regular basis (a new entrant in the market) showed significant more interest in HDTV than people who do not watch Talpa (t=2,01 df=136 p=0,05). There were no significant differences in intention to adopt HDTV for any of the other channels. The best predictor of intention to switch to HDTV turns out to be preference for specific genres. Using Pearsons R2 we can show significant relations between appreciation of Music (R2=0,186, p=0,031), Reality (R2=0,171, p=0,050) and Sport (R2=0,208, p=0,014) and intention to switch to HDTV. The degree of appreciation for all other genres (Cartoons, Culture, Documentary, Entertainment, Erotic, Film, Kids Programs and News) however, did not show significant results. In all we conclude that the predictive value of behavioural characteristics is low.

4.3 Attitude: perceived performance and effort expectancy

Table 4. Regression analysis for PPE and PEE

The third set of variables relates to attitude towards HDTV Regression in terms of Perceived Performance Expectance and Beta Sig Perceived Effort Expectancy. For this third set the regression (Constant) ,000 model was significant. Moreover, the scale that was Perceived performance expectance ,251 ,007 constructed for Perceived Performance Expectancy shows a One remote -,030 ,718 relatively strong and significant relationship with the Ease of use decoder ,281 ,003 -,220 ,026 intention to adopt HDTV. The effect of the items that are Costs HD-subscription ,083 ,383 supposed to measure Perceived Effort Expectancy are more Costs HD-screen -,110 ,183 Fuss of switching difficult to explain. Ease of use of the decoder is a significant factor, as is cost for the subscription. For cost of subscription we find a negative beta, which is in line with our expectations. When people find it more important that they have to invest a lot of money, they will be less inclined to adopt HDTV. However, the positive beta for Ease of use of the decoder means that if people find it more important that a decoder is easy to use (and are, in other words, less inclined to invest a lot effort in understanding the way the decoder works) are more inclined towards switching to HDTV. The result is not in line with our expectations. In all, the model explains 21% of the variance which can mainly be attributed to the effect of Perceived Performance expectancy. Although this result is in line with other TAM/UTAUT research results, one can wonder what the value is of knowing that if people see more advantage in doing something, they are more inclined to actually do that. In order to provide more insight into the reason why there is a relation between Perceived Effort Expectancy and intention to adopt HDTV we will look at our fourth and last set of characteristics: the situational factors price and supply of content.

4.4 Situation
Table 5. Situational factors

The multilevel regression we preformed for the three variables that made up the six scenarios are all significant. This means that the results of this research shows that people prefer an inexpensive set-top-box (one time investment) and relatively high subscription rates over expensive settop-boxes and relatively cheap subscription rates. The regression coefficient is very low though. The level of supply and the supply of HD content in a genre that is of interest to the respondent show much

(Constant) Price Level of supply Supply in genre

Multilevel Regression Coefficient Sig 2,109 ,000 -0,000 ,035 0,960 ,000 0,486 ,000

stronger, positive and significant relationships as is shown in Table 5. From this we conclude that successful diffusion of HDTV heavily depends upon a sufficient supply of content.

5. DISCUSSION AND CONCLUSION

5.1 Conclusion and limitations of the research
The results of this research show that situational factors (and especially, the provision of sufficient content) have the strongest explanatory power concerning the degree to which people are inclined to switch to HDTV. Although Perceived Performance Expectancy also has significant influence on the willingness to adopt HDTV, this variable tells us much less about why some people will and others will not switch to HDTV in an early stage. Unfortunately our analysis with regard to demographic and behavioural variables did not yield much information. The reasons for not finding these answers may be multiple: Both sample size as well as the convenience character of it may influence the statistical inferences we can make in this research. Of course it is convenient to suggest to draw a sample that represents the (Dutch) population better. However, due to the fact that only a small part of the population actually knows what HDTV is we wonder if that is going to yield better results. Instead we would like to suggest that a more qualitative approach towards an understanding of why people may want to switch to HDTV may be more appropriate. A second factor that may explain why we did not find any significant results for demographic and behavioural factors may be embedded within the way we measured the likeliness that people will switch to HDTV. Basically, we used the six scenarios as a basis for developing our scale. Although it was homogenous, we feel that in a follow-up we should look at the adoption process in more depth. The adoption of new technologies is not merely a simple yes/no question. Instead it is a process in which many actors and factors play a role. If we really want to obtain insight into the diffusion of HDTV, we will need to obtain insight into this process.

5.2 Discussion
All in all the consumers in our research pool seem to believe in the advantages of HDTV (performance expectancy) and predictably content is going to be the main driver. As there is ample (foreign) content in HD available, this will help drive HDTV as the next broadband application. Our sample was too small and the scenarios we used in the various questions were perhaps too restricted to be able to extrapolate to a secure understanding of the factors influencing the adoption of HDTV. We will therefore follow-up with further research into this issue. REFERENCES
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