7 HDTV Comes Into Focus Clear, cheap, and federally mandated.
By Peter Lewis

(FORTUNE Magazine) – Janet Jackson's breast may someday be credited with spurring the adoption of high-definition television, but the adoption rate of HDTV was already building long before the Super Bowl halftime incident earlier this month.

After years of teasing, it appears that HDTV is finally ready to deliver. The first piece of the HDTV puzzle--converting the nation's TVs to digital--is supposed to be complete by 2007. This is arguably the most significant TV upgrade since the medium's inception, greater even than the shift to color. Digital signals are less susceptible to interference, make more efficient use of the airwaves, and enable new types of applications, like data services and interactivity.

But the real star of the digital show is HD. The actual shape of the image changes from today's boxy width-to-height ratio of 4:3 to the widescreen 16:9, allowing the viewer to see, for example, all four bases of a baseball game or Hollywood movies as they appear in theaters. HDTV screen resolution can be up to ten times greater than that of analog TV, resulting in much sharper, almost film-like pictures. Sound quality is also improved to DVD quality. Although only two million U.S. homes currently subscribe to HDTV channels, the number should rise to more than 40 million by 2007.

What's driving the shift? On the hardware side, the Federal Communications Commission endorsed a digital cable "plug and play" agreement, which will eventually permit consumers to plug a cable line directly into their digital TVs, bypassing the annoying set-top box. The first digital-cable-ready sets will appear later this year. And the FCC is leaning toward the adoption of copy protection "flags" that will ease the nerves of content providers worried about the Napsterization of HD shows.

For consumers, the attraction will be price. Dozens of companies are entering the market to compete with big Japanese and Korean setmakers, driving prices down; new players include Gateway, Dell, HP, and Intel, which says it has a processor that will soon bring the cost of a thin, 50-inch HDTV set to under $1,800--still expensive, but less than one-third the price of just a year ago.

Meanwhile, HD programming is proliferating. Cablevision just launched an HD-only service called Voom, which carries 25 HD channels. More than a dozen HD channels, including HBO, Showtime, and Discovery, are now transmitting on cable and satellite, with a dozen more soon to launch. All the big broadcast networks, with the notable exception of Fox, already send out their prime-time lineups in HD. The last big hurdle for HDTV is customer confusion over the new technologies and salesperson mumbo jumbo. But when it comes to HD, seeing is believing. --P.L.