By Walter S. Ciciora, Ph.D., Recognized Industry Expert on Cable and Consumer Electronics Issues
I realized that there are two hockey stick curves, and almost no one talks about the type-two hockey stick curve. This is a bit surprising since I believe that the type-one hockey stick curve is a relatively rare occurrence. Line one shows the type-one curve, while line two shows the type-two curve.
When you hear someone talking about a hockey stick growth curve, they almost always mean a type-one hockey stick curve. In reality, most of the time, it is the type-two hockey stick curve that is experienced. Instead of a short period of development followed by an explosive upward growth of market penetration, the real situation tends to be a very long period of very slow growth, followed by a short upward spurt to only a modest level of penetration.
The Internet is an interesting example of both types of hockey curves. We usually think of the growth of the Internet as a classical type-one hockey stick curve. Actually, it is just one part of the Internet that grew this way. The explosive growth was in the World Wide Web, which was a real type-one curve. The Internet itself grew on a type-two curve.
The lessons to be learned concern the difference between the two growth rates. Why did the World Wide Web follow the type-one curve, while the Internet, upon which it was based, suffer with a type-two curve?
The Internet served an important role for a limited number of users, but it had serious barriers to entry. It displayed its messages in monochrome text; no color, no pictures. The Internet had to become pretty and easy. Lessons to be learned include that ease of use, attractive displays, entertainment value, cost-effectiveness, and genuinely new utility are the keys to type-one hockey stick growth.
A little closer to home, we have digital television. There is an opportunity for massive confusion here. What do we mean by "digital television"? There are at least four types that come to mind: satellite digital television, cable digital, the Internet's streaming video, and broadcast digital television. The order of this list is according to speed of penetration.
Satellite digital television really was type-one growth. From the cable industry's perspective, satellite digital television went from "DBS = Don't Be Silly" to "Death Star" in a very short period of time, and with penetrations that give it more subscribers than the largest cable system.
An example of a type-two hockey stick is streaming video on the Internet. It still is on the long handle side, waiting for the upturn. That upturn may be a year or two down the road. Streaming video is troubled by low-speed Internet connections, cable Internet systems that have failed to keep up with demand and are only marginally faster than phone connections, failed DSL companies, and poor video quality. Yet, streaming video has its place and is growing.
Digital set-top boxes are an in- between case. We were promised the 500-channel universe quite some time ago. It was to have happened in true type-one style. The reality is that, some time later, we first saw reasonable numbers of digital cable set-top boxes being deployed last year. This year, fears about cable operator stock prices have caused order cancellations and postponements. The deployment has substantially slowed. We can visualize this hockey stick as a warped child's version in type-two format. The handle isn't as long as an adult hockey stick, but it is the handle side that is along the horizontal axis. And the vertical up rise has a warped bend going less aggressively upwards this year.
Finally, we consider broadcast digital television. At present, broadcast digital television is best viewed as a type-two hockey stick broken in mid-stem. Digital broadcast television suffers from a variety of near-lethal ills. Perhaps most importantly, it provides little of value that is unique and unavailable elsewhere more conveniently and cheaper. If analog television gives reasonable results, especially on modern hybrid fiber/coax cable systems, there is no need for broadcast digital television. Those who need "free advertiser supported television" have it with their analog receivers. "Free television" that comes with a high initial purchase price is not free at all. The cost of a digital television receiver will buy a lot of cable or satellite service. For those consumers who somehow feel a need for DTV, they have both cable and satellite to satisfy that hunger.
The one thing that broadcast can do that cable cannot is to provide portable reception. While analog LCD receivers are very inexpensive and work reasonably well, digital portable receivers are non-existent and will likely be very expensive if they are ever manufactured. Yet we hear pleas for "digital must-carry" and "mandatory digital tuners" in consumer receivers. Both of these onerous patches on a broken hockey stick are intended to force something that is fundamentally flawed.