Digital television adoption timing and format choices of broadcast stations: Examining the dynamics of government-mandated standard transition

This study examines the relationship between firm- and market-specific factors with broadcast stations' choice of timing and format while transitioning to the new digital television standard. The case of the American digital television transition is especially intriguing because of its three-fold peculiarity. First, its standard-setting process is a hybrid of both market- and committee-based decision methods. The finally adopted standard is regarded as an atypical standard because it allows multiple formats, which range from high definition to standard definition. Second, while the U.S. digital television transition is government-mandated, it follows a flexible timetable. On one hand, Congress requires all the stations to complete the transition by February 17, 2009, on the other hand, Congress permits transition delays for many stations. Third, in spite of the government mandate, the digital adoption pattern is highly associated with the market performance and firm behavior of broadcast stations. This study focuses on three firm- and market-specific factors---firm size, age and business grouping---to investigate their possible impacts on stations' adoption choice of digital television.;Survival analysis and a competing risks model are employed to examine stations' format choices. The results show that old and established stations tend to adopt high-definition format sooner, but it takes less time for young stations to adopt standard-definition format. The findings suggest that the financial difficulty of digital television transition may have been eased by the flexibility obtained by having multiple formats. The standard choice in digital television transition is also likely to introduce new business models for traditional broadcast stations. Profit-motivated decision making by individual television stations influenced their format selection. Large stations interested in preserving market power chose the high-definition (HDTV) format, while smaller stations interested in reducing cost and experimenting with new business models chose the standard-definition (SDTV) format. The relaxed transition timetable suggests that the regulator has been industry friendly. However, the regulator failed to boost viewers' awareness of digital television. To ease the difficulty associated with technology adoption, it is recommended for regulators to activate a friendly environment for both firms and consumers.