Recently, a studied showed that nearly 20 million households in the US have some sort of HDTV device. Analyst Murray Arenson sees strong growth for this area in the future of the digital media space . He talks to us a little bit about his pick in this space, DG Fast Channel (DGIT):
Mr. Arenson: The company I like in this space is called DG FastChannel, and it is the dominant deliverer of advertising for the television industry. Today only 1% to 2% of the ads being delivered are in HD, and this company stands to generate a lot more revenue from the expansion to HD, since the per-transaction economics of HD delivery are much more attractive… What’s particularly compelling about DG’s HD play is that they can generate today roughly 10 times the revenue and cash flow for an HD ad delivery as they can for an SD (standard definition) ad delivery. And again, the premise here is that we’re starting at 1% to 2% HD ad penetration and ramping up that penetration as we approach that February 2009 deadline you talked about. There’s a pretty good possibility that HD ad penetration could be approaching double digits by the time we get to that 2009 time frame.
For the full interview with Mr. Arenson, including an overview of different areas in the digital media sector, and his outlook for 2008, click here.