More than 21 million HDTV sets had been sold to consumers at year-end 2005, according to a new study from Kagan Research. Meanwhile, there were 5.5 million subscribers to an HD service. Of those, 70 percent are cable customers.

Kagan projects at year-end 2006, penetration of HD sets into TV households (TVHHs) is expected to reach nearly 30 percent, and that by 2010, nearly 180 million HDTV sets will have been sold to U.S consumers, penetrating more than 81 percent of TVHHs.

“Due to capacity constraints and the fact that the number of HD households remains rather small, the market for HD cable networks is still nascent, and by our estimates, generated only $182 million in 2005. However, we believe this will grow to more than $1.9 billion by 2010,” said Derek Baine, senior vice president of Kagan Research.

“While some HD nets are currently producing positive cash flow, in aggregate, HD networks are expected to lose money through 2006 as subscriber numbers and affiliate and ad revenue catch up with programming expenses,” he added.

MSOs will continue to be put under pressure to add more HD networks. The two major DBS operators, DirecTV and EchoStar, are growing rapidly, in part because of their HD services. Together, they should end 2006 with a total of abut 29.4 million subscribers, or about 30.3 percent of the multichannel universe.