Baxter: CE Industry Needs 3D TV To Be Successful

By Greg Tarr On Mar 23 2010 - 10:34am

NEW YORK — Having enjoyed the successful launch of an extensive LED TV lineup in 2009 and heading into the year of 3D TV, Samsung Electronics America president Tim Baxter is preparing for another successful year.

Samsung kicked off the launch of a global 3D LED TV marketing and advertising campaign in New York with a flamboyant Times Square concert and upstaged its rivals by scooping up “Avatar” director James Cameron to give a shout out to Samsung’s 3D TVs and shoot 3D footage of a Black Eyed Peas performance for a promotional video during the campaign launch celebrations.

TWICE caught up with Baxter at the Samsung Experience showroom in New York just after the launch formalities for a closer look at the company’s 2010 strategy:

What are your goals for 3D TV this year?
Baxter: The first goal is to create the market. We, as an industry leader, have that responsibility to create the market [for a new platform]. We did it last year with LED. We want to be able to take that same approach and formula into this because if we don’t take new technology and create new markets, we are on a very slippery slope towards rapid commoditization, and that’s not healthy for anybody, including the consumer, because you are not bringing the newest and best entertainment solutions alive. So, the first job is to create the market. In doing that, we expect to get more than our fair share of the marketplace, and we expect to be a clear leader in the 3D market. We have between 30 and 35 percent market share in TV, Bluray, and we are getting there in hometheater systems. We expect to have the No. 1 position in 3D as well.
This year we will have 15 TVs coupled with a Blu-ray player and a Blu-ray hometheater system, all with 3D and IPTV capability built in. The strategy is to use 3D and IPTV as critical legs of that new entertainment experience. We are seeding the market with 3D TVs that give you IP TV benefits immediately, as well as bringing forth 3D partnerships with partners like DreamWorks.

TWICE: The A/V specialty channel historically has been a critical component in the launch of any new format, yet the industry has lost a number of significant players there in the last year, and many of the rest feel the manufacturers are leaving them out to dry in favor of the mass merchants, warehouse clubs, online dealers and big-box chains. How is Samsung going to address this with its 3D plans this year?
Baxter: We are very committed to our partnerships with the A/V channel. A lot of what we have done over the past two years and the successes we have had have come from the A/V specialty channel. It is critical that we do that, because that is where you bring new technology to the marketplace. We offer derivatives for the channel. We offer special programs and promotions for the channel, and we will continue to invest in them. It is in Samsung’s best interest that the A/V specialty channel continues to flourish.
This is not a fundamental changed in our distribution strategy. We continue to offer programs and solutions tailored to each of the distribution channels.

TWICE: What is required to qualify for one of the 5,000 3D merchandising kiosks you announced you will be providing to dealers across the country this year?
Baxter: This is about dedicating the space and recognizing that one size does not fit all, so there are many different form factors and solutions for our various partners. This is not about building 5,000 merchandising displays and putting them in a warehouse to see who wants them. This is collaborating with each of the retailers, understanding their merchandising needs, understanding their merchandising restrictions and guidelines, and designing solutions that will bring forth the message that we want to convey to the marketplace. Again, this is very similar to what we did last year with LED. We wanted to communicate three main points, and we think that delivering solutions that communicate them at the retail level is the best way to do that.

TWICE: This year Sony and Panasonic are also offering 3D kiosks to many dealers to communicate their systems and messages. Will it be more difficult to get the real estate you will require?
Baxter: It will depend on the retailer. We are confident in our ability to get the retail execution of this.

TWICE: You are investing heavily in advertising and promotion this year. How does your advertising and promotions budget compare to last year?
Baxter: Looking at it from the context of the TV and consumer electronics areas — I can’t speak to the handheld phones — we will be spending more money in 2010 than we did in 2009, and we spent a lot of money in 2009. We invested a lot in promoting our Dual View digital cameras, and we expect to do more of that in 2010. So what we are really doing is rather than taking the rather traditional vertical approach to marketing communications, we are really doing it much more horizontally. National television advertising will be a significant portion of that budget. The focus will be on broadcast TV, online and print as the three key components of that and probably in that order. We think the value of online in that space is growing and growing in terms of communicating and marketing online to reach consumers. When we launched the teaser (3D TV spot) campaign on Sunday, the amount of hits and the Twittering that was going on was remarkable. The numbers were something in the neighborhood of 20x the numbers that were coming to the site to learn about 3D, and we had been doing a lot of talking about 3D coming out of CES. So we think the timing of that was very relevant.

TWICE: And how will you leverage co-op advertising this year to bring the customer into local stores?
Baxter: What we’ve been doing is getting more and more creative with how we collaborate with our retail partners to bring that alive. You saw that in TV commercials last year, and you saw that with many of our retailers, where we take our creative theme and messaging and tie that in with our retail partners so that is becoming more prominent. The key to it is making sure that both parties understand the consumer insights and what we are bringing to the table, and how do we extend that beyond the buy/sell relationship but more integrated into the marketing communication and insight groups within our retail partners. That allows for a richer experience that we bring alive.

TWICE: How will you tie 3D into your NFL sponsorship plans?
Baxter: I think that is still evolving. As broadcast content evolves, there might be opportunities to do that, but there is a lot of work going on right now on the broadcast side of the 3D content experience in general, and we expect that will continue to evolve, and that’s all I can say right now.

TWICE: How much more of a challenge is it to introduce a new format like 3D on the tail end of this recession?
Baxter: I look back to the day, almost one year ago, when we announced our plans for LED TV, which had a $600, $700, $800 premium, and many people asked me that very same question. And at that time we were in some of the darkest days of the economic downturn. Yet we think it was imperative for us to do that. And, frankly, so many retailers and consumer were appreciative of us taking that bold step, because had we not, we would have again been on that slippery slope toward commoditization. So, while we are seeing improvement — and we don’t think that we are out of the woods yet."

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