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Ultra HD Offers Market Share Opportunities

Ahandful of manufacturers are pulling out all the stops to ensure their leadership positions in the burgeoning Ultra High-Definition TV brand-share sweepstakes, but will the arrival of this new technology provide a reset button for overall TV rankings?

Most industry players and analysts are doubtful, although it could help to put some lesser-known brands on the map.

Among the current HDTV market share leaders are Samsung, Vizio, LG, Sony and Panasonic. All but Vizio and Panasonic have Ultra HD products in the market today. But brands just entering the Ultra HD field — like Sharp, Toshiba and an assortment of Chinese contenders — still have a shot at the coveted top.

“Ultimately, 4K is more of an evolutionary step akin to 1080p or 3D, rather than a revolutionary step like HD or digital broadcasting or the transition from CRT to flat panel,” said Paul Gagnon, NPD Display- Search North American TV market research director. “In addition, the switch to flat panel, and by association, HD, lowered manufacturing barriers. Those low barriers still exist today even for 4K, so the brands who are strong today in flat-panel HD can still be successful in 4K so long as they maintain their marketing and pricing competitiveness.”

Gagnon pointed out that the big market share shift that occurred from analog to digital “coincided with a move from CRT — which was a very vertically oriented technology with high manufacturing barriers — to flat panel, which allowed almost any company to start up a TV brand due to the merchant-like structure of the manufacturing industry. This time around, there is no similar shift since the same manufacturing base that produces HD or FullHD flat panels is being used to produce 4K. Structurally, the supply chain for 4K is identical to HD or FullHD.”

Scott Ramirez, Toshiba America Information Systems visual products marketing and development VP, said that establishing a good reputation early in the rollout will be critical to any manufacturer.

“Every technology shift provides new opportunities for both manufacturers and retailers,” Ramirez said. “Of course, it’s not going to be a go-to-the-head- of-the-class pass, but manufacturers that move quickly and act smart can gain advantage. Toshiba hopes to be both quick and smart.”

As for newcomers to the market, like China-based Seiki Digital, Ultra HD offers a chance for quick visibility as a value leader.

Seiki turned the Ultra HD market on its ear last spring by introducing a 50-inch Ultra HD LED LCD TV at a less than $1,500 suggested retail.

“Increasing market share is definitely a goal for the Seiki Digital brand in the U.S. TV market,” said Frank Kendzora, Tongfang Global’s Seiki Digital brand executive VP. “However, we are realistic about our market position and the type of consumers we serve. The Seiki brand caters to smart, savvy consumers looking for a straightforward product without the bells and whistles that increase cost. Whether Seiki’s target consumer will be the majority for Ultra HD is hard to predict, but we feel confident that our Ultra HD plans will ultimately lead us to a leading position in the market.”

TCL is another Chinese manufacturer striving to get a foothold in the U.S. TV market using Ultra HD. TCL undercut Seiki’s 50-inch Ultra HD TV launch price by introducing a 50-inch Ultra HD LED LCD TV of its own at a market-leading $999 price point.

Tom Heffernan, TCL Multimedia marketing director, said: “I think Ultra HD shakes things up a bit, and it gives an opportunity to brands like TCL that are new to the U.S. market. Reaching the top five is obviously a goal, and I think 4K will give people the opportunity to get to know us a brand.”

Heffernan explained that although TCL is a major player in China and other markets of the world, its lesser- known status in the U.S. has made it hard to bring to the U.S. market some of the higher-end technologies for which it is better known elsewhere.

“4K gives consumers a chance to see some of the advanced-level technologies from TCL, rather than just entry-level products,” he said.

DisplaySearch’s Gagnon said the strategies could help emerging brands make a bigger impact, “if they are willing to target the most aggressive price points. But for a premium feature, I think there is a preference on the part of consumers to seek out trusted brands. Chinese brands are just not that well-known. We’ve seen Chinese, or other opening-price-point brands, operating in the HD and FullHD market for years now without any breakout success.” Another Chinese brand that could see an impact in the U.S. from Ultra HD is Hisense, he added.

“Hisense has a strong link to Walmart at the moment, and if Walmart takes up the 4K banner and pushes it aggressively, Hisense would stand to benefit,” he said. “However, we really haven’t seen Vizio’s plans for the category, and as the No. 1 or No. 2 brand overall, their move will have a big impact.”

Vizio showed 65- and 70-inch Ultra HD LED LCD TVs in January, but John Schindler, Vizio new product development VP, warned that the company wouldn’t release anything until it had the inputs necessary to receive native Ultra HD “4K” content in all its glory — presumably referring to 4K/60p, which was covered in the recently released HDMI 2.0 spec. At press time, Vizio wasn’t commenting on its specific Ultra HD model plans.

Gagnon’s early picks for Ultra HD brand-share leaders in the next five to 10 years include “the same top brands today … so long as they don’t become complacent, although having exclusive (or nearly exclusive) access to 4K content will help.”

Companies like Sony, with ample content resources on its side, have an early edge, but “many of today’s successful brands, like Vizio, have almost no connection to the HD ecosystem of content, production or video distribution. It’s not a prerequisite,” he continued.

Securing a top-five position in the TV brand-share race, after Ultra HD, will come down to price competitiveness, Gagnon assured.