NEW YORK – Time flies at Ultra HD speed, and already the industry is about to see the releases of thirdgeneration Ultra HD LED LCD TV models for the consumer market.
This year the stakes get a little more interesting with a veritable slew of TV brands entering the field looking to build their reputations around the latest high-resolution performance – often, at value pricing.
Brands including Hisense, JVC, RCA, Seiki Pro, TCL, Vizio and Westinghouse Digital are preparing to deliver new Ultra HD model lines now or in coming weeks as the established top tiers, including Sony, Samsung, LG, Sharp, Panasonic and Toshiba, brace to fend off the onslaught and maintain a sustainable profit margin at the same time.
According to IHS market research, 1.3 million Ultra HD TVs are forecast to ship in the U.S. this year (amounting to 4 percent of total shipments). That is expected to increase to 6 million units (18 percent of total TVs) in 2016, according to Veronica Thayer, IHS market research analyst.
Somewhat more conservatively, NPD’s Display- Search is forecasting UHD TV shipments of about 800,000 units in North America this year, rising to 13 million (about one-third of NA TV volume) by 2017.
Analysts and manufactures alike say market conditions are lining up for what should be a highly successful format takeoff.
First, sales are ratcheting upward daily on very large-screen flat- panel displays – 55-inches and larger – and the larger the display, the greater the chances of seeing distracting image artifacts from enlarged SD, HD and even FullHD material, especially in smaller viewing spaces.
Enter Ultra HD TV (or “4K” as some stalwarts continue to refer to it) with four times the resolution of FullHD and some of the finest up-scaling and video-processing technologies yet seen in the industry, and the big-screen TV sale becomes even more compelling, even to consumers with small home theater spaces.
Still, the Ultra HD takeoff won’t happen overnight.
Industry observers said the first obstacle to consumer acceptance will be boosting general consumer awareness of Ultra HD and the benefits it provides.
According to a late 2013 Leichtman Research Group online consumer survey, only 30 percent of U.S. adults had heard of the newer Ultra HD TV technology and only one-third of them have ever seen one.
Of the 10 percent of people who have seen an Ultra HD TV, 28 percent are “very interested” in buying one, and 15 percent of all who have heard of it are “very interested” in getting it, the study found.
In contrast, a similar survey conducted by CEA market research found more than half of online U.S. adults have some level of familiarity with the terms “Ultra High-Definition TV” (64 percent) or “Ultra HD TV” (55 percent), and three-fourths (73 percent) of online U.S. adults who saw an Ultra HD TV in a retail store are interested in owning the technology at some point in the future, while only 34 percent of people who did not see the technology are interested in ownership.
The latest IHS consumer survey on Ultra HD awareness conducted in August 2012 indicated that 26 percent of consumers are aware of Ultra HD TVs, according to Thayer.
Industry pundits, manufacturers and analysts are in agreement that the road to a profitable return of the TV business will depend on the level of commitment retailers, in particular, are willing to put behind the Ultra HD segment.
“The main barrier for purchase will be price and educating the consumers about the benefits,” Thayer offered. “UHD looks great but unless put side-by-side with a FullHD (1080p) TV, it’s very difficult to see the improvement.”
Many dealers, distributors and buying group representatives are buying in to the Ultra HD story: Tom Hickman, electronics senior VP of the $15 billion Nationwide Marketing Group, recently told TWICE he is “thrilled” by the potential that Ultra HD and OLED hold, and will encourage members to target early adaptors.
Similarly, Dave Bilas, president/COO of the independent dealer organization, added that the group is “challenging members to display the new video technologies differently” than HD models by using lifestyle environments with motion furniture. “The TV wall is not the best display format for OLED,” he said.
Jerry Satoren, CE executive VP, DSI Systems, said relief from inventory tightness, winter weather and Ultra HD sticker shock will create “a perfect storm of opportunity.”
“I’m very optimistic about the back-half of the year, when there’ll be more TV inventory and UHD will become affordable, but not cheap,” he said. “These are big sets that will be the main TV in the house, which is where independent dealers play well.”
Roddey Player, president/CEO, Queen City Audio Video Appliances of Charlotte, N.C., called the display programs being developed around new Ultra HD and OLED TVs “exciting stuff.”
“It will help us get the product on the floors. The availability of content might still be lacking a little bit, but we need the product-end now. I think it’ll take hold this fall, and we’ll see some good activity. We’re going to position ourselves as experts for UHD and OLED and make sure people know that we know about the product. We can talk to you about it and tell you what it’s going to offer.”
As for the “lack of native content” argument that some Ultra HD naysayers like to throw out when considering Ultra HD adoption, the IHS study found that “lack of 4K content isn’t that big of an issue” because of the aforementioned new up-scaling technologies and because, historically, the lack of native HD content at launch didn’t deter penetration of HDTVs. “That came later, and it’s still developing,” said Thayer.
As is typical for a new technology rollout, high prices (relative to the existing field of products) is the biggest consideration in an Ultra HD purchase, but that should start to improve significantly this year as price-aggressive brands ship their new lines.
“The price curve for 4K TVs will be similar to that of HDTVs but at a slightly faster rate of decline,” said Barbara Kraus, Parks Associates, research director. “While 4K is priced at the high end now, it will decline to mass-market levels over the next two to three years. Like flat-panel HDTVs, 4K TV prices will continue to decline as unit sales volume increases.”
“A lot of the 4K volume this year will be done under $1,500, especially in the second half of the year when Vizio launches their P series,” observed Paul Gagnon, DisplaySearch worldwide TV market research director.
According to analysts, the brands poised to gain the most traction in the Ulra HD market this year are all located in the top tier: Sony, Samsung, LG and Vizio.
DisplaySearch’s Gagnon singled out Vizio as a significant wild card to watch later this year.
“A significant portion of our forecast factors in Vizio’s entry into the space since they are one of the top overall brands, and we expect their competitors to react,” Gagnon said. “After the launch of Vizio’s P series, competitors will react and the trend down in prices will open up distribution to mass market channels. 2015 is probably when we will see the greatest expansion of UHD distribution.”
Alan Wolf contributed to this article.