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$2K 4K Will Drive Ultra HD Demand In Q4

TWICE: Will Holiday 2014 be the breakout season for Ultra HD TV?

Tom Hickman, Nationwide: We think that during the fourth quarter there will be an Ultra HD effect. TV is the biggest category and Ultra HD will get people into the store.

Any category that drives people into our storefronts helps us since it is difficult for us to sell ancillary categories to customers when they are not in the store. With some 4K going to be priced at $1,999, we will sell other categories. We aren’t thrilled about the price going down, but we like the foot traffic which will help us sell other categories.

Rick Souder, Crutchfield: 4K is absolutely a viable business for the specialty channel and is already meaningful, well before the holidays. It’s a very significant part of our TV business, and will continue to be so for us and other specialty retailers through the holidays.

Our TV business in general has been good, driven by 4K and large screen sizes. Sixty inches and up is what’s driving a lot of the business.

Dave Workman, ProSource: Generally UHD will represent a smaller number of units from the entire [TV] category, but the dollars will be significant, probably $2 billion at retail.

Mike Abt, Abt Electronics: Ultra HD has been a good category and gives us something to talk about. There’s still not a lot of content but it’s coming, and it’s neat to be able to sell a TV for $2,000 or $3,000.

Dan Pidgeon, Starpower: The World Cup had the potential to be a tipping point for 4K, but Samsung and Sony are providing their own content, and price compression will open that market up quite a bit.

UHD also opens up a discussion with the customer about what’s important to them. It’s no longer just a price-value proposition; now it’s about a new home entertainment experience, and that provides opportunities for attachment sales of premium and hi-res audio. People justify spending on the entertainment experience, and our rule of thumb is that we should be able to attach an amount equal to the price of the TV.

Hickman: I think we’re in for a very serious resurgence for the TV business in general in the fourth quarter. It is always dominant in the fourth quarter but in the past couple of years, tablets and smartphones dominated holiday. But with price points on Ultra HD coming down, you will see that trigger retail activity that will put TVs back on the front page.

TWICE: What is the pricing “sweet spot” to make Ultra HD a volume business?

Abt: It needs to be in the $1,500 to $2,000 price range to be a volume category. But our customers are willing to pay more when they’re buying the newest technology, and they tend to purchase the better sets. They’re also inclined to spend more on accessories and will choose the better cables.

Workman: I would say that tier-one suppliers let the Chinese artificially reduce pricing on 4K too quickly. There will be plenty of noise out there with Seiki 4K for $999 which is available already. There is already pricing you could replicate for 4K from the 2K market.

We are still dealing with an early-adopter market, if suppliers have patience. For instance, Samsung’s curved ad campaign is working. There is a form factor issue here and the curve embodies what a premium product is in 4K.

Hickman: My experience is that it only takes one guy to create [an aggressive market]. A huge amount of promotions will be around since there is a lot of share up for grabs. Key manufacturers – top tier-one and tier-two suppliers – will create retail activity by going fast and hard with promotions.

We think a bunch of suppliers will have additional 4K models for the fourth quarter that will give us a shot in the arm. From what we hear there will be a bunch of mainstream brands reaching $1,999, $999 price points, which are very compelling for UHD… which should lead to hyper adoption of UHD [in the fourth quarter].

Pidgeon: We sell two tiers of Ultra HD TVs: $10,000 to $15,000 sets at the high end, and $2,500 to $5,000 models, which is an affordable range for an ultra-premium TV. As they inch down further toward the $2,500 price point, we will see increased traction on our end.

Souder: I expect 4K will have a much broader appeal in Q4.