Live From CES: CTA Overview of TV Marketplace Shows Promise of OLED, Power of Size

Steve Koenig, Consumer Technology Association, senior director, market research, provided an overview of current consumer-television features at the CES Research Summit, held prior to the start of a show that promises to see many of the features discussed sparkle and shine in all-new ways. The good news is that, for all the discussion about the end of TV, there is still a relatively high number of consumers planning to buy a new TV in the next 12 months (29% versus 33% for smartphones). And 77% of all TV buyers (66% of millennials and 82% of those over the age of 35) see the TV screen as their main video-consumption device. More than 50% have more than three TVs, 29% four or more TV sets.

“We have more TVs in America than we have people, which is kind of astounding,” said Koenig.

Steve Koenig, Consumer Technology Association, senior director, market research

Steve Koenig, Consumer Technology Association, senior director, market research

But what are they looking for? Screens in the 40- to 59-in. range are the sweet spot, and 23% also want to buy a UHD set. The two biggest factors are, quite simply, screen size and picture quality (80% and 62%, respectively) with cost (29%) and sound quality (27%) ranking third and fourth in importance.

“People are finding space in their home for 70-in. TV sets, and the super-jumbo size category is growing aggressively,” said Koenig. “By the end of the decade, 10% of TV sets will be 65 in. or larger.”

Furthermore, that desire for larger sets will not be just a U.S. thing.

“Years ago, you would hear that smaller households overseas had no way to fit a 50- or 60-in. TV,” Koenig noted, “but now, if you go to retailers overseas, you see 65-in. sets.”

LCD revenues are particularly tied to larger screen sizes, with two-thirds of revenues from sales of sets larger than 50 in.

The next most important factor is picture quality, a major reason that Koenig believes both 4K resolution and HDR will be major factors in getting consumers to upgrade their current TV.

“There were 1.3 million 4K Ultra HD shipments last November,” he said. “We expect household-penetration rates to continue to climb higher. Current CTA projection calls for 13 million UHD sets to be sold in the U.S. in 2016, 17 million in 2017, 18 million in 2018, and 19 million in 2019.”

“But, globally, the real driver will be China,” he added, noting, “It is a huge marketplace with millions and millions of new consumers coming to the market every month.”

As for HDR, Koenig pointed to the UHD Alliance announcement on Monday as an example of how serious the Hollywood community is about making sure both HDR (and UHD) are  done properly. The Alliance laid out recommended standards that need to be met for a consumer device, service, or content to be labeled Ultra HD Premium.

“There is a bit of concern about how consumers will be able to get comfortable with HDR and whether the industry can agree on what HDR is, as there are a lot of different approaches,” he said. “Enter the UHD Alliance, which worked with a wide cross-section of the industry.”

And the final feature that continues to gain attention from consumers is Smart TV, whereby the TV is connected directly to the Internet, with apps and streaming functionality obviating external boxes like Roku, Apple TV, or Blu-ray players.

“Last year, we saw broader adoption of Smart TVs, and now the household ownership has overtaken the streaming-media devices (43% to 29%),” said Koenig. “But Smart TVs are here in abundance as the feature is in more than two-thirds of set sales and that continues to climb.”

And, he added, it’s not just for Netflix. LG’s WebOS3, for example, allows the TV screen to be split and a music player to be run with the TV off. And Samsung’s Smart Things Hub exemplifies future capabilities of UHD sets that go beyond more pixels and improved images.

The Price Is Right
“When you get down to brass tacks, sustainable sales volumes are because of price drops, and the irony is, very unhappily for TV-set makers, [that] winning the sale may mean you are out of business,” said Koenig. “Toshiba has left the TV market, and there are really only a handful of brands, and a number of those are really struggling mightily.”

Despite the pessimism, it is anticipated that set sales will remain steady for the next three years and a number of new technologies will emerge. According to Koenig, the current phase of the digital-TV evolution is one of replacing first-generation sets, but, by 2020, the next phase of innovation will really take off as OLED and even things like rollable and foldable TVs become a realistic value proposition for manufacturer and consumer alike.

“You are going to see the industry pivot and point to OLED as the upgrade path,” he explained. “That will be more of a next-decade story as the yields on OLED are still poor [for large screens] and very few manufacturers have been willing to invest too much.”

In the meantime, LCD technology will continue to dominate, and it will probably not be until 2030 that OLED could possibly push LCD out of the market the way LCD pushed plasma out.

“Plasma now is gone,” he added, “and projectors have been relegated to the CEDIA high-end [home-theater] market.”

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