Revolutionizing The Capabilities Of Television

Revolutionizing The Capabilities Of Television

For 2019, attractive retail prices may boost the TV demand, despite the lack of global sports events. Therefore, global TV shipments are expected to further expand to 221 million units in 2019, a growth of 1.3 percent year-on-year.

With a year-end estimated 3 percent year-on-year increase in shipments, and a rise of 7 percent in trade value, the 2018 global TV market reversed the declines of the previous year. The sales of TV sets amounted to USD 51 billion in 1H18 in the global market, around 1 percent more than in the same period in 2017, spurred by 2018 FIFA World Cup. Global sales of a total of 238 million devices have been estimated for 2018, corresponding with a 2 percent increase compared to 2017. Main trends contributing to this growth are high-end devices with high average prices, smart TV sets, and recovery of emerging markets.

The global shipments of branded LCD TV sets for 2018 are estimated to total 218 million units, an increase of 3.4 percent compared with 2017. New technologies are now driving the upsurge with 4K sets continuing to attract consumer spend at the premium end of the market driven in part by easier access to 4K content, as streaming services add content and gain a foothold. 4K TV shipments are estimated to have surpassed 102 million in 2018, representing 44 percent of total global TV shipments. Geographically, APAC leads the 4K unit shipments representing 37 percent of global unit shipments in 2018. North America and Western Europe are the regions with the highest 4K TV penetration at present.

Smart TV shipments are up by 9 percent and the market value is expected to reach USD 253 billion by 2023, exhibiting a CAGR of around 10 percent during 2019–2023. The demand of 4K and 8K smart TV screen resolution is anticipated to witness significant growth due to a gamut of factors such as rising adoption of novel technologies by consumers, increasing popularity of UHD TVs and plummeting smart TV prices. The segment is anticipated to grow at an increased rate due to increasing consumer preferences toward online content, snowballing replacement demand, and effective advertisement and marketing by key players across the globe. North America accounts for the largest regional share in the global smart TV market in 2018.

Even though the technology is barely out of its infancy and with very little traction, 8K sets are seen emerging in 2019. IHS Markit forecasts that the 8K TV market will grow from less than 20,000 units in 2018 to more than 430,000 in 2019 – eventually approaching 2 million units by 2020. All of this growth will be centered on 60-inch and larger screen sizes, with 65-inch TVs accounting for more than half of the volume.

For the very first time in North America, more than a million above 70-inch screens are estimated to have been shipped last year, underlining the importance of super-large screens. OLED is also beginning to make its presence felt and is projected to break the million European shipments mark in 2019.

The market is being lifted by developing economies, as European and US markets continue to deliver a lack luster performance. In developed countries, the desire for bigger screens and premium features in the living room is being satisfied to the detriment of other rooms and that in many cases, households are opting to upgrade their main set at the expense of secondary TVs, resulting in some market stagnation. China is in positive territory thanks to a growing middle class, whereas many in India are finally saying goodbye to their old CRT TV sets. In Russia, the market has benefited significantly from hosting the FIFA World Cup, resulting in an estimated 14 percent shipment growth in 2018. Meanwhile, over in Brazil, TV set demand from the previous year’s analog switch off spilled over into 2018. All these diverse influences have combined to create a positive market landscape.

Technology update

Throughout 2018, trends, cultural shifts, and consumer behavior rapidly evolved. Innovation and competition in the market continues to disrupt the status quo. As 2019 has begun, a few major developments are shaping up in the TV world.

Integrating innovation and increasing value proposition of smart TVs. Technological innovations such as artificial intelligence (AI), Blockchain, and smart homes are having a considerable impact on businesses of all shapes and sizes. The smart TV industry is one that is adapting to integrate these new technologies and ensure that its products remain in step with consumer expectations. In a smart TV context, AI will be used to anticipate media demand for content delivery, ensuring more hit shows for content producers and enabling viewers to receive better recommendations for shows. The growth of the global smart homes industry offers an opportunity for the evolution of smart TVs. As the devices occupy a central position in almost every household, smart TVs’ connected screens are perfectly placed to become the central hub for interaction with smart home devices and services. As consumer behavior is shifting toward increasing adoption of digital media services, there is a strong potential for smart TV manufacturers to integrate these technologies and increase their value proposition. However, product differentiation is becoming increasingly important. This challenge is enhanced by the fact that people now consume content across smartphones, tablets, PCs, and laptops, as well as TVs, so smart TVs are competing with a large number of screens for people’s time. This is pushing established incumbents in the consumer electronics industry to consider how to evolve their business models. The traditional manufacturers are planning to focus more on driving recurring customer revenues rather than device sales. Increasing numbers of TV manufacturers are striving to create a complete value chain that builds on their core business to incorporate digital services, eventually achieving a high customer lifetime value thanks to the potential for cross- and upselling.

Lower market share and LCD continues its dominance. LCD will continue to lose market share, especially in the small and medium display market to OLED. Strong competition has also impacted LCD’s profitability resulting in fab closures. Companies in China such as BOE, China Star, and others are bringing in massive 10.5G and higher LCD capacity over the next 3-4 years that are optimized for 65-inch and above size TV panels. This will result in more aggressive price reductions for TV panels in 2019, leading to a shift to larger size TVs. 2018 saw the introduction of more 8K TVs. Manufacturers will bring 8K TV to drive replacement demand. QD technology and mini LED backlight can also help LCD to reduce performance gap with OLED and even exceed performance in certain segments. This will enable LCD technology to keep TV market dominance in 2019 and beyond.

Quantum Dot coming to LCD’s rescue. QD display technology has the potential to be a disruptive force to enable next generation LCD, MicroLED, and OLED. It can ultimately create an emissive display to compete directly with OLED display. QD can bring LCD TV performance closer to OLED and enable OLED to exceed LCD in certain areas. In recent years, there have been various QD technologies and applications available or under development for display. Now Chinese brands have also joined the QD club. The cost reduction of LCD panels in 2018 also lowered the prices of QD TVs. With massive larger size LCD capacity coming, QD can come to the rescue by providing ultra high brightness, super wide color gamut and differentiating product to boost TV replacement demand. 10.5G fab larger size LCD capacity fabs are coming in 2019 that can help to reduce QD-based LCD TV costs, leading to higher adoption rates.

OLED poised for next gen TV. OLED has achieved increased market shares in recent years with superior picture quality, design differentiation, higher capacity, and adoption by multiple TV brands. Still, OLED capacity for TV is small compared to LCD. The segment has shifted to 65-inch and above. Suppliers are bringing in new materials and new processes in 2019 and beyond to drive growth. However, the costs of OLED panels remain high due to the tight panel supply from LG Display and hurdles in yield improvements. With low-priced LCD TVs rushing into the market, it remains to be seen when OLED models are able to remain in the premium market positioning.

4K services are still the exception rather than the rule. Connectivity has become critical as it drives accessibility to 4K content. Consumers are buying 4K TVs and vitally, connected ones that are connected at a higher rate than older smart TVs. Penetration of 4K TVs is low but picking up fast. Better visual experience and availability of 4K content together with declining price points are driving 4K TV set shipments. 4K content can now commonly be found on streaming services such as Netflix and Amazon Prime, while some pay-TV service providers are producing, up-converting, and broadcasting 4K programming. However, although TV programs are frequently produced in 4K, and some are broadcast or delivered that way, 4K services are still the exception rather than the rule. The US, the UK, Korea, Japan, India, China, and Turkey have both 4K channels and services. The operators are also seen committing to 4K STBs but there is a little drive on the linear channel side except for some niche channels. Multichannel operators are accelerating the rollout of 4K set-top boxes to future-proof their installed base of set-top boxes as HD and 4K set-top box costs have neared parity, while the new 4K devices help improve customer retention and growth. Reinforcing the drive to 4K are streaming media players (SMPs). 2018 was an important year for SMPs as the number shipped with 4K support passed the 50 percent milestone in 2018 in Western Europe and North America. Asia will pass 50 percent in 2019.

8K – the next wave of resolution transition. 8K models have a strategic significance for TV makers, despite its difficult ramp up. The limited growth is due to the high costs of panel, not fully developed supply chain, and lack of content in 8K resolution. However, with a strategic significance for manufacturers, the arrival of 8K TV has changed the landscape of the premium TV segment, while expanding the customers’ choices of products beyond only QLED and OLED. A group of the world’s leading display technology brands came together at CES 2019 to form a new industry organization: The 8K Association (8KA). Founding companies for the 8KA include AU Optronics along with Hisense, Panasonic, Samsung Electronics, and TCL Electronics. Samsung Display is also in the process of joining the 8KA. Specific goals of the organization include – promoting 8K TVs and 8K content to consumers and professionals; helping educate consumers and professionals about the 8K ecosystem; helping secure 8K native content for members; encouraging service providers to develop 8K offerings; facilitating communication within 8K ecosystem to help with commercialization; developing initial technical requirements for 8K input signals; and developing initial 8K TV categories and minimum specifications for image quality. The organization will work on developing the entire value chain for 8K with an initial focus on supporting the early commercialization and adoption of 8K TVs.

TV screens get bigger and more affordable. TVs with 55- or 65-inch screens are now commonplace. Global shipments of 60-inch and larger TV screen sizes increased more than 40 percent, year-over-year in 3Q18, with even stronger growth in North America and emerging markets, as prices fell to new lows for 65-inch and 75-inch sizes. This growth rate is more than 10 percent higher than in recent quarters. As demand grows for larger TV panels, the panels will increasingly be produced at 8.5G, 8.6 G, and 10.5G fabs. But as 10.5G fabs stabilize and shipment volumes grow, 8.5G fabs, being older than their 10.5G counterparts, will be less competitive in their bid to make super-large-sized panels. To this end, some suppliers at the older fabs are considering a restructuring in capacity to produce displays using OLED and QD-OLED technology, while some suppliers plan to increase shipment volumes for IT panel products, such as monitors and displays for laptops.

Road ahead

For 2019, attractive retail prices may boost the TV demand, despite the lack of global sports events. Therefore, global TV shipments are expected to further expand to 221 million units in 2019, a growth of 1.3 percent year-on-year.

For large-sized displays, the oversupply will be the result of ongoing aggressive investment in China forecast to drive growth of more than 10 percent in glass-area capacity yields. Chinese panel makers, already frazzled by various stresses, could find themselves plunged further into perilous territory. By all accounts, China continues to be the highest-profile player in the overall displays market. BOE started mass-producing panels in 2018 at its 10.5G fab. Meanwhile, other counterparts, such as CEC-Panda and CSOT, began mass production of their panels at 8.6G fabs during 2Q18, with CSOT planning a shift to a 10.5G fab in 1Q19. Area capacity from all Chinese fabs is projected to reach 155 million square meters in 2019, up from 120 million square meters in 2018.

OLED TV is expected to grow more than 40 percent in 2019, rising to 3.6 million units. This growth is in line with previous forecasts, because demand is essentially matching industry production capacity. The size mix still favors 55-inch TVs, based on current prices, but it will transition to mostly 65-inch TVs by 2020, when new production capacity is optimized for larger screen sizes, and when substantial growth is expected in the OLED TV category.

QD LCD TV shipments are now forecast to exceed 4 million units in 2019, based on more aggressive pricing and the introduction of transitional QD-equipped LCD TV models. The high-end prices of non-QD-equipped LCD TV models and the prices of the low end QD-equipped LCD TV models have moved closer together. This extension of the QD LCD TV lineup into more moderate price ranges effectively reduces the QD premium to less than 100 percent at mid-range sizes, opening up the category to a larger addressable market of consumers.

In the UHD TV panel space, panel makers from China and Taiwan are hoping to ignite interest in 8K panels, touting the high numbers in 8K resolution. Leading manufacturers are aggressively promoting 8K TVs; meanwhile other TV brands are similarly indicating willingness to join the 8K TV market. 2019 will see the first 8K sets from several brands, and they will be large and expensive. However, these higher resolution sets will not be meaningful for most of the consumers for at least a few years. 2019 is also going to be the year that even mainstream sets get voice-enabled digital assistants, especially Amazon Alexa and Google Assistant, as part of their smart DNA. These sets will allow a new level of voice control and interaction with other smart products. The bulk of the market, however, still belongs to 4K, with 4K shipments in 2019 expected to reach some 142 million sets, or 52 percent of the total display panel space. Another TV trend from 2018, HDR, will again be a hot TV topic in 2019, both for consumers and the manufacturers. One continuing concern for consumers is that while many 4Ks tout HDR capability, most people will have no idea what level of HDR experience their new TV can deliver until they take it home.

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