Global TV sales remain stable and will stay that way, with Futuresource Consulting forecasting growth of less than one per cent CAGR between 2018 and 2024.
This obscures the underlying turmoil as there has been a boost in sales across developed countries during the year, with consumers looking to improve the home viewing experience during increased periods of leisure time at home. In less developed countries, which were previously driving global growth, a decline in shipments has occurred due to households retaining disposable income during a time of economic uncertainty.
4K and the Race to the Bottom
As TVs have got larger, consumers have made the transition to 4K sets over the last four years, allowing vendors to command a premium price and build in more margin. However, this proved to be unsustainable. In 2018, manufacturers fought hard to gain market share and a price war began. Although the cost of panel production decreased due to economies of scale and technological advances, price competition pressed down hard, scavenging any profit potential and leading to manufacturers looking elsewhere to gain competitive advantage.
The Smart TV Dilemma
Futuresource Consulting’s insights show that by the end of 2020 there will be more than one billion smart TVs installed worldwide, as we continue to move towards a world where consumers are more reliant on TV delivered over the internet. For vendors, having an installed base of TVs with built-in smart functionality is the new entertainment battleground. This is an arena currently being contested by LG with WebOS and Samsung with Tizen, as well as Android TV, which is being adopted by many brands at a low cost, high quality interface, with some degree of customisation and personalisation.
Yet the smart TV challenge lies in the balance between innovation and upgrade. There are a huge number of video services that all require app development. They also need updating and upgrading when necessary to make them work effectively and securely. This can be expensive for a manufacturer, particularly when it’s done on legacy models as well as new TVs. If older models are no longer supported, it will save on costs, but can cause consumer backlash. Additionally, if regular upgrades are carried out on legacy TVs, there is little incentive for an owner to upgrade, which reduces manufacturer profit. It is a challenging situation that needs to be handled carefully.
The smart TV dilemma has also opened up the market for media streamers like Google Chromecast, Amazon Firestick and Apple TV box, all of which are acting as content aggregators to improve the user experience, by simplifying how consumers access content from multiple subscription services. These devices are inexpensive, work effectively, update on a consistent basis, can have differing services to smart TV, and prolong the lifetime of a TV. These reasons, amongst others, support Futuresource’s expectation that the installed base of media streamers will increase on a global scale to nearly 300 million by 2024.
Furthermore, the key companies selling media streaming devices are also selling access to an entertainment ecosystem, which aggregates content services, takes payment for media content, and integrates effectively with smart home technology. These platforms, including the likes of Google, Apple and Amazon, have a significant impact on how today’s consumer communicates, shops and enjoys leisure time. A TV is therefore no longer a silo’d entertainment device and must at least work with these operating systems.
The seamless ability to connect with the operating system of choice for a consumer is fast becoming an important reason to choose one brand of TV or accessory over another, representing the next frontier of competition.