The main TV stories at this year's CES were the increased presence of Dolby Vision among sets using High Dynamic Range (HDR), Sony joining LG in the OLED TV space, Samsung's new QLED line of 4K TVs, and LG's wallpaper-thin OLED models. While each of those developments may boost consumer interest in Ultra High-Definition (UHD) TV to some degree, not a single one of them is likely to drive 4K TV sales as much as the continued decline in pricing.
"Generally speaking, the main thing that will drive TV sales in 2017 will be the continued decline in cost per inch of larger TVs, which will entice consumers to upgrade," said Paul Gagnon, director of TV sets research at IHS Markit. "Price compression always drives consumers to replace their TVs for bigger and better ones, much more so than the introduction of new TV features." He added that IHS Markit is "expecting less price erosion in 2017 than in 2016, due to some increased costs associated with the supply chain for LCD TVs."
That said, the average unit sales price of a 4K TV in the U.S. this year is projected by the Consumer Technology Association (CTA) to decline to only $935, breaking the $1,000 price point for the first time. That will be down from an estimated $1,023 in 2016, according to the CTA, which noted in its January 2017 Sales and Forecasts report that average 4K TV unit pricing had already tumbled from a whopping $22,000 in 2012 to $4,026 in 2013, $1,564 in 2014, and $1,048 in 2015.
The CTA projected that U.S. 4K TV sales will increase to 15.6 million units in 2017 from an estimated 10.4 million in 2016, 7.3 million in 2015, and 1.4 million in 2014. It also projected that U.S. 4K TV revenue will grow to $14.6 billion in 2017 from an estimated $10.6 billion in 2016, $7.7 billion in 2015, and $2.2 billion in 2014.
The CTA's consumer research has "consistently shown purchase drivers for TVs principally revolve around price, picture quality, and screen size," Steve Koenig, senior director of market research at CTA, told us. Despite the increased 4K TV sales performance last year, sales volumes "under-performed expectations" and, as a result, total U.S. TV sales fell two percent from 2015 to $19 billion, the CTA said in its report.
What caused the weaker-than-expected 4K TV sales is open to debate, but one possible culprit is the lack of adequate broadcast UHD content available from TV service providers. Whether consumers get their TV service from a cable company, a satellite company, or a telco/fiber-optic provider, some of them might not see a reason to rush out to replace the HDTV they own with a 4K model when there is so little content available in 4K through any of those service providers.
The CTA's Koenig predicted that "we will inevitably see more 4K and HDR content this year and next, and even more once the ATSC 3.0 standard gets deployed by broadcasters." But he also didn't think that 4K TV sales were "strongly correlated with 4K broadcast" availability, thanks to streaming 4K content and UHD Blu-ray. It does seem, however, that streamed 4K content from Netflix, Amazon, YouTube, and other companies isn't enough of an attraction for some consumers, and UHD Blu-ray players are still too high-priced for the average consumer to rush out and buy one. After all, many consumers still own DVD players rather than Blu-ray players, and some people even still own VCRs ... with clocks still flashing 12:00.
It's possible, therefore, that mass adoption of live broadcast 4K will be the only major driver of 4K TV sales other than obscenely low pricing, no matter how great the picture quality is on those new TVs and how thin they are.
"Live broadcast of 4K is nearly non-existent, but it will be one of the key drivers for the future, especially around sports," Gagnon said, noting that the next generation of ATSC 3.0 broadcast standards will support UHD, but the current ATSC 1.0 doesn't. For now, "streaming media is continuing to lead the way in delivery of 4K content," he said.
Gagnon believes that consumers "understand the value of 4K, in that more pixels is better. Even if they don't have as many content options yet, they expect them to come and are buying 4K today to future-proof themselves." On the other hand, "many of the improvements to picture quality, such as HDR and wide color gamut, ... won't drive consumers into stores on their own, although they may affect the purchase decision."
Content and pricing will be significant drivers of 4K TV sales this year, predicted Tom Campbell, CTO and senior technologist at California retailer Video & Audio Center. "The prices are very tempting" now, he said, but he also believes that the HDR featured on the latest 4K TVs, including the Samsung QLED line that his company recently held a launch event for at its Woodland Hills location, will help drive sales, too. That's especially the case if consumers actually go to a store and see how great the sets look, he explained.
Potential Consumer Confusion
In the meantime, the 4K TV market could be hurt to some degree by the growing alphabet soup of new technologies and their assorted acronyms and abbreviations that are being foisted on consumers. "There is significant confusion around these technologies, especially HDR and the multitude of formats and lack of a common way of measuring performance," Gagnon said.
He added: "When it comes to TV features and technologies, confusion is a persistent problem. Often the problem stems from brands using proprietary names for similar technologies, or lack of industry consensus around nomenclature or performance measurement." As an example, Gagnon noted that QLED is Samsung's latest proprietary term for using quantum dots in LCD TVs with an LED backlight. Previously, Samsung's high-end UHD TVs were called SUHD. Admittedly, the new QLED TV line is different, featuring an improvement to the quantum dot formulation designed to boost color performance and achieve higher brightness, Gagnon pointed out.
This is happening as many consumers are still in the dark about just what UHD and 4K are to begin with. The average consumer who walks into a home theater specialty dealer likely knows what these terms mean, but it's a pretty safe bet that many of the customers who walk into a BJ's, Costco, Sears, or Target electronics department don't know what 4K, UHD, HDR and OLED are yet.
Customer confusion over TVs doesn't seem to be a major concern for Abe Yazdian, vice president of merchandising at Nashville-based retailer Electronic Express, which has 14 stores in Tennessee and one in Alabama. "I really don't know" if consumers will be confused by QLED and the other new technology terms, he said. "Maybe some," but Yazdian added that he didn't think HDR was all that confusing to customers. They understand it means better picture quality, he said.
Yazdian expects that a combination of forces, including pricing, will help drive 4K TV sales this year. After the price decline on 4K TVs last year, the continued price declines that are expected on them in 2017 will "cannibalize the 1080p market," he explained, adding that he hoped it would allow the average selling price of TVs overall to increase. (The CTA has projected that the average unit selling price of TVs this year will grow to $474 from $465 in the U.S.)
In the case of Electronic Express customers, however, Yazdian guessed that it will be an interest in 4K in and of itself that will be the largest factor that drives 4K TV sales this year.
The CTA projected that total LED-backlit LCD TV sales will start declining by single digits in 2017, while OLED TV sales will start growing slowly, "breaching the two million unit mark by 2020." It predicted that OLED "will eventually unseat LCD as the top display technology." However, 4K LCD models will outsell OLED TVs for several more years, the association predicted. The CTA projected that U.S. 4K LCD TV unit sales will grow to 15 million units in 2017 from an estimated 10 million in 2016, and that sales will expand to 20.5 million in 2018, 22.5 million in 2019, and 24.5 million in 2020. In stark contrast, it projected that U.S. OLED TV unit sales will grow to 451,000 in 2017 from 181,000 in 2016, and that sales will widen to 903,000 in 2018, 1.5 million in 2019, and 2.1 million in 2020.
OLED will "have a bigger impact" on TV sales in 2017 than last year, in part because Sony is now making OLED TVs and that will "give more credibility" to the technology, Yazdian predicted. The thinness of LG's new wallpaper-thin OLED TVs should only help drive sales of OLED models, he added.
OLED "really drove" the average selling price of TVs at Electronic Express stores up in 2016 from 2015, he said. Even when OLED TVs were being promoted, they were still about $2,000 for a 55-inch model and about $3,000 for a 65-inch model.
UHD in general--whether it's an OLED model or an LED-backlit LCD model--gives consumers a reason to come back to Electronic Express stores to look at TVs, he said. More consumers visited the company's stores looking specifically for 4K TVs in 2016 than they did a year earlier, and he predicted that trend will grow a lot more this year.
He agreed that more broadcast 4K will "absolutely" significantly drive 4K TV sales further, adding that the more 4K content that's available--be it through Netflix or DirecTV--the better it is for 4K TV sales. "Consumers like more choices," he said. "I don't care what anybody says. Whether they use it or not, they just like to have more. It's human nature."
After the elimination of 3D from most, if not all, TVs over the past year, the curve could end up being the next once-promising feature that is in danger of extinction. At the very least, it's hard to see it driving much TV sales this year.
"At this point, curved is still a very small subset of even Samsung's own TV shipments, accounting for" just nine percent of the company's North American TV shipments in 2016, Gagnon told us. In total, curved TVs amounted to only three percent of all TV shipments in North America during 2016, although that was an increase from two percent in 2015.
Gagnon added: "For 2017, at least in North America, Samsung will again be the only major brand with curved TVs in the market, now that LG has transitioned all of their OLED models to flat only. It is up to Samsung to promote the curve, but in many of their model series, they offer both curved and flat options."
According to Yazdian, Electronic Express did well with curved TVs last year, especially when the price of a curved model was exactly the same as a comparable flat model. When that happened, "there was a significant bump in sell through" of curved models, he told us. Barring that, the price of a curved TV tends to now be about $100 more than a flat TV that otherwise has all the same features.
On the other hand, citing one common knock against curved TVs, Yazdian noted that when a customer wants to mount a TV, they generally want a flat model rather than a curved one. He predicted that curved TV demand will remain about the same in 2017 as last year, although how it does will depend mainly on Samsung's promotions.
Are you thinking about buying a 4K TV this year? What are the main factors that would convince you to take the plunge? Let us know in the Comment section below.
• Dolby Vision Takes Center Stage at CES at HomeTheaterReview.com.
• High-End Audio at CES: A Post Mortem at HomeTheaterReview.com.
• Emerging Technology Stars of AV at CES at HomeTheaterReview.com.