Regardless of all the hype about 4K ultra-high-definition TV, the emerging technology could be just another additional feature and would likely fail to boost global TV sales, Jefferies Group LLC said in a research report this week.
A potential slowdown in the Chinese market, as well as weakening demand in Japan, Europe and Latin America, could also pose increasing risks for global TV sales this year, according to the report issued on Tuesday.
“Recalling FHD [full high-definition], then 3D, smart-TV technologies, we know that all these created hope for price premiums and profits, but it was all just a mirage,” Jefferies analysts Atul Goyal and Yuki Maeda wrote in the report, titled Will 4K TV Be the Savior?
“Combined with the absence of 4K content [a constraint faced by 3D adoption as well], we think this will also end up being a mirage,” they added.
Companies such as Sony Corp are basing their financial turnaround in the TV business on the back of growth in the 4K TV market and 4K TV has become the new industry buzzword.
Also on Tuesday, market researcher WitsView reported that total 4K panel shipments reached 6.27 million units in the first half of the year. Shipments for the full year are expected to grow to 15 million units, it said.
DisplaySearch forecast 13 million 4K TVs in shipment this year, accounting for 6 percent of overall TV sales around the world.
However, Jefferies said the 4K category is still small and, most importantly, the overall TV market is in decline, with the downward risks increasing this year and next year.
Global TV shipments have declined continuously in the last two years since peaking in 2011 with 247.9 million units, according to industry advisory firm DisplaySearch’s tallies.
As the TV market is saturated, the worldwide shipments for this year are forecast to fall to 220.3 million units from 225.2 million units recorded last year, Jefferies said.
Goyal and Maeda attributed the weakness in the global TV market to demand drop-off in Europe and Latin America with the end of FIFA World Cup and the softening demand in Japan during the post-consumption tax hike period.
However, the highest downside risk could come from China, after Beijing stopped its energy subsidy to facilitate replacement demand for TVs earlier this year, the two analysts at the US investment banking firm said.
Moreover, as Chinese makers have become more aggressive in the 4K category, if they build excess inventory and are later forced to sell at discounts, that would likely cause a trouble to the whole industry, they added.
As a result, Jefferies said 4K may not be able to revive TV demand and it predicted the global TV shipments could fall to 218.2 million units next year.
Meanwhile, since next-generation technology in the form of 8K (with a resolution of 7,680 x 4,320) is already on its way, the report concludes that 4K might be a short-cycle technology before 8K is ready to take off.
“Consumers may want to wait for 8K TV rather than pay high premiums on 4K TVs or discounted 4K when 8K TVs emerge,” Goyal and Maeda wrote.
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