TV Wars
Korean TV manufacturers, which have dominated the global market since the mid-2000s, are finding themselves in a dilemma due to the global economic recession and the resultant decrease in demand. With the industry recording negative growth for two consecutive years, the business environments are far from favorable for them, too.
The decline in demand can be attributed to not only the financial recession but also the digital broadcasting conversion in advanced economies. The supply glut has led to a significant drop in the prices of TV sets.
The situation has affected display panel manufacturers as well. The LCD panel price is forecast to continue dropping until at least next year. According to Shinhan Investment Corporation, that of 42-inch TV panels is predicted to go down from US$289 to US$210 between December 2012 and March 2014.
As recently as earlier this year, Korean TV makers took a wait-and-see attitude as to the UHD TV market. In the meantime, Taiwanese display panel and Chinese TV manufacturers caught them by surprise with their own UHD TVs and the fast growth of the Chinese UHD TV market.
According to market research firm NPD DisplaySearch, the global UHD TV shipments are estimated at approximately 1.3 million units, over 70% of which is taken up by Chinese companies. “China will account for more than 50% of the global UHD TV shipments between 2013 and 2017,” said Paul Gray, director of TV Electronics Research or NPD DisplaySearch, adding, “Chinese TV makers are likely to pose a threat to leading UHD TV makers like Samsung Electronics, LG Electronics, Sony, and Panasonic beyond their home turf.”
Korean electronics makers have concentrated on OLED TV, which is considered to be more advanced than UHD TV. Their strategy was to retain their market leadership by replacing LCD TV with OLED. However, OLED panel production yield has been unstable, so the industrial ecosystem has been slow to be established and OLED TV prices are still high around the world. Since the first half of this year, Samsung and LG have not released any OLED TV. The local sales volume is estimated at just thousands of sets.
Under the circumstances, the market outlook is getting bleaker. Between the first and third quarters of this year, NPD Display Search has adjusted its OLED market size estimate for next year downward from 600,000 units to 250,000.
Industry experts are stressing that Korean manufacturers have to create UHD TV demands mainly in the United States and Europe, based on aggressive marketing strategies and their high brand awareness, if they are able to continue their dominance in the global TV market. Also, more interest and investment are necessary in the UHD and OLED TV segments alike. “Taiwan and China almost caught up with Korea when it comes to LCD panel manufacturing, but the latter is a couple of years ahead of the former as far as OLED panel technology is concerned,” said Lee Choong-hoon, head of UBI Research. He continued, “Korean companies would be well advised to distinguish themselves by means of OLED TV technology.”