Loss of Chance
Samsung Electronics and LG Electronics are having trouble, as the standardization of ultra HD (UHD) broadcasting is being delayed.
The delay in the commercialization of UHD terrestrial broadcasting due to frequency allocation issues is expected to have a significant effect on the domestic UHD TV market by incurring sunk costs associated with television receivers and the like. In that case, Korea could fall behind in competition with China and Japan.
At present, no transmission standard for UHD terrestrial broadcasting has been set, and only test broadcasting is available. Even the test programs can only be watched after a receiver or a kit is installed or the TV software is upgraded. This is why the UHD TV manufacturers hurried for free support for the conversion ahead of the Brazil World Cup. The manufacturers have to take on the related costs until infrastructure for delivering UHD terrestrial broadcasting is set up.
Under the circumstances, the standard proposal for the purpose has been rejected in the Telecommunications Technology Association (TTA) general meeting held on July 2. Telecoms and broadcasting companies showed sharp conflicts to make it difficult to predict that the proposal would be passed in a subsequent conference.
“The receivers or kits added to already-sold UHD TVs are priced at 30,000 won to 50,000 won [US$29.70-49.43] each, which is pretty burdensome in view of the current size of the domestic market and additional expenses,” said an industry insider, adding, “The social costs could be increased on the part of general consumers and TV manufacturers when the standardization process fails to gain speed.”
In the global UHD TV market, China is accelerating the creation of its own ecosystem, while Japan is also putting much effort to take the lead in the market. According to market research firm DisplaySearch, the size of the global market is estimated at 12.34 million units this year, which is eight times that of the previous year, and is expected to reach 30 million units in 2015. The growth is truly rapid, from US$3.017 billion to US$12.738 billion and then to US$24.680. billion.
Korean UHD TV makers achieved fast growth in the first quarter of this year, when Samsung Electronics recorded the highest share in the global UHD TV market to be followed by Hisense, Skyworth, LG Electronics, and Sony. Last year, Sony had been on the top of the list, with the others following it.
Still, things are not entirely positive for the Korean companies. Their Chinese counterparts are holding hands with Japanese companies for the enhancement of their competitiveness, and NHK is planning to provide UHD broadcasting across Japan by 2020.
“UHD broadcasting is possible only when the four factors of broadcasting facilities, content, infrastructure, and TV sets are available,” a domestic maker explained, continuing, “A UHD ecosystem has to be established in the nearest future if Korea is to lead the global market with improved competitiveness.”