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How’s this for an interesting stat? It was provided by Dr Christian Göke, CEO of Messe Berlin, organisers of the annual IFA conference in Germany in September. In 1980, a new TV cost about the same as Germany’s average monthly income, while a new car cost 12 months of average income. In 2015, a new TV now only costs a week’s wage in Germany — its price in real terms has significantly decreased — while a new car will cost 20 months’ wages, almost doubling in value. Consumer electronics have become much, much cheaper while other discretionary purchases have become more expensive.
The TV is still considered the fundamental piece of electronics in every home. Brands have traditionally exhausted a lot of marketing dollars and energy promoting TV sales as they see a halo effect around this purchase. If a consumer buys Brand X’s TV, they are then more likely to go back for X’s soundbar, Blu-ray player, smartphone, tablet and multiroom wireless speakers. It’s comparable in that way to the role of the oven in the kitchen. Convince a consumer to buy your oven and the rangehood, cooktop, refrigerator and dishwasher will follow.
Where will the TV battleground be fought through 2015? Jürgen Boyny analyses consumer electronics at GfK’s head office in Nuremberg. He said that the “TV market is continuously driven by innovations — exciting and new thrills for consumers — but as old technologies are fading out [there is] no additional push in the market”.
Boyny noted that TV innovation is revolving around bigger and bigger screen sizes, improved picture quality from 4K and OLED panels, the emergence of Curved and ultraslim form factors, significantly improved audio reproduction and the strengthening of the various Smart TV platforms. In 2014, 43 per cent of TVs sold in developed western markets had Smart functionality, 12 per cent were 50-inch and above and 3 per cent were 4K Ultra HD. (Incidentally, 26 per cent were 3D TVs, up from 2 per cent in 2010, though this feature is seen more as a novelty than a trigger to purchase.)
Despite this growth in innovation uptake, Boyny says there has been “no significant growth in unit-based TV demand”. With uptake remaining flat, seemingly locked into a replacement cycle, is might be worrisome for the industry to read that “price is, ongoing, under pressure, driven by a continuous and ongoing concentration on retail level”.
The challenge therefore seems to be wringing as much cash out of every TV purchase. If the number of unit sales is flat — sources say around 1.5 million units are sold each year in Australia — then you’ve got to be convincing in promoting the latest and greatest models. At the recently gala launch of Samsung’s 2015 TV range, an insider told me that: “The trade loves new technology. Give them new technology and they will be happy to support you.” Roughly one in five TVs sold in Australia is a Samsung, and its value share is more than 20 per cent, so the company clearly knows something about merchandising premium models.
Paul Gray is a lead analyst specialising in TV and display shipments and sales for IHS, formerly known as DisplaySearch. He provided some fascinating insights into what the focus should be when exhibiting TVs in a retail environment. He said that despite the significant prima facie advantage of Ultra HD over Full HD — the four times the number of pixels, in layman’s terms — “resolution has no ‘wow’ effect”, and that side-by-side comparison of 4K to 2K has not an impact comparable to previous example of Full HD vs Standard SD.
Where there is a noticeable difference, however, is in frame rate. Gray said that “120Hz native content provides much better quality than 60Hz” and that it provides a “big difference with sports events”. Even more noticeable is a high dynamic range — the greater the luminance presented to the prospective customer, the more pleasurable the TV will appeal — but only to a point. “There is a perceived video quality and viewing comfort increase with peak luminance,” Gray said, “but some viewers report visual discomfort at high luminance,” which he classifies as 3,000 candelas per square metre (cd/m²). A typically desktop LCD display will be 200 to 300 cd/m² while a top-of-the-line new 4K model will be 420 to 460 cd/m², according to a source at a leading manufacturer. Gray also noted that deep colour reproduction is a good conversation starter, provided you have the right content. Manufacturers have certainly been investing in the colour gamut, with bespoke features like Samsung’s SUHD nano-crystal technology, LG’s ColourPrime and Sony’s TRILUMINOS Display (its caps), though it must also help if ‘real’ content is being broadcast in store, rather than the mind-numbing B-Roll of canoeing, flowers unfurling and volleyball that you see across the screens at launches and conferences.
To get an idea of how this plays out in the real world, I called up a JB Hi-Fi store in Brisbane and spoke to Nathan, who works in the TV department. He said that the arrangement of the TVs in-store is often at the discretion of whoever is merchandising them at the time, though there is a broad strategy to be followed.
“We focus on size and price range, not brand,” he said. “The pricing will sometimes mean that Full HD and 4K TVs will be side-by-side. I notice the difference, especially if one has a better reproduction engine, say a Sony TV compared to a Chinese brand TV.” Somewhat contradicting Gray’s research, Nathan said that, “Consumers seem to notice it as well”.
At the other end of the retail spectrum — big store in big city vs small store in the boondocks — Mark is a salesman for Leading Appliances Alexandra, population 2,656, in rural Victoria. He said the strategy in this outlet is based on size, not substance.
“We’re a small store so we set our TV display up so you can see them from the front door, and they are placed in a corner at the back,” he said. “Our strategy is based on sizing, so we will have the Samsung 42-inch next to the TEAC 42-inch — we don’t base our strategy around clarity.” As an aside, Mark added that he didn’t think Curved panels would be particularly successful in regional areas in the short to medium term.