The consumer electronics industry, particularly the TV manufacturers and especially retailers who sell TVs, has a lot riding on Ultra HD TV. In its vision of a perfect world, excited consumers will bang down the doors this holiday season with an insatiable appetite for what is also called 4K TV (which is a problem in itself — let’s settle on a name already). Even more ideally, those stakeholders in Ultra HD’s success are counting on prices remaining high enough that profit margins on the TVs will bolster everyone’s bottom line.
But those expectations don’t necessarily line up with reality.
Here’s a peek behind the curtain at how the industry is thinking, via CE Week‘s eye-opening “Your Next TV” conference. If you’ve got a few hours, dig in. If not, scroll down past the videos and we’ll proceed to the main idea of this post.
Those videos are full of hope, optimism and dollar signs. But let’s take a look about how conditions in the real world actually are.
- Those potential profit margins are falling every week. Hell, they might be next-to-nothing by the time the holidays roll around. That’s good news for you, bad news for Best Buy and their rivals, many of whom are mom-and-pop businesses that are just eking by as it is. Regardless, it’s still good news for you.
- There’s hardly any native Ultra HD content available, and that’s not likely to change this year. That means your shiny new, expensive Ultra HD TV will be overwhelmingly used to “upscale” HDTV signals to 4K resolution. Unless you’re talking about a large screen size (over 65 inches), and unless those upscaling technologies actually deliver superior performance (the jury’s still out), you probably won’t notice an appreciable difference compared to standard HDTV.
- Most significantly, most Americans still have no idea about the existence of Ultra HD.
That last point comes courtesy of a study conducted by The Diffusion Group (TDG), which found that “short-term demand for 4K/Ultra HD televisions is hindered by two simple but structurally important fundamentals: a widespread lack of awareness among consumers and a marked sensitivity to the costs of these advanced sets.”
The research firm found that more than 80 percent of “adult broadband users” don’t even know about Ultra HD. As for those who are in the know, they’re overwhelmingly waiting for prices to come down to an acceptable level before they take the plunge, says TDG:
At a retail price of $1,499 … only 6 percent of adult broadband users are moderately or highly likely to purchase a 4K/UHD TV. “This explicitly quantifies just how poor the demand for 4K/UHD televisions actually is,” said [TDG President Michael] Greeson, “and clearly demonstrates that current prices are too high to stimulate new sales.”
To illustrate how rapidly this demand evaporates relative to price, only 3 percent of adult broadband users are moderately or highly likely to purchase a new 4K/UHD set at $1,999 a unit, a modest increase in price of $500 that results in a 50 percent decline in demand at $1,499.
The next closest reason for a lack of interest was that non-buyers “were perfectly comfortable with the televisions they currently use.”
This last data point demonstrates a widespread complacency when it comes to purchasing new televisions.
“It would seem that 4K/UHD is falling far short of being the panacea the industry expected and needed.”
What do you think of Ultra HD TV? Let us know in the comments section.