There is a school of thought that we believe is growing which says that the second screen in the room is rapidly becoming the first and only screen. TV will be viewed more and more on the tablet, and that the social experience of watching TV will be shared with your real friends, not your family who are physically on hand.
If you have that view, then you will interpret the report this week from IHS that shipments of TVs in the US have declined by 11% in the first quarter, in a very different way to those who are devout believers in the shared screen. The numbers came from a TV Systems Intelligence update from IHS.
It says that US TV shipments dropped to 6.6 million units, down from 7.4 million a year ago in 2012 with LCD TVs off by 7% and plasma falling a massive 39%. And all the efforts of this year’s magic new smart devices, only lifted average selling prices by 3%.
At those shipment rates it would take 4.2 years to replace all the TVs in the US, whereas at last year’s rate it was closer to 3.8 years. That’s assuming that we are only dealing here with large TVs which are replacing only the main TV in the home. If we factor in that there are 2.8 TVs on average in US homes then it would take more like 12 years to replace them all, down from 11 years at last year’s shipment rates. The truth is probably somewhere in-between, because many second sets are now being replaced by tablets, PCs and Smartphones, or just left until they no longer work.
Global shipments say IHS are not down so badly, closer to around 2%, but given that in Japan last year hardly anyone bought a TV and that purchase rates in Europe were down due to the Eurozone crisis, then being down at all on 2012 is down indeed.
IHS said that this was all caused by a decline in CRT sets, which if you think about it is sort of nonsense, since we already know that almost all shipments are LCD with a spattering of Plasma, with a few CRTs being shipped still in China. If China has largely fallen out with CRT devices, it doesn’t mean you can blame the fall on that. The reduction in Plasma is all to do with cost, so you can’t even blame that.
Another factor it gave was the decrease in LCD TV manufacturing volumes by major Japanese vendors. Sorry this is the chicken and the egg backwards. They have stopped making so many because they are selling less, not the other way around.
‘The US market is starting to reposition toward higher-end TV sets,’ said Veronica Thayer, analyst for consumer electronics & technology at IHS. ‘Now that most homes have at least one flat-panel TV, consumers have become more discerning in their tastes and place more value on features like light-emitting diode (LED) backlighting, supersized screens and interactive smart TVs.’
Supersized LCD TV sets larger than 50 inches across accounted for 27% of US LCD TV unit shipments in the quarter, up from 15% a year before and these accounted for 53% of TV revenue, up sharply.
Here’s what we think is happening. Demand is falling like a cut down tree. So making, really big smart TVs that cost less to make, has held the revenue in check, but why are those under 50 inch sector falling apart. You do not need to replace a single second or third TV in the home, a laptop or a tablet will do. It was the increased shipments of really big TV screens 50 to 60 inch sets, which took the ASPs up, but it wasn’t up much, to $704, up from $682 one year earlier, just $22.
With LED-backlit screens reaching almost saturation, the only feature set left to push is when a TV is smart or when it can take 4K. Smart TV is taking off and 4K will not hit volume for a few years. So where is the recovery coming from? It just isn’t, and these numbers will just fall and fall.
Samsung accounted for 31% of overall US television market revenue, up from 30% and Vizio increased its share of TV revenue, rising to 16%, up from 11%.
Samsung is never going to be worried if tablets replace TVs, but a number of its rivals have no real position in tablets to hang onto.