IHS Forecasts Strong Global 4K UHD TV Growth

While 4K Ultra HD televisions have become commonplace in the United States at Best Buy, Walmart and Target, among other retailers, global adoption of the new high-definition format is still picking up speed, according to new data from IHS Markit.

The London-based research firm cited declining prices for big-screen TV driving wider consumer adoption. Speaking at the MIPTV confab April 8-11 in Cannes, France, Paul Gray, director research and analysis, technology, media & telecom, said there are more than 142 4K UHD channels on the market, including 49 channels in Europe.

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Gray says that next summer’s Olympics in Tokyo (July 24 – Aug. 9, 2020) generate will 4K UHD unit sales of 130 million worldwide.

IHS estimates that by 2022, 60% of North American households own at least one UHD video display, with another 40% among Western Europe homes.

Indeed, the report suggests that by 2022, TV’s with 75-inch screen sizes will drop to around $1,000, with some 8K units priced at $2,000.

“It has taken only five years: shipments broke 1% for the first time in Q4 2013. This is as fast as the move from standard definition to HD resolutions,” Gray said, as reported by Advanced-Television.

 

 

IHS: 22% of Web Users Employ Voice-Commands to Control TV and Video Devices

Voice-activated consumer electronics in the home is growing in popularity.

New data from IHS Markit found that 22% of Internet users across four markets – the United States, United Kingdom, Australia and India – use voice-command software to operate their TV and video devices, including smart TVs and set-top boxes. Another 30% are interested in doing so in the future.

Next to content recommendations, content discovery and navigation is vital for video services as 20% of video cancellations are due to a perceived lack of available content, according to IHS.

The most common reasons for cancelling video servicesfrom an online survey of 9,636 Internet users in Australia, India, the U.K. and the U.S. conducted in November 2018, included cost, lack of use and lack of available content.

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Indeed, IHS found that the burgeoning amount of content available across media devices puts the user experience at the forefront of device and platform strategies, including discovery, recommendations and navigation.

Voice command functionality represents an increasingly important element in content discovery, as it allows users to not only search for content, but also control the video interface in some instances. Consumers already using voice commands on video are more likely to own connected living room devices, which indicates they may already have access to large content libraries across various services and devices.

 

London-based IHS found respondents using voice commands to operate video devices are more likely to own, or at least have access to, connected devices that allow access to over-the-top (OTT) video. These devices include smart TVs, games consoles and media streaming sticks.

Voice-command use peaks among 25-to-34 year olds, compared to all adults aged 18 to 64. Older age groups continue to use traditional methods of content discovery, and many are not engaging with all the features and content available to them

Content catalogs are a key reason consumers subscribe and engage with video services, so ensuring the right content makes it to consumer TV screens is increasingly important,” analyst Fateha Begum wrote in her report.“Easing navigation and improving personalization are critical ways to increase value to video consumers, so large content catalogs don’t become burdensome to the user experience.”

Begum said voice functionality is a key element for device manufacturers – particularly within home entertainment. The ability for devices to communicate and control other devices has become evident, as brands are increasingly launching proprietary digital assistants, according to the report.

“For TV providers, innovating in the areas of content discovery and recommendations is a means to ensure their content is easy to find, driving greater value and  ultimately reducing customer churn,” Begum wrote. “Pay-TV operators have an advantage over most OTT streaming services, because they can manage the user experience on the set-top box and can ensure their own content is prioritized on the platform.”

 

 

IHS: World Cup Soccer Spiked Global TV Sales in 2018

Last summer’s FIFA World Cup Soccer tournament in Russia helped increase global TV sales 2.9% to 221 million units, according to new data from IHS Markit Research.

In the fourth quarter of 2018 more than half of all shipments were ultra-high-definition (UHD) TVs with increasingly larger screen sizes.

“Average new TV screen sizes are still growing at least one inch per year,” Paul Grey, research director, said in a statement. “With falling LCD panel prices, consumers clearly care more about trading-up in size than about spending less money. Even in Japan, where consumers have been resistant to buying large TVs, the average screen size increased year over year.”

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Indeed, UHD TV shipments reached 99 million units. China led the global market with 30.1 million TVs shipped in 2018, followed by North America with 24.7 million. Nearly 63% of TV sets in Western Europe shipped with UHD resolution in the fourth quarter of 2018, the largest share of any global region.

Meanwhile, 18,600 8K TVs shipped globally in 2018.

“The launch of an 8K channel by Japan’s NHK network, was an important landmark last year, which led to an acceleration in 8K TV shipments in Japan during Q4,” Gray said.

Separately, smart TVs that support UHD through streaming services continued to rise in volume. More than three-quarters of TVs shipped in quarter were smart TVs. In North America, more than 85% of all TVs were smart TVs, which is 10% higher than the previous year.

Finally, just under 1 million OLED TVs shipped in the quarter, up 20% over the prior year. Thanks to increasing competition, large-screen 55-inch OLED TVs hit new levels of affordability in Western Europe. Meanwhile, OLED TV shipments to North America fell 26%, year over year, due in part to aggressive price declines in very large LCD TV sizes.

IHS: New Video Services to Add $3.6B in Revenue, Saturate Domestic OTT Market

An influx of pending over-the-top video services is projected to add $3.66 billion to the direct-to-consumer entertainment market by 2023, according to new data from IHS Markit.

The research firm said services from Disney, Apple, and WarnerMedia are expected to launch this year, with NBC Universal launching an ad-supported platform to pay-TV subscribers in 2020.

These services have the potential to add 53 million paying subs to the U.S. market by 2023, effectively growing the total number of subs by 25%.

“Subscriber growth of this magnitude assumes an aggressive strategy from all the major services,” Dan Cryan, executive director of research and analysissaid in a statement.

“This strategy could include making movies available earlier or bundling, either at no extra charge or as a low-cost add-on, with other products and services that already have large customer bases. Less aggressive policies would result in lower overall subscriber growth, but they would still expand the video subscription market.“

According to the “Disney, Apple, Netflix: Scenarios for the Future of Online Video” report, Netflix and Amazon Prime Video will continue to lead the market for the next few years. Apple could potentially catch up with Hulu by 2023, depending on what happens to that service after Disney’s acquisition of Fox has been finalized.

“A successful Disney service would also be among the top-tier services in the U.S. by 2023,” Cryan said.

Regardless of Netflix and Prime Video’s market dominance, IHS said the market for pure-play video services will become “exceptionally” competitive. And despite their burgeoning original content spending, studio-driven upstarts bring their own strong content libraries to the equation.

Netflix Overcomes Brazil Hurdle

In 2011 Netflix launched service in 43 Latin America countries, beginning with Brazil. Expansion into Brazil — the fifth-largest media market in the world, after China, India, the U.S. and Indonesia, was fraught with challenges.

Consumers were less familiar with using credit cards to pay for recurring charges such as over-the-top video. In addition to spotty broadband penetration, the lack of localized content (at the time) on Netflix alienated potential subscribers.

“Brazilians enjoy different things, like UFC and stand-up comedies, while hating telenovelas that are made in other Latin American countries,” former chief communications officer Jonathan Friedland told the Brazilian press.

Long-time Netflix bear Michael Pachter, digital media analyst with Wedbush Securities in Los Angeles, went so far as to predict Netflix wouldn’t make it in Latin America.

“This just won’t work in Ecuador or Costa Rica or even Mexico as it has in the U.S.,” Pachter told the Associated Press. “It’s going to depend on how many households have broadband access and what the quality of the content will be like.”

Fast-forward to the present and Netflix is a shining star in Brazil.

Along with Google’s YouTube, Netflix is the first OTT video choice across all devices, according to new data from IHS Markit. About 28% of respondents claim they turn to Netflix first when looking for something to watch, followed by YouTube at 24%. More than 63% of Internet users in Brazil, between the ages of 18 and 64, had access to Netflix, of which 86% claimed to use the service at least once a week.

IHS says that along with growth in OTT video, the installed base of Internet-connected devices grew by 10%, rising to more than 310 million devices in 2018.

More than 40% of survey respondents said they have a personal computer connected to their primary TV screens, while 35% claim to mostly use their smart TV apps to access video content on their primary TVs.

IHS contends that with on-demand video becoming ubiquitous around the world, and Brazil is no exception.

“The country has been experiencing a significant economic slump in recent years and, like other Latin American markets, Brazil’s legitimate pay TV and OTT subscription video-on-demand (SVOD) service providers have seen subscriptions fall or suffer reduced growth,” Erik Brannon, associate director of research and analysis, wrote in a note.“Laptops, tablets, streaming sticks and other devices increasingly pose a threat to cable TV and other traditional TV services.”

In terms of perceived quality, Netflix and YouTube were significantly ahead of pay-TV providers in the following categories: ease of use, flexibility (i.e., “ability to watch what I want when I want”), largest catalog of content, quality of content, and value for the money.

Although this finding is a victory for OTT providers, Netflix and other OTT video services must focus on local language content to remain relevant in the long term, according to Brannon.

Despite the vast library of foreign content Netflix has to draw upon, the amount of Brazilian and Portuguese content remains minimal, which is why the company is now partnering with local producers to boost local content in its library.

As the Brazilian economy continues to improve, growth in pay-TV households is expected to resume. At the same time, a surge in growth is expected in the OTT market as well.

IHS found that pay-TV monthly average revenue per user (ARPU) can cost five times or more than the monthly ARPU of Netflix. Subscription sharing also seems to be a profound problem in Brazil, since nearly 63% of survey respondents reported having access to Netflix, while Netflix subscriptions penetrated less than 25% of all broadband households.

“Connected consumers in Brazil are interested in viewing content in non-traditional ways, which will put added pressure on traditional content and distribution systems when the economy recovers,” wrote Brannon.

 

 

IHS: Netflix Needs More Than ‘Sacred Games’ to Drive Consumer Adoption in India

There’s a reason Netflix is emphasizing localized content and talent when expanding service abroad: Consumer adoption.

With over-the-top video by nature offering loss-leader pricing, services such as Netflix and Amazon Prime Video haven’t yet engaged in price warfare against regional competitors.

But simply regurgitating Hollywood movies and TV shows is a strategy of the past in markets such as India and China – two regions of the world Netflix and Amazon want to establish significant presence in.

In India, OTT video services will add 25 million subscriptions over the next five years, three million more new subs than pay-TV. It will exceed 35 million OTT video subs by the end of 2022, according to new data from IHS Markit.

When it comes to choosing connected video services, IHS found that more than 76% of connected consumers in India feel local content is important – with 74% citing the importance of quality subtitling and dubbing. Pricing also remained important across all markets surveyed.

As Netflix & Co. increase their focus on the Indian video market, including investment in local content, they continue to face competition from India’s well-established local OTT players.

The country’s successful domestic film and network TV markets pose challenges for newcomers lacking local content libraries. Despite launching “Sacred Games” this year, featuring Bollywood star Saif Ali Khan, IHS says Netflix still has a long way to go to grow its Indian subscriber base.

Star India launched Hotstar, an ad-supported video-on-demand (AVOD) service in 2015, followed by SVOD service, Hotstar Premium, in 2016. The service is forecast to grow its Indian subscriber base 60% this year, accounting for 25% of all online video subscriptions in the market.

Its success has largely been supported by content investments, including premium sports, local-language content and international content from HBO, Disney and Fox.

Although pricing is the most important factor in a video service across all country markets surveyed by IHS, Indian consumers were most likely to cite price as an important factor in their video service decisions.

Average revenue per user (ARPU) among pay-TV subs in India reached $4 monthly in the satellite heavy market, while local OTT subscription services cost less than $1 per month. In comparison, the basic Netflix subscription in India costs $7.

To succeed and grow in India’s content-hungry market, IHS says global OTT video players need to provide the correct mix of content at the right price.

IHS: Shipments of Larger-Size TV Screens Increase

Size matters when it comes to high-definition televisions.

Despite flat TV shipments in the most-recent fiscal period, the average TV unit-shipment screen size increased more than any previous quarter in the past year.

Global shipments of 60-inch and larger TV screen sizes increased more than 40% year-over-year, with even stronger growth in North America and emerging markets, as prices fell to new lows for 65-inch and 75-inch units, according to new data from IHS Markit. The growth rate is more than 10% higher than in recent quarters.

While promotions for the World Cup raised TV unit sales more than 7% in the first half of the year, Western Europe, Latin America, and Middle East and Africa all experienced double-digit TV shipment year-over-year declines in the third quarter.

“Each year during the holiday shopping season, brands and retailers try to push ever larger screen sizes to keep revenue growing and encourage adoption of value-added features like 4K and smart TV,” Paul Gagnon, research and analysis executive director, IHS Markit, said in a statement.

“This year, there’s higher interest in 65-inch 4K TVs for many of the key promotional deals, leading to less focus on smaller screen sizes under 50 inches.”

IHS said expanding screen sizes bodes well for sales of 4K units. In fact, the share of 4K TV shipments in Q3 reached a record high of nearly 44%. Due to sustained premiums and larger average size, 4K TV made up more than 71% of all TV revenue during the quarter.

Prices of 65-inch 4K LCD TVs fell to an average of $1,110 in North America during the quarter, from $1,256 in the previous quarter. In China, the average price of 65-inch TVs was even lower – just $928, after already falling below $1,000 in the second quarter. Xiaomi and other brands have aggressively pushed prices lower as competition intensifies in China. In other regions, prices were considerably higher for 65-inch 4K TVs, due to less intense retail competition and a smaller addressable market.

LCD TV shipments increased by 14%, quarter over quarter. Quantum dot LCD TV shipments rose to 663,000 units in the quarter, with an average size exceeding 60-inches. The average size of OLED TVs increased to more than 59 inches for the first time, as the 65-inch shipments share grew to a new high of more than 38%.

Home Entertainment on a Roll as Consumer Spending Soars 15%

Consumer spending on home entertainment rose 15%, to an estimated $5.7 billion, in the third quarter of 2018, according to numbers released this week by DEG: The Digital Entertainment Group.

For the first three quarters of the year, spending was at nearly $17 billion, an 11% year-over-year gain.

Digital purchases of movies, TV shows and other filmed content, known in the industry as “electronic sellthrough,” or EST, rose 18% in the quarter compared with the same quarter in the year prior, a significant uptick from the single-digit gains posted in prior years.

Consumers spent an estimated $624 million in the third quarter to buy content digitally from vendors such as Apple iTunes, Amazon Prime Video, Vudu, FandangoNow, Redbox On Demand, Microsoft Movies & TV and Google Play. That’s up from $529 million in the third quarter of 2017.

Industry observers attribute at least some of the gain to the rising popularity of the multi-studio Movies Anywhere platform, which uses a cloud-based digital rights locker to allow consumers to have immediate access to their purchased content at any time, on a wide range of devices, from home theaters to mobile phones.

The EST spending gain also was driven by a 31% surge in spending on movies that played theatrically prior to their digital release, generally two weeks prior to their appearance on Blu-ray Disc and DVD.

For the year through Sept. 30, EST spending was at $1.8 billion, up more than 12% from the comparable period in 2017.

On the physical side of the business, consumer spending on discs was down 11.5% to an estimated $844 million.

But sales of 4K Ultra HD Blu-ray Discs soared 68% in the quarter from the same quarter last year “as more consumers purchased new TVs and 4K Ultra HD Blu-ray players equipped with the advanced technology,” according to the DEG.

Thanks to the big increase in spending on digital purchases,  total spending on  content buys was only down 1% in the quarter. This marks the first time that EST spending gains nearly offset the decline in physical media purchases.

Transactional video-on-demand (TVOD), the digital equivalent of renting a movie, also realized significant gains, with consumer spending up nearly 10% to an estimated $497 million in the quarter from the prior-year quarter. The big digital sellers of content, such as Apple iTunes, FandangoNow and Redbox On Demand, also offer consumers a lower-cost option to stream movies on a temporary basis, generally for a 48-hour period and a start time within 30 days of the transaction date.

Consumer spending on streaming subscriptions rose more than 30% in both the third quarter and the first nine months of this year, totaling an estimated $3.3 billion and $9.4 billion, respectively. The DEG report attributed these numbers to data compiled by global information provider IHS Markit.

The DEG also said more than 4.2 million 4K Ultra HD TVs were sold in the first three quarters of 2018, bringing the total number of U.S. households to more than 42 million, an increase of 80% from the prior year period. Approximately 2.3 million Ultra HD Blu-ray playback devices (both dedicated players and video game consoles) were sold through to consumers in the first nine months of the year.

Growth of 4K Ultra HD content is rapidly expanding, the DEG reported, with 392 4K Ultra HD Blu-ray Disc titles available representing more than $162 million in consumer spend for the period. There are also 595 4K titles available digitally.

IHS Markit: TV Shipments to Grow 3.6% in 2018 With UHD Models to Account for More Than Half of Shipments in 2019

After declining unit-shipment volumes in 2017, global TV shipments are forecast to grow 3.6% year over year in 2018, with additional 1.4% growth in 2019, according to a new report from research firm IHS Markit.

Of the 226 million TVs expected to ship in 2019, more than half will be ultra-high-definition (UHD) models, the majority of which are 4K. However, 8K TVs from major global TV brands will launch toward the end of 2018, kicking off the next wave of resolution transition, according to the report.

“Growth in the TV market typically is the result of more attractive retail prices for large-screen sizes and the continued commoditization of 4K resolution, driving TV replacements and upgrades,” said IHS research and analysis executive director Paul Gagnon in a statement. “However, this growth through price compression has a negative effect on profits, so TV brands are actively looking for more growth from advanced TV models to improve earnings.”
Technologies such as 8K, organic light-emitting diode (OLED) and quantum dot (QD) carry substantial premiums, and 4K TVs still carry premiums of more than 35 percent at screen sizes where 1080p resolution is still an option, such as 40-inch to 49-inch TVs, according to IHS.

IHS Markit forecasts that the 8K TV market will grow from less than 20,000 units in 2018 to more than 430,000 in 2019 — eventually approaching 2 million units by 2020. All of this growth will be centered on 60-inch and larger screen sizes, with 65-inch TVs accounting for more than half of the volume.

OLED TV is expected to grow more than 40% in 2019, rising to 3.6 million units. This growth is in line with previous forecasts, because demand is essentially matching industry production capacity, according to IHS. The size mix still favors 55-inch TVs, based on current prices, but it will transition to mostly 65-inch TVs by 2020, when new production capacity is optimized for larger screen sizes, and when substantial growth is expected in the OLED TV category.

Quantum dot LCD TV shipments are now forecast to exceed 4 million units in 2019, based on more aggressive pricing and the introduction of transitional quantum-dot-equipped LCD TV models, according to IHS.
“The high-end prices of non-QD-equipped LCD TV models and the prices of the low end QD-equipped LCD TV models have moved closer together,” Gagnon said in a statement. “This extension of the quantum dot LCD TV lineup into more moderate price ranges effectively reduces the quantum dot premium to less than 100 percent at mid-range sizes, opening up the category to a larger addressable market of consumers.”

IHS: Consumer Interest in 4K UHD Video Gaining Traction

With sales of 4K Ultra HD televisions becoming the norm — 50% of all shipments in China, North America and Western Europe — consumer interest in UHD entertainment is slowly increasing.

New data from IHS Markit found that 36% of consumers in five countries surveyed said 4K UHD content was important to them when choosing video services. That interest rose to 50% in homes with pay-TV and over-the-top video.

The data – based on an April sample of 12,005 online survey respondents in the United States, United Kingdom, Germany, Japan and Brazil – found that respondents between the ages of 17 and 44 exhibited the most interest in UHD content; men age 25 to 34 were more interested than women in the same demo, while respondents aged 45 and over reported the least interest.

Among respondents who indicated UHD was important to them, 75% subscribed to Netflix compared to 16% among non-UHD enthusiasts.

The preference for high-resolution video is in line with the growing, albeit small, number of UHD titles available and the rising penetration of 4K-capable TV sets. IHS Markit research reveals that more than 40% of TVs shipped globally in the second quarter of 2018 were 4K capable.

Respondents interested in UHD content were more likely than others to own connectable video devices such as video games consoles and streaming media devices such as Apple TV and Google Chromecast.

Owners of Apple TV, PS4 Pro, Xbox One X and other 4K-capable devices had the highest connection rates to the primary TV screen, indicating a desire to consume the latest technologies and watch high-definition video content.

This finding is particularly important during a time when most connected devices allow access to similar video content apps. Lower-cost devices, like Amazon Fire TV and Roku, saw little or no change in household penetration compared to those who indicated UHD is important to all other video subscribers.

When subscribing to both pay TV and OTT video services, respondents who thought UHD was important were also more likely to be driven by device availability, including the ability to watch video content on more than one device, or to watch on a specific device. The likelihood of renting or purchasing digital video content also increases across all content types, including new movie releases and TV box sets.

While OTT content availability has largely been driven by OTT video services, a small but growing number of pay TV operators now make UHD content available to their subscribers, primarily via “on demand” services. These findings underscore the importance of UHD among a well-connected and content-hungry consumer base, because they also tend to be big spenders on the latest technologies and content services, with a demonstrated preference for premium products.