IHS: Domestic 4K UHD TV Shipments Surge Due to Pending Chinese Tariffs

Sales and shipments of 4K UHD televisions has hit 60% market penetration in some parts of the world, including the United States, according to new data from IHS Markit.

Speaking Oct. 14 at the MIPCOM confab in Cannes, France, Paul Gray, research analysis director at the London-based IHS, said 4K UHD TVs now exceed more than half of all TV shipments worldwide.

The analyst contends there are more than 260 million 4K UHD households globally — a tally that is expected to reach 574 million households by 2023, according to Advanced-Television.com, which reported Gray’s comments from France. About 34% of North American homes have 4KUHD TVs, increasing to 64% in the next four years.

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Notably, domestic shipments of 4K UHD TVs surged in North America as distributors stockpile inventory ahead of any proposed tariff increases on Chinese-manufactured products by the Trump Administration.

Meanwhile, next-generation 8K resolution continues to grow slowly with 167,000 display units shipped in 2019. This is expected to reach 3 million units by 2023.

IHS: Apple TV+ Growth Hindered by iOS Mandate

When Apple bows its branded $4.99 monthly Apple TV+ subscription streaming video service on Nov. 1, it will be the cheapest SVOD platform on the market.

But being priced 50% below Netflix apparently isn’t good enough for IHS Markit, which suggests the service’s growth will be hampered by its exclusivity to Apple’s iOS platform.

Apple TV+ will be limited to the new iPhone, Mac, iPad and Apple TV streaming media device. The company is offering a free year of Apple TV+ with the purchase of any of the aforementioned devices.

Indeed, Apple is projected to sell about 70 million new iPhones through the winter holidays, in addition to Macs, iPads and Apple TVs.

Yet the data underscores the reality that Apple TV+ will have the potential to reach just 57% of the addressable market ion the United States, according to IHS Markit.

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By comparison, Netflix reaches 95% of the U.S. market — a percentage the pending Disney+ platform is expected to emulate.

“With its limited device distribution, Apple TV+ will be accessible to just over half the online population in the US, thus hindering subscriber growth,” analyst Fateha Begum said in a note. “Although Apple is the largest smartphone brand in the U.S. market and plans to offer free access with hardware purchases, the company would need to widen its device distribution to compete with OTT players that are now available nearly universally.”

Begum argues Apple should move beyond its iOS borders and make Apple TV+ available to Android devices. Indeed, the SVOD service is expected to be made available on Roku and Fire TV, in addition to Sony, LG and Vizio smart TVs.

“By opening up to other platforms, Apple TV+ will see its addressable base increase by 24% to 87 million U.S. households,” Begum said. “This will improve Apple’s position, but the company will still be at a disadvantage compared to competitors who can address the entire U.S. market of 124 million online households.”

 

Survey: U.S. Consumers Cite Video Streaming as Top Use for 5G

The 5G era is set to drive the next wave of growth in video streaming, with 78 percent of U.S. consumers indicating they will expand this activity as they adopt the next-generation wireless standard in smartphones and home-networking solutions, according to a survey conducted by IHS Markit, Digital Orbit.

When asked to name which types of activities they are likely to increase due to the arrival of 5G, consumers ranked video streaming first, ahead of video calling, social media, mobile gaming, virtual reality and augmented reality, according to the survey. As a result, the deployment of 5G will help cause video usage to grow to account for 70 percent of mobile network traffic in 2022, up from 47 percent in 2015, IHS reported.

“The promise of faster video streaming through 5G is generating enormous enthusiasm among consumers,” said Joshua Builta, senior principal analyst for IHS, in a statement. “Interest is particularly high for those younger than 50, with 81 percent of survey respondents in that age range citing video streaming as the top activity for 5G. Consumers are expressing strong interest in video streaming both on smartphones and for home internet services, which are equally supported by 5G.”

Current 4G wireless services already provide sufficient performance to support most types of video content commonly streamed today, according to IHS. As a result, 5G’s largest impact will be felt in emerging areas of the market, such as 4K Ultra High Definition video, according to IHS, as the 5G standard enables 4K on mobile platforms because of its increased capacity and speed. When coupled with the growing demand and supply of 4K UHD content, the proliferation of 5G will help drive mobile consumption of UHD content, according to the firm.

Also, the 5G standard will also be critical to promoting the consumption of general live video, IHS noted. This is particularly true for sports and live events, where lower latency and higher speed and bandwidth are critical.

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In parallel with the trends in the smartphone market, US consumers are expressing intense interest in engaging in 5G video streaming via home internet access, according to IHS. While often regarded purely as a mobile technology, the 5G standard also supports fixed wireless access (FWA) in the home. However, unlike fixed solutions such as DSL, cable or fiber, 5G FWA uses wireless mobile network technology to extend internet access into homes.

Most consumers said they are attracted to 5G FWA by its faster speeds. The average speed of broadband connections in the United States in 2018 was about 35 megabits per second. In contrast, 5G can theoretically operate at up to 1 gigabit per second, although initial deployments will be much slower, according to IHS.

Survey respondents also cited streaming of video, both prerecorded and live, as the most compelling reason to upgrade home internet service. A total of 74 percent of those surveyed named video streaming as the chief motivation for upgrading to 5G in the home.

IHS Markit forecasts that global over-the-top (OTT) video subscriptions will pass the 1 billion mark in 2021, up from 620 million at the end of last year. In 2022, OTT video subscriptions will surpass pay-TV subscriptions.

IHS Markit’s Digital Orbit report summarizes the results of a survey on how consumers perceive 5G and how they intend to use the new technology. The survey was conducted May 22-27, 2019, among 2,031 respondents, 95 percent of whom were U.S.-based. The median age of the survey respondents was 43, and 63 percent lived in urban areas.

IHS: China’s TCL Brand Tops North American TV Market

With just about everything made in China, it’s little surprise a Chinese television manufacturer has unseated South Korea’s Samsung for top unit sales in North America.

With China and the United States embroiled in a trade dispute, the rush to import Chinese TVs ahead of proposed tariffs is at a fevered pitch.

China’s TCL unit shipments climbed to 26.2% in the first quarter (ended March 31), up from 16% during the previous-year period, according to new data from IHS Markit.

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Perennial market leader Samsung saw shipments drop to 21.8% from 28%. No. 3 Vizio shipments nearly reached 14%, according to the data first reported by Advanced-Television.

TCL, which markets TVs featuring the Roku operating system, helped drive North American unit shipments up 30% to a record 9.3 million units.

Samsung still dominates the market in revenue (36.9%) due to its larger screens across its product line and higher price points.

“As uncertainty mounts around a possible tariff-driven rise in costs, these brands have been bolstering shipments to protect against any potential disruption,” Paul Gagnon, research executive director at IHS Markit, said in a statement. “Given that margins for TVs are relatively low compared to other consumer-electronics categories, any tariff increase would have a major impact on sales.”

 

IHS Markit, Informa Swap Business Units, including OTT and Media

London-based research firms IHS Markit and Informa May 22 announced a swap of select business units — including the former’s technology, media and telecom business for the latter’s agribusiness intelligence group.

Informa, whose focus has been on international exhibitions, events, information services and scholarly research group, will up its sights on over-the-top video (i.e. Netflix, Amazon Prime Video, etc.), media and related technology.

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The company is giving IHS Markit $30 million in cash to complete the deal, which is expected to close in July, pending regulatory approval.

“This agreement is very positive for both IHS Markit and Informa, increasing the focus of each company on core markets where [each] has particular strengths and a long-term commitment to invest and grow,” Lance Uggla, CEO of IHS Markit and Stephen Carter, group chief executive, Informa PLC, said in a joint statement.

“Our ambitions for Informa Tech will be further enhanced by the addition of the IHS Markit TMT portfolio, extending our customer and international reach, creating a strong platform for future growth,” added Carter.

IHS Markit will retain RootMetrics, its benchmarking business and a portion of its market intelligence business.

IHS acquired Markit in 2016 for $5.5 billion, creating a data analytics powerhouse. In 2018, it acquired financial services firm Ipreo for $1.86 billion.

 

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.