HDR key to offsetting profit erosion
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High dynamic range, also known as HDR, is a new category of 4K TVs that emerged in 2016. HDR TV shipments will reach more than 4 million units in 2016 and growth to more than 30 million units by 2020, according to research firm IHS Markit.
The market for HDR compatible TVs, defined as any sets compatible with basic HDR formats but using standard dynamic range displays, will be as much as four times larger. By 2020, IHS Markit expects that nearly all of the 112 million 4K TVs shipped worldwide will be compatible with HDR, but only 30 percent will have true HDR performance capabilities.
Worldwide demand for 4K TVs continues to grow even though total TV shipments will decline slightly in 2016. The lack of unit volume growth in the total market and continuous price erosion, especially for categories like 4K, is a concern for TV manufacturers and retailers. New display technologies like HDR hold promise for improving ASPs and profits, but only if the technology and its benefits are communicated well to consumers.
“As with many new technologies in the TV market, the ability to introduce them to consumers in a way that communicates the value is crucial to achieving lasting premiums and profits,” said Paul Gagnon, Director of TV sets research for IHS Technology.
“In the case of HDR, only some sets have enhanced display performance that can allow the consumer to see the benefit, while the rest will have little discernable difference to consumers, who may become confused about the value of HDR as a result,” said Gagnon.
Standard dynamic range, or SDR, TVs will shrink rapidly as a segment within the 4K TV market, but remain the only choice for HD and 1080p resolution TVs as HDR benefits are featured primarily with 4K content.
The 4K TV market is growing quickly from 55 million units in 2016 to more than 100M units by 2019, achieving 100 percent share of 50-inch and larger TV shipments by 2019. As with many new TV technologies like 4K, HDR is featured in larger screen sizes where the additional costs are supported by larger premiums. More than 80% of HDR TV shipments will come from 50-inch and larger screen sizes.
Questions & Answers
Q.Given the rapid growth in HDR compatible TVs, what proportion of these will offer a true HDR viewing experience for consumers?
Given the rapid growth in HDR compatible TVs, what proportion of these will offer a true HDR viewing experience for consumers?
By 2020, IHS Markit anticipates that nearly all 112 million 4K TVs shipped worldwide will be HDR compatible. However, only 30 percent of these will possess true HDR performance capabilities.
Q.Why is HDR considered so important for TV manufacturers and retailers, especially in the current market climate?
Why is HDR considered so important for TV manufacturers and retailers, especially in the current market climate?
The total TV market is seeing a slight decline in unit volume and continuous price erosion for categories like 4K. HDR offers new display technology that holds promise for improving average selling prices and profits.
Q.What is the primary risk associated with the introduction of HDR technology into the consumer market?
What is the primary risk associated with the introduction of HDR technology into the consumer market?
A significant risk is consumer confusion regarding HDR's value. Only some sets offer enhanced display performance, meaning many HDR compatible TVs will show little discernable difference to consumers, potentially eroding the technology's perceived benefit.
Q.Which specific screen sizes are primarily benefiting from the introduction of HDR technology?
Which specific screen sizes are primarily benefiting from the introduction of HDR technology?
HDR technology is mainly featured in larger screen sizes, where additional costs are supported by larger premiums. More than 80% of HDR TV shipments will come from sets that are 50-inch and larger.