Simon Applebaum (email@example.com) was a primary contributor to this commentary.
Remember all the effort required from content creators, advertisers, networks, stations and multichannel operators to make high-definition the default television viewing option for the majority of Americans? This long and winding road, like The Beatles' final big hit, encompassed decades of advancement and technological achievement, and everyone involved had to reinvent their production, distribution and creative competencies during that process. Whatever side of the business you're in, and whether you've settled into an HD world or not, get ready to consider uprooting all you've achieved and the need to once again reinvent the TV video business.
Forcing the hand here is Ultra HD, otherwise known as 4K, a transmission process with four times the pixels, picture size and clarity of HD. Unlike HD, embraced by the TV world after decades of testing, consideration and reconsideration, decisions to get aboard this train or not are closer than you may realize. That's because this summer and fall, set makers from LG to Samsung are introducing Ultra HD-capable models at retail stores nationwide and online.
CE Week, the annual midyear showcase presented through the Consumer Electronics Association in New York, illuminated both the attraction of Ultra HD and different viewpoints over how long and winding this road to public adoption can get. The presentations and discussions over them also illuminated the factors determining the road's course. The current take from CEA's research staff: Ultra HD's road to adoption will inch up at least through 2016. More than 23,000 UHD sets will be sold this year, followed by 212,000 next year, 744,000 in 2015 and 1.4 million in 2016. At that point, CEA chief economist/senior research director Shawn DuBravac believes, about five percent of all TV homes will have an ultra HD set, and that's when the marketplace will take off. "You need to have the whole ecosystem come together in terms of content before things jump," he says.
That's not how TV home electronics executives like Toshiba vice president Scott Ramirez crunch the outlook. Because most major set providers will come out with UHD models at a variety of sizes and price points, 2014 will end with more than 212,000 sets in use, he argues. Ramirez and others believe the one million UHD sets or more per year mark will be cracked by 2015. "We believe 2014 will be the year of audience acceptance, where price points will change significantly. People buy benefits, and the three benefits that will drive these sets into homes will be picture quality, picture quality and picture quality."
"That's the number one driver for people buying these sets," chimes in Sharp Electronics president John Herrington. "Along with price, these sets will get smarter, lighter and better quickly."
What makes TV executives like Ramirez and Herrington sure picture quality will win people over? There's very little native programming available in UHD, and TV stations, networks and multichannel operators, after all their HD effort and disenchantment with 3D, appear not to be in a frame of mind to advance UHD-compatibility. 4K 3D, which many home electronics manufacturers consider to be their next BIG economic catalyst, appears to be at least a decade away and manufacturers need an interim marketing thrust. The answer In a word –upscaling -- boosting the picture quality in a number of technical ways so that it's close to UHD without being UHD. Viewers will learn to enjoy a close-to-UHD experience while the programming, advertising and distribution sectors figure out when to generate native UHD content and eventually 4k 3D content. From what you could see on the CE Week exhibit floor, every UHD set on display, whether 45, 50 or 70-inch, demonstrated pictures with stunning clarity, colors and depth. With most major theatrical releases now in 3D, the marketplace needs to find a path to 3D in the home, no matter how long and winding it may be.
Price is another issue manufacturers will use to force UHD's adoption. Soon, almost all sets at all size options available at retail will deliver enhanced HD and be UHD compatible. Models from Sharp, LG, Toshiba, Sony and Westinghouse Electric now range from $4,000 to $15,000 but the field already has one price rebel, Asia-based Seiki, which offers a 50-inch set for $1,499.
The wild card in this push for quick UHD consumer adoption may be smart TV services and functionality. Already there's growing research and anecdotal buzz suggesting that people are viewing smart TVs to watch Web content and original interactive applications along with their favorite TV shows and networks. Smart TV ownership is already up nine percent this year and CEA's DuBravac forecasts that overall smart penetration will reach 38 percent of U.S. TV households by the end of the year. His unit's latest research figures 10 percent of TV households will buy a smart set over the next 12 months, 30 percent within three years.
A few set makers are advancing what they currently do with smart content or capability in their UHD models. Both Sharp and Toshiba have browser features allowing viewers to view any Web site they want, using on-screen keyboards taking commands from smartphones, tablets or remotes. In Sharp's case, the viewer can see a Web site and what they're watching side-by-side on the screen. There's a hitch--for now, the viewer can't watch a Web video and TV picture side-by-side (The Web clip must be viewed full-screen.). A Sharp spokesperson demonstrating this feature at CE Week told me work is underway on eliminating this hitch in future UHD models.
Sony already has TV ads for its UHD sets on broadcast and cable networks.
Other set makers are expected to launch promotions before the holiday shopping season. We'll have more clues then about how quickly the public warms to UHD -- and whether producers, studios, networks, stations, distributors, advertisers and agencies need to scramble back onto that long and winding the road toward a new video content delivery standard.
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