SANTA CLARA, USA: 2011 has been a challenging year for the TV industry. Sluggish consumer demand in developed regions, like North America, Japan and Western Europe, has led to poor profitability on the part of TV set makers and panel makers.
With supply chain inventory problems persisting well into mid-year, many TV brands cut back on their shipment plans for 2011 and reduced panel orders in Q3, which resulted in larger price declines for those core panels. The upside for consumers is more attractive retail set prices during the upcoming holiday season, particularly during Black Friday in the US.
“End-market demand has been weak in North America during most of 2011, with unit shipments falling around 4 percent Y/Y through the first three quarters of the year,” noted Paul Gagnon, Director of North America TV Research, DisplaySearch. “However, consumers, still quite sensitive to pricing, may be delaying purchases until the holidays when they expect to see the best deals. Consumers have learned this practice from observing previous holiday selling periods.”
According to the latest figures published in the DisplaySearch Advanced Quarterly Global TV Shipment and Forecast Report, total TV market shipments were up 3.7 percent Y/Y in Q3’11 to 62 million units, a 12 percent increase from Q2’11. This marks a healthy rebound from the 1 percent Y/Y shipment decline in Q2’11 and weak 1 percent Y/Y gain in Q1. However, orders for LCD and plasma panels used in the production of TV sets were both down in Q3’11, resulting in a somewhat lean inventory situation towards the end of the quarter.
Many suppliers have taken a conservative approach to inventory for the holidays. Therefore, if demand is better than expected, there may not be much slack in the supply chain to fulfill restocking orders. This could potentially lead to some product shortages.
LCD TV shipments worldwide were about 1 percent better than forecasted, rising 12.9 percent Y/Y to 51.5 million units compared to single-digit annual growth during Q1 and Q2’11. This is a good indication of improving demand in end markets. Retail prices for some LCD sizes are falling below key price levels, like $300 for 32” and $500 for 40-42”.
The transition to LED backlights continues, but the rate of adoption has been slower than expected. LED-backlit models have not been able to pass the 50 percent level, accounting for 48 percent of total LCD TV shipments, with the vast majority of those being edge-lit models.
Similarly, higher frame-rate models (120Hz or higher) have been mostly unchanged through 2011, representing about 22 percent of LCD shipments in the quarter. 3D grew to about 11 percent of LCD TVs, up from 9 percent in Q2. The slower growth of these two advanced features is indicative of a continuation of conservative consumer spending and reluctance to pay significant premiums.
Plasma TV shipments had shown increasing softness in recent quarters, declining 6 percent Y/Y in Q2’11 and falling 14 percent Y/Y in Q3’11 to 4.1 million units. The decline in plasma TV shipments is the result of closer price competition with LCD models, leading to a transfer of market share at key sizes like 42” and 50”.
In addition, poor profitability at plasma TV heavyweight Panasonic has led to a shift in focus to larger models and more richly-featured sets with less emphasis on price competition. Within plasma, 720p models account for about two thirds of unit shipments, but DisplaySearch forecasts a bigger shift to 1080p in the near future. Finally, 3D rose to about 27 percent of plasma TV shipments in Q3.
By region, China increased to more than 21 percent of all global TV shipments to become the clear leader in global TV demand. Shipments to China seasonally increase during Q3, ahead of October Golden Week promotions, but the level of share gain was substantial compared to previous years.
The softness in consumer demand seen for developed regions led to much weaker growth than for emerging regions, with total unit shipments rising 12 percent Y/Y in emerging regions and falling 8 percent Y/Y in developed regions, and China is a major driver of the stronger growth in emerging regions. In addition, adoption of advanced features, like 3D, has performed better in China than any other region. In fact, China was the leading region for LED LCD TV shipments as well as for 3D LCD TVs.
3D accounts for 11 percent of total TV units and 27 percent of revenues
3D continued to see solid gains in shipment and revenue penetration worldwide, but the focus of those gains is somewhat surprising. Through the first three quarters of 2011, Western Europe and China were the leading adopters of 3D at 13 percent and 11 percent of total TV unit shipments, respectively.
North America was initially forecast to be the leading market for 3D TV, but 3D accounted for only about 8.5 percent of total unit shipments. An unwillingness to pay much of a premium for 3D, and lower availability of low-cost 3D sets, compared to regions like China, have impacted uptake of 3D. During the upcoming holiday selling season in the U.S., 3D is not expected to be highly promoted. Instead, retailers will focus on large sizes with strong value pricing, but with lighter feature content.
Samsung remains #1 global TV brand, leading in LCD and plasma TV
Samsung’s global flat panel TV revenue share was up slightly in Q3’11 to 22.8 percent, a substantial lead over the #2 brand LGE. Samsung was the #1 brand on a revenue basis in every region, with the exception of Japan, where it does not sell TVs, and led LGE (a strong emerging market brand) in Asia Pacific and Latin America. Samsung was #1 in LCD and plasma TV revenues, #2 in CRT TV revenues, and was the only top 5 brand to post Y/Y growth in revenues.
LGE was the #2 brand worldwide at 13.1 percent with small Q/Q and Y/Y revenue declines. LGE was #2 in LCD TV and #3 in plasma TV, but continued to lead in CRT TV with more than double the revenue share of any other brand. Sony remained the #3 brand in global flat panel TV revenues during Q3’11, but saw a significant decrease in market share and posted a 13 percent Y/Y decline in total revenues.
Panasonic and Sharp rounded out the top 5 with Sharp gaining revenue share on increased shipments of large sizes like 60”.
Samsung was the #1 global brand of 3D TV overall, accounting for all technologies, with 31 percent of revenues. Within the 3D LCD TV category, Samsung was #1 while Panasonic claimed the top 3D plasma TV revenue share.