Assessing customer demand for 4K
One of the challenges facing cable MSOs and other MVPDs (multichannel video programming distributors) is determining whether customer demand for 4K (Ultra HD) programming will follow the trajectory of HD or 3D TV.
Consumer electronics retailers are the most bullish on the outlook for customer adoption. 4K was a big topic at the 2014 International CES, and many retailers were aggressively promoting discounted prices for Ultra HD TVs as part of last year’s Black Friday and Christmas holiday promotions.
Fueling their optimism was a “Seeing Is Believing” study released last spring by CEA, the Consumer Electronics Association. The CEA study found 73% of shoppers who experienced Ultra HD in a showroom viewed the technology as positive, compared to 45% who did not see or hear about the technology in a store.
Apart from customers looking to replace old or broken TVs, the report predicted 43% will buy 4K TVs to improve picture quality, 42% to increase their screen size and that 62% of online consumers would be more willing to purchase an Ultra HD TV if the picture quality “was so clear that it felt like they were experiencing what they were watching in person or if the picture quality was better than a movie screen."*
There are signs the sales push is paying off, particularly in Asian markets where there are many first-time TV buyers. According to a report compiled by Futuresource Consulting in December, worldwide shipments of 4K Ultra HD TVs were on track to exceed 100 million units by 2018.**
In contrast to these findings, the Diffusion Group (TDG) pushed its initial timeframe for 4K adoption out by five years, from 2020 to 2025. “There’s no reason to invest. No one is on the verge of losing market share because they don’t have 4K,” TDG senior analyst Joel Espelien told CED magazine.***
This observation is reinforced in a news story this week from The Hollywood Reporter saying the broadcast division of the International Olympic Committee (IOC) has "no plans for 4K TV broadcasting" during the 2016 Rio Olympics. “There is no demand from our rights holders for 4K,” explained Yiannis Exarchos, CEO of Olympic Broadcast Services.****
While the IOC’s decision is a good reminder that adoption of 4K may not be too far along by 2016, the data from Futuresource demonstrates that there will be a growing number of homes who are purchasing Ultra HD TVs and will be looking for 4K programming to enjoy on them. Examples of content providers who are already stepping in to fill that void include the NBC and USA television networks, which have begun to make TV shows available in Ultra HD. In addition, international video providers like BBC TV are shooting original productions in 4K as part of “future-proofing” their libraries.*****
Will 4K follow the trajectory of HD TV or that of 3D TV? The findings of CEA’s “Seeing is Believing” study remind us that one of the major drivers will be customers in need of replacing their existing TVs. Like the BBC - and the rest of us who must make technology decisions - they will want to future-proof their purchases.