Category: The Front Line

4K & UHDTV: Once More Unto The Breach, Dear Friends…

Yesterday, TWICE reported that Samsung, Sony, and LG will partner with Best Buy on a 13-week consumer awareness campaign to increase interest in UHDTV and ultimately drive sales of 4K TVs.

The campaign starts tomorrow and is named “Believing Begins Here.” The Consumer Electronics Association had a part in developing the campaign, which will feature in-store demonstrations of UHDTV at 50 Best Buy locations in 11 major markets, including Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and Washington D.C.

The timing of this campaign is no coincidence. National Football League pre-season games have already started, and the first NCAA college football games are scheduled for August 28. And as we all know, nothing sells big-screen TVs like football!

The demonstrations will take place between 11 AM and 3 PM each Saturday for the duration of the campaign. According to the TWICE story, these three major TV brands (and hopefully others to be added later) “…have chosen the last remaining big-box CE specialty chain as their showcase.” (I’m sure HH Gregg and Frye’s would dispute that last statement!)

Does this bring back memories of the stumbling, awkward effort to promote 3D TV five years ago? It should, except there’s a difference this time around. For one thing, there aren’t any eyewear issues, because there’s no eyewear. Assuming BB does a good job with 4K content selection, anyone who happens to wander by the demo can easily and quickly check it out.

For another, there’s aren’t any “exclusive” 3D Blu-ray deals tied to specific manufacturers and TVs, a strategy that amounted to shooting one’s self in the foot back then. Throw in the battle between passive and active 3D, the eye disorders and vision issues almost a quarter of the population experiences, and a paucity of interesting 3D content readily available to viewers, and the obituary for 3D TV was quickly written.

This time around, Best Buy has decided to emphasize 2K/4K upconversion as a “future-proof” advantage of 4K TVs and will have adequate demos of 2K-to-4K program material to make their point. And to attract potential customers, the usual manufacturer promotions and sweepstakes/drawings will be conducted. Prizes include a 55-inch Sony, Samsung, or LG UHDTV with installation and Geek Squad service plan included. (By the way, a 55-inch Samsung 4K TV can be taken out of the box and up and running in about 5 minutes, based on my experiences at InfoComm during my 4K / UHDTV class.)

The television industry clearly has a lot more at stake in 2014 than it did in 2009. TV shipments have declined for two years in a row, and TV prices are collapsing with each quarter. (You can easily buy 60-inch LCD sets for less than $1,000 now, and LG has already dropped a 55-inch 4K “smart” model to less than $2,000.)

For some manufacturers like Panasonic, the TV business has been de-emphasized in favor of commercial electronics products and even beauty aids and appliances. (Panasonic now sources a lot of its LCD TV glass on the wholesale market from Taiwan and China.) For others like Mitsubishi, the business of manufacturing and selling TV is “history” as their profits slowly but inexorably evaporated to nothing.

One fact that Best Buy and its partners can’t really explain to consumers is the changing dynamics of the LCD panel and television components supply chain. Thanks to an aggressive push by Chinese manufacturers into the television business and an emphasis on 4K, we will soon see ALL TVs larger than 55 inches move exclusively to 4K glass, just as we saw the migration from 720p/768p glass to 1080p about 6-7 years ago.

The good news is; 2K-to-4K upscaling is comparatively easy, as my colleague Ken Werner has pointed out in a previous Display Daily. Some manufacturers are even building upscaling chips into HDMI interfaces and cables! So the Best Buy demos should be effective if they start with strong 2K content.

But there are always unanswered questions. Best Buy now sells Vizio TVs, and according to Vizio’s timetable, they will have a full range of heavily discounted UHDTVs available this fall, starting at $999 for a 50-inch TV and going all the way to $2,999 for a 75-inch set. In the key sizes of 55 and 65 inches, the prices will be $1,299 and $2,199, respectively. How does that price war help the Big 3? And why should Vizio have anything to do with this campaign when they can simply sit on the sidelines for a couple of months and then swoop in and capture sales based on their brand recognition?

More devil in the details: We still don’t have a 4K Blu-ray standard, and every month it is delayed lets more wind out of the BD sails. According to a recent Home Media story, consumer spending on streaming, downloads, and optical discs was flat through the first six months of this year, to the tune of $8.6B in the U.S.

The “details” show us that digital spending (downloads and streaming of movies and TV shows) increased by 17% ($3.6B) over the same time period in 2013. Meanwhile, spending on optical discs (DVD and Blu-ray) continues to drop, falling 8% ($3.3B) in the Y-Y comparison. Additionally, rentals of optical discs dropped 14% ($1.7B) compared to the first six months of 2013. Brick and mortar store rentals took an enormous hit of 33%.

Breaking out the Blu-ray category, the story says that Blu-ray disc sales were up by 10% during Q2 ’14, with new theatrical releases up 18% in the same time period. But that’s not enough to offset the overall decline in interest by consumers to buy or rent optical discs. (No numbers were provided for Blu-ray sales revenues.)

Will 4K suffer the same fate as 3D? Not a chance. As I just pointed out, many of our big screen TVs will employ 4K panels exclusively in the not-too-distant future. The infrastructure for 4K streaming is being built and the sales and rental numbers show consumers increasingly prefer that delivery format to accumulating a pile of discs.

I plan to check out the 4K demos myself in “secret shopper” mode and will have a report in a future DD.

The OLED Firmament Does Not Quake — but it’s Vibrating a Little

All of AMOLED-land is divided into two parts.

Part 1:  Samsung dominates production of smart-phone-sized AMOLED displayss, and is now doing the same for tablet-sized AMOLED displays. (The first Samsung Galaxy tablets with AMOLED displays are now available in the U.S. market.)

Part 2:  LG still struggles to make AMOLED TVs a mass-market product, but significant developments in manufacturing processes are needed before costs can come down enough for OLED-TV to be a true high-volume consumer product. LG is committed to achieving this goal, but the road to the mass market continues to be bumpy.

You would think that Samsung’s long-held position as king of the small-OLED hill would have invited some serious competition by now. There is some activity in China and Taiwan, but its modest scale hasn’t been enough to make an appreciable dent in Samsung’s dominance. But now, a significant Chinese player is making a major investment in AMOLED manufacturing.

Tianma's cell-phone-sized AMOLED prototype, as shown at SID 2014 in San Diego.  (Photo:  Ken Werner)

Tianma’s cell-phone-sized AMOLED prototype, as shown at SID 2014 in San Diego. (Photo: Ken Werner)

At SID 2014 in San Diego this past June, Tianma was showing several good-looking AMOLED prototypes, including a 4.3-inch

with 480×800 pixels, on-cell touch, 250 nits, and a claimed contrast ratio of over 10,000 (see photo); and a 5.5-inch with 720×1280 pioxels, 4-lane MIPI interface, 200 nits, and that same claimed contrast ratio of over 10,000.

Tianma’s Stephen Liu told me that Tianma is now building a Gen 5.5 AMOLED fab in China and expects to be ramping up commercial production of smart-phone and tablet sizes in mid-2015.

It’s worth saying that Tianma’s exhibit area was decidedly major league, and fully competitive in design and presentation with those of its first-tier competitors. Tianma combined its China-based Tianma and U.S.-based Tianma-NLT teams to design the booth and select the products and technologies to be presented. Tianma and NLT personnel said they worked hard and long, and were very pleased with the result.

The importance of North-American-style presentation in our market is not always clear to Chinese companies. That Tianma gets it, and was willing to expend significant human and monetary resources to present their competitive technologies in a fully professional manner, is impressive. I will be tracking Tianma more carefully in the future.

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications, including mobile devices and television.  He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them.  You can reach him at kwerner@nutmegconsultants.com.

Well, Whaddya Know!

It’s late July, and the summer doldrums have definitely arrived. The flow of press releases has slowed to a trickle, and all kinds of strange stuff arrives in my mailbox several times a day – most of it destined for the recycling bin. Even so, there are a few stories worth mentioning.  Let’s take a quick glance.

The tables have turned: Remember when your parents limited the number of hours of TV you could watch in a day? Well, it appears Millennials are self-regulating, when it comes to the boob tube.  According to a story on MediaPost from last Thursday, Nielsen has discovered that the number of hours spent viewing traditional TV continues to decline year-over-year for this demographic.

Nielsen’s current numbers show that the average Millennial watched a little less than 22 hours of traditional TV, per week, during the first quarter of this year. That’s a decline of 14 minutes per day from Q1 2013. In contrast, their parents (50 – 64 and 65+) watched more than twice that amount at 45 and 52 hours, respectively. (Well, us Baby Boomers grew up with television, so maybe that’s not surprising.)

Much ado about nothing? Aereo, the renegade broadcast TV-over-IP “antenna” service that lost a major ruling in the U. S. Supreme Court last month, flip-flopped in its assertion that it wasn’t a cable TV system and insisted it was, applying for a license to broadcast copyrighted content from the U.S. Copyright Office. But Aereo’s request was just turned down by that august body, putting its future into limbo.

Now, a story on the GigaOM Web site suggests that Aereo had maybe 100,000 subscribers at most. How do we know that? Well, as part of its application to the U.S. Copyright Office, Aereo submitted a payment of $5,310.74 to cover “royalty and filing fees” from January 2012 through the end of last year. Using some basic assumptions about Aereo (such as its monthly subscriber fee) and royalty payments of .33 to 1.064% of gross profits, law professor Bruce Boyden backed into a guess of around $1 million gross revenue for that time period.

That’s not a great ROI for the time and investments Aereo made, and the article stated that, even if all of the $1M in revenue came in 2013, it represents only 10,000 subscribers.  We’ll have to see what the next steps are, pending more hearings in court next month.

Not selling like hotcakes, Part I: Apple’s recent financial results show that the company sold 35.2 million iPhones in Q2 2014. That’s up over 12% Y-Y and was largely driven by a big jump in sales in Brazil, Russia, India, and China, a.k.a the BRIC countries. Good news, but offset by the fact that iPad sales dropped 9.2% in the same quarter. That follows a 16% decline in iPad sales in Q1 2014. What’s going on here?

One obvious answer is that consumers don’t turn over their tablets quite as often as their phones. I’ve seen other research that shows a retention rate of 2+ years for tablets, which implies satisfaction with these products. But that doesn’t help Apple’s bottom line, which is why they’re pushing into the “wearables” market – and just got a patent for a new smartwatch called iTime that features sensors, in-strap circuitry, and support for arm and wrist gestures, according to the ETCentric Web site. Will it offset declining iPad sales?

Not selling like hotcakes, Part II: Finally, from the Home Media Web site, we get a story that says “UHDTVs are underwhelming at the marketplace,” based on market research by HIS. The share of UHDTV shipments among the top 13 LCD brands reached 5% in May, up from 4% in April, 3% in March, and 2% in February. (Hmmm…so, they’ve increased by more than 100% in three months? That’s not too shoddy!)

IHS goes on to state that “UHDTV pricing remains too high to gain meaningful market share.” Well, duh! Until recently, all Japanese and Korean UHDTV sets in the 55-inch class were priced close to $3,000, and we know that’s a non-starter. But LG recently cut its 55-inch 4K LED TV to $1,999, and Vizio will be launching a 55-inch 4K LED for just $1,300 in the fourth quarter.

HIS analyst Jusy Hong was quoted in the story as saying that UHDTV shipments will increase to 14.5 million by the end of the year, up from a paltry 2 million in 2013 – and that’s nothing to sneeze at.  Samsung and LG are the kingmakers here, accounting for 46% of all UHDTV shipments in May. In contrast, the “big six” Chinese brands – Haier, Hisense, Skyworth, TCL, Konka, and Changhong – captured a combined total of 45% market share in UHDTVs.

Gotta run! The reclining chair and an ice-cold glass of lemonade are calling…

4K TV Does NOT Require Native 4K Media

Repeat after me: 4K TV does NOT require native 4K media. Again: 4K TV does NOT require native 4K media.

The reason I’m repeating myself — not only in the previous sentence, but also in echoing other articles I’ve written — is that self-styled experts continue to say that 4K TV will not be successful until native 4K media is widely available. They are wrong, obviously wrong, and for an obvious reason: High-quality 2K-to-4K up-conversion is so good that experts can’t see the difference in side-by-side tests from distances of three feet or more. Even at nose-on-the-screen distance, the differences are subtle.

Good up-conversion has remarkable quality but it isn’t expensive. Seiki, the Chinese company with a Japanese name that introduced the first sub-$1500 4K TV set last year, has an HDMI cable with a converter chip built into the cable that sells for $59.95! This is not any converter chip. It’s the Marseilles Networks video processing chip with Technicolor up-scaling certification that was introduced to high acclaim at last year’s summer PEPCOM Digital Experience show in New York.

Inexpensive, high-quality 2K-to-4K up-conversion is available from Seiki. (Photo: Ken Werner)

Inexpensive, high-quality 2K-to-4K up-conversion is available from Seiki. (Photo: Ken Werner)

There is a back story here. When Seiki introduced its sub-$1500, 4K, 50-inch set last year, people were impressed with the screen and price but

appalled at the low-quality built-in 2K-to-4K conversion. Seiki acknowledged the problem and worked with Marseilles to produce the up-converter cable, which it then gave to purchasers of the initial 4K sets.

In addition to including the Marseilles up-converter in its 2014 sets, at CE Week in New York in late June, Seiki introduced a Blu Ray Player with the Marseilles chip built in at the impressive MSRP of $99!

Seiki’s Sung Choi told me that Seiki is also introducing 28-, 32-, and 40-inch 4K monitors. Sales will be through Walmart, Sears, Best Buy, Amazon, and Costco. I asked Choi one of my standard questions: “Who makes your display panels?” All of the major suppliers, he said, including Sharp and CSOT. “It depends on pricing.”

Vizio and TCL have also promised 4K TV sets at $1000-ish prices by Q3 or Q4 of this year, and we can certainly expect others. Tier 1 brands aren’t going that low yet, but their prices are trending downward, too, and probably faster than they would like.

Set-makers know they don’t have to wait for native 4K media before they sell 4K TV sets. It’s time for the self-styled experts to stop doing their readers the disservice of feeding them false information and erroneous analysis.

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications including mobile devices and television.  He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them.  You can reach him at kwerner@nutmegconsultants.com.

 

 

Humpty Dumpty Strikes Again!

I’ve been on hiatus the past couple of weeks, recovering from a heavy teaching schedule at InfoComm and also celebrating the wedding of my son in late June.

Even so, I steal a glance at the daily headlines now and then. And it was impossible to ignore the 6-3 Supreme Court decision against Aereo in late June. Aereo, as has been well-documented in this space, was a cocky startup that attempted to get around copyright law and retransmission fees by constructing a Rube Goldberg-like system of antennas to receive and distribute broadcast TV signals to subscribers in New York, Boston, and other markets.

The initial court decisions against broadcasters and in favor of Aereo (1st and 2nd Circuits) were offset by an unfavorable decision in the 10th Circuit. So Aereo pushed to have the Supreme Court hear its case (ABC Television Networks vs. Aereo) in late April. And the majority of the Supremes ruled that Aereo was essentially a cable TV system in operation, even though it devised an elaborate technical work-around to avoid such classification.

After squealing like a stuck pig, Aereo execs pleaded with Congress to take up their case and called the SCOTUS decision “a blow against consumer’s rights to watch free television.” Actually, although none of the justices really understood what was going on here – despite their insistence that the Aereo decision had no impact on so-called “cloud” media storage and delivery systems –  they got it right.

Studying Aereo’s patent application showed their attempt to re-define science and established technical terminology, classifying everything in a TV channel receiver system from the antenna, receiver, decoder, and MPEG encoder as an “antenna” and the MPEG network interfaces moving signals from the roof of a building to H.264 encoders and multiplexers as an “antenna transport system.”

Nice try, but no cigar. That’s essentially what a cable TV system does. The converted signal formats might be different, but the process remains the same. So unwittingly, Aereo got called out. But now the story takes a decidedly different turn.

Last week, Aereo did an about-face and filed a petition to 2nd Circuit Judge Alison Nathan, asking that Aereo indeed be classified as a cable TV service provider under Section 111 of the Copyright Act: “If Aereo is a ‘cable system’ as that term is defined in the Copyright Act, it is eligible for a statutory license, and its transmissions may not be enjoined (preliminarily or otherwise).” In a nutshell, this means that Aereo would merely have to pay retransmission fees to all of the stations it carries and it could resume operations as before.

As expected, this filing brought an incredulous response from the likes of ABC and CBS, who expressed disbelief that Aereo, having made such strong arguments that they were not a cable TV system, would now petition the court to determine if they were eligible for a compulsory license – as a cable TV system.

Here’s a quote from the Forbes story: “… it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a ‘cable system’ under Section III, given its prior statements to this Court (United States 2nd Circuit) and the Supreme Court. It represented to this Court, for example, that it could not qualify as ‘a cable system’ and, therefore, that cases interpreting the application of Section III were ‘irrelevant to the issues here’.”

Two other interested parties, ivi.tv and FilmOn, are watching this part of the proceedings with great interest. Both companies also attempted to set up and operate Internet streaming services to carry broadcast TV channels, but out-of-market. And both were shut down by the courts. Even so, FilmOn has registered with the U.S. Copyright office as a cable TV company and paid for a license to retransmit copyrighted programs.

If nothing else, the Aereo case has provided us with some great theater and entertainment, and also raised valid questions about growing technical illiteracy in this country. But it’s clear that CEO Chet Kanojia and his backers (which include media mogul Barry Diller) aren’t going down without a fight. Hence, the 180 degree-turn in their court strategy.

I’m reminded of a conversation Alice had with Humpty Dumpty in Alice in Wonderland: “When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean, neither more nor less.” Apparently Aereo’s lawyers are big fans of Lewis Carroll..