Lack of Native 4K Content Not a Barrier to Ultra HD Sales So Far Among Early Adopters

Ultra HD sales have gone “beyond expectations,” said manufacturers and retailers on an upbeat panel at the Ultra HD Conference, part of CES Unveiled in New York Tuesday. Tom Campbell, spokesman for Video and Audio Center, Santa Monica, Calif., said Ultra HD is largely responsible for the chain’s best Q2 and Q3 in history.

Robert Zohn, owner of Value Electronics, Scarsdale, N.Y., has been using user-generated content recorded in store using a Sony 4K camcorder and positioning customers 4-½ feet from an 84-inch -- “something unheard of” with TVs offering lower resolution -- to show that Ultra HD is truly different from past TV technology, he said. “We force them to sit close,” he said.

Thanks to pricing policies from TV makers, Zohn is embracing showrooming, where Value Electronics’ sales staff can strut their stuff educating consumers who have read online about 4K TVs, Zohn said. “We're competitive now thanks to UPP; it’s an equal playing field,” Zohn said. “I love showrooming; it’s helped us,” he said. Value Electronics makes 4K TVs “look exceptional,” Zohn said, and then it’s “so compelling they have to buy it.” Consumers are intrigued about 4K and see it as a way to protect themselves against “being left behind,” he said. Value Electronics has a 100 percent attach rate for add-on sales of 4K media players. “Why would you not buy the media player to go with” a 4K TV, he asked.

At Video and Audio Center, Ultra HD TVs are generating their own repeat business, said spokesman Tom Campbell, who said customers are coming back for UHD sets after they get one home. Nearly a third of UHD customers have bought second or third sets, he said, because once they've watched UHD for a week, “they can’t stand to watch regular HD."

As for Ultra HD’s trajectory on the technology curve, Shawn DuBravac, senior director-research at CEA, said it’s “right where it should be.” Sales to date for the year are tracking “a bit over 20,000” heading into Q4, and if sales for the quarter reach the projected units, sales will reach 50,000-60,000 for the year. DuBravac estimated Ultra HD will follow the “natural progression” of other successful technologies such as HD or Blu-ray. Momentum is building, he said, and UHD will factor into typical TV replacement cycles in which 1 in 3 households buys a new “flagship” TV every year. According to research, 25 percent of consumers plan to buy an Ultra HD TV within the next 12 months, he said.

A market driver that has helped UHD at launch is that there’s no competing technology, said Campbell of Video and Audio Center. He cited the numerous times in CE history when format wars have slowed down launches of new technologies. This time, the industry is pulling together on 4K and Campbell predicted that forecasts of 4K TV sales will turn out to be “way underestimated.”

DuBravac said CEA research shows that cost is the number one inhibitor to UHD sales. He was sanguine on that point because “deflationary pressures of technology will take care of” price obstacles. That’s a positive compared with technology hurdles such as 3D glasses that can’t be addressed by pricing adjustments, he said.

Price hasn’t been an overriding concern with early adopters, Campbell said. Video and Audio Center tried carrying a “tertiary brand” but ended up dropping it after customer returns and complaints about quality, he said. Recent price adjustments have made Ultra HDs “affordable,” Zohn said, saying manufacturers requested that he not address upcoming price cuts (see separate UHD TV pricing report, this issue).

Lack of native 4K content hasn’t been a problem in the early days of UHD, said Zohn, Campbell and Brian Siegel, vice president-merchandising and operations for Sony Stores. Zohn’s store shows the upscaling capabilities of the technology along with 4K content from Sony’s media player. He noted that Samsung recently announced it will have a 500 GB USB drive with a “fair amount of content.” Netflix has been testing 4K content as well, so “they know content is coming,” Zohn said.

On Ultra HD’s path to becoming mainstream, DuBravac said by 2015, 5-6 percent of annual TV volume will be from Ultra HD sets and 10 percent a year later. To move that type of volume, the technology will need broad representation at retail, he said. “You're going to have to have broad reach to start to move multiple millions of units each year,” he said. For now, Zohn wants specialty stores to have an exclusive as demand ramps for 4K. On big box stores having Ultra HD, Zohn said, “I don’t appreciate it."

As a specialty dealer, Zohn wants more from the technology as well. Zohn is pushing for more bit depth, higher contrast ratio, bigger color gamut and a “real Ultra HD picture, not just dense pixels.” With denser pixels, “we can have much more gradation in tonal quality,” Zohn said. “Let’s go all the way with it and give the customer what will really wow them,” he said.