Pixel Counts Alone Won’t Compel the Upgrade to 4K TVs, Observers Say

Consumers are unfamiliar with the concept of 4K TV, creating a “significant barrier to its uptake,” said a white paper released by Parks Associates Thursday (http://bit.ly/1AXX3Bw). Fewer than 15 percent of U.S. broadband households are familiar with 4K, Parks said, because there’s been little reason to upgrade from their flat-panel TVs. And that’s in an era of shorter replacements cycles, according to Parks, which said the average upgrade cycle for flat-panel HDTVs has narrowed to six to eight years compared with nine to 10 years for traditional CRT TVs. More than 80 percent of U.S. broadband households have a flat-panel TV, it said.

In the Parks survey, 45 percent of consumers who planned to buy a TV in the next 12 months planned to invest in 4K, which was 8 percent of broadband households. But the survey didn’t factor in the cost delta of 4K TV, Parks said, citing the wide swath of price choices consumers have. Currently among top-tier makers, the range for a 4K TV is from roughly $1,300 to $120,000. Consumers have to weigh the costs and benefits between a new 4K television and a comparably sized 1080p HD TV for under $1,000, it said.

Making the case for a 4K upgrade is “difficult at the outset” because of confusing terminology, Parks said. It said 4K displays have a resolution of 3840 x 2160 pixels, which totals more than 8,000 pixels overall, translating to four times the resolution of 1920 x 1080p HD. While acknowledging that more pixels translate to a sharper picture, Parks said the industry needs to shift the message from resolution to more “experiential benefits.”

Episodic TV programming needs to make use of Ultra HD TVs’ real estate for consumers to feel they're getting their money’s worth in an upgrade, Parks said. Most TV networks are stuck in the chicken-or-egg conundrum, not considering 4K as a viable production and distribution format because of high costs of transitioning to 4K TV compared with low consumer penetration of Ultra HD TVs, it said.

The TV industry has been trying to generate upgrade interest that had waned after the transition to digital TV, Parks noted. The 3D effort fell short due to a lack of content and the need for glasses, and now smart TVs are in the feature spotlight in 2014. Consumer response has been more positive to smart TVs than 3D, with 30 percent of U.S. broadband households owning a smart TV and 70 percent of those TVs connected to the Internet, Parks said. That compares with 13 percent of broadband households with a 3D TV, it said.

According to Parks data, more than 70 percent of consumers planning to buy a TV in the next 12 months said they'd choose a smart model, but inexpensive add-on streaming players including Roku, Google’s Chromecast and Amazon’s FireTV -- which deliver smart TV features for far less money -- could eliminate that as a reason to upgrade to an expensive TV, Parks said.

In addition to price and lack of content, retail trends could affect a consumer shift to 4K TV, Parks said. Viewing a 4K TV next to an HD model will be critical in convincing consumers to invest in an upgrade. With more consumers shopping for TVs online rather than in stores where demos can be easily shown, manufacturers will have to be “more creative when exposing consumers to the technology,” said Parks. That offers an opportunity to connect 4K technology with key events, it said, naming opportunities such as World Cup soccer, the Super Bowl or even the season premiere of a popular TV show as examples of programming that could draw a crowd. “Until consumers begin clamoring for 4K, the movement toward 4K will be an industry-driven initiative,” Parks said.

Delivering content for Ultra HD TVs is an opportunity for OTT providers, said Parks, saying Amazon also plans to produce all of its original content with 4K equipment. It also cited plans by Sony Pictures, Warner Bros., Lionsgate and 20th Century Fox to supply 4K movies. Most of the 4K content from major studios is 2K video that has been re-mastered in 4K in post-production, it said.

Elsewhere, in a news release Thursday, DisplaySearch analyst Paul Gray said more 4K broadcasts are necessary to “deepen the value” of 4K Ultra HD TVs “beyond pixel counts.” Gray called the 4K TV business “a lot like the high-end TV market in general,” saying there’s likely to be some “overshipment relative to demand outside of the Chinese market” over the rest of the year.

More 4K Ultra HD TVs were shipped in Q2 of this year -- 2.1 million units -- versus the 1.6 million shipped in all of 2013, DisplaySearch said, while the shipment balance by region has shifted. In 2013 China had about 80 percent of shipments in each quarter, as Chinese brands introduced low-priced 4K TVs and consumers there bought largely on higher pixel count versus content availability. With the introduction of 2014 models, the shipment balance by region has shifted, and new 4K TV models from global brands have been introduced in all regions supported by a bump in 4K content available from streaming providers, DisplaySearch said.