India 4K Market Could be One to Watch ABI Research Analyst Says

A Sony 4K TV at CES. Photo: John.Karakatsanis

[Via Satellite 12-19-2014] The 4K market will begin in earnest in 2016. This is the view of the Michael Inouye, a research analyst at ABI Research who looks in-depth at pay-TV markets around the world. Inouye believes the nascent 4K market will expand and likely by the 2018-2020 timeframe in some markets, begin to stand on its own like HD.

The 4K market is an interesting one to look at, particularly when you consider the overall failure of 3-D TV to take-off. Inouye admits ABI Research is taking a “conservative estimate” when looking at the numbers of 4K TVs likely to be shipped.

“In terms of shipments, we anticipate the major markets (North America, Europe, and Asia-Pacific) could reach 50 percent of TVs (4K ready) by the 2019-2020 timeframe. Naturally there are a lot of moving parts to that forecast, but considering the price declines and expected growth in 4K content, 4K TVs should flow down to lower models with decent uptake by consumers — even if they are not purchasing TVs for 4K per se. In terms of unit shipments we are looking at more than 100 million by the 2019-2020 timeframe,” he said.

However, despite a conservative estimate, Inouye admitted the prices for 4K sets have already declined dramatically over the past two years, more than he had initially estimated.

Still, one of the key questions is where 4K will make an impact first. While 4K making an impact in markets such as South Korea, China and Japan may not be considered a surprise, Inouye cites India as a potentially interesting market to watch for 4K.

“India, rather surprisingly, is also looking to explore 4K in the near term, having announced plans for new set-top boxes that will support 4K services expected in 2015; although we remain skeptical about the impact,” Inouye said, though he still expects China to pace this market. “China is the leading 4K market in terms of shipments, and other regions have expressed more advanced timelines for 4K channels/services (notably, Korea and Japan). With that being said, however, once services are launched the North American market could develop at a faster rate.”

According to Inouye, North America may take a more “cautious approach” saying that screen penetration is “still relatively low” and content providers are being more cautious, particularly in light of what happened in the 3-D TV market.

“The first North American dedicated 4K channels will likely come in 2016 or later (likely three channels from a few operators with a movies, sports and nature channel), but there remains an outside chance for something in 2015 — although, if this were to come to pass, it would likely more resemble a test/demonstration channel than a full dedicated 4K launch. At this time, we do not have a specific forecast for number of 4K channels. Premium transactional VOD (rental/sales) OTT services will likely support 4K from mid-2015 as well.”

The 4K market is very much in an “chicken-and-egg” situation right now. Content in 4K is expensive to produce right now, and customers who have upgraded their TV sets to HD, may not be ready to make another heavy investment to move to 4K despite strong price declines. Producing content in 4K right now with a lack of the audience could be seen as a tough business model to justify.

“Cameras are still expensive and other production equipment is not just expensive but rare. The market needs to wait for enough devices/screens to become available in consumer households. You have to remember that in many cases the market is still not even caught up with HD — one can reference all of the limitations put on mobile devices with multiscreen and streaming services,” said Inouye. “Quite a few streaming services, for instance, limit mobile devices to SD content or restrict viewing of certain programs. In some respects this will prove counterintuitive from a screen perspective because these devices will have higher resolutions than many TVs in a year or two (high end phones are already at 2K with 4K expected to come in 2015).”

It is likely that the take-up of 4K and what this means to the satellite industry will be one of the big topics at SATELLITE 2015, with many satellite operators optimistic that this will present a strong market for them going forward. Despite the onset of OTT alternatives such as Netflix, the global satellite pay-TV industry has proved remarkably resilient.

“DTH has held up well in the global pay-TV market. The reasons vary by market but in some cases the DTH providers have been — and in some cases remain — leaders in the transition to HD (and likely coming 4K as well) or other premium services. Several satellite operators also have secured significant exclusive rights to sporting content which serves as a significant differentiator. Satellite also is the most cost effective way to reach a wide number of households, particularly in those regions with limited infrastructure,” Inouye added.