Televisions and Projectors - Australia

Televisions and Projectors - Australia

HEADLINES

Current value sales of televisions and projectors grow by 5% in 2009

The switch-off of analogue television signals begins in 2010, and the growing availability of digital content is driving sales growth

Converters, decoders and receivers records the fastest current value growth of 80% in 2009, largely due to set top boxes

The average unit price decreases by 9% in current value terms in 2009 to reach A$720.00

The leading brands in 2009 are Samsung in LCD TVs, Panasonic in Plasma TVs, and Topfield in convertors, decoders and receivers

Sales of televisions and projectors are expected to decrease by an 8% constant value CAGR over the forecast period

TRENDS

One of the most exciting categories in consumer electronics in Australia is televisions and projectors, which recorded retail volume growth of 16% in 2009. However, much growth was due to the explosive performance of converters, decoders and receivers, mostly made-up of set top boxes. Converters, decoders and receivers recorded retail volume growth of 35% as the Australian government revved-up its promotion of the switchover in television broadcasts from analogue to digital starting in 2010. This inspired the need for consumers to buy a set top box, although the ability to stream online content is another significant selling point.

Whilst the switch-off of analogue television signals in 2010 will only occur in some remote rural communities such as Mildura and Broken Hill, the Australian government is assertively promoting digital television. This is because even in these regions there is still a significant number of consumers who have not made the adjustment, and are possibly not even aware of the impending changes. As a result of the upcoming switch-off, analogue television sets are almost unavailable in Australia, with only 83,000 units sold in 2009. They fact that any were sold at all is due to their affordability, as they remain cheaper even after the need to buy a set top box is taken into account.

Content is, as always, key, and finally in 2009, after a decade of little progress in relation to available digital content, the three major television stations finally launched new digital stations with programming that did not merely replicate that of their analogue output, including Channel Ten’s sports channel One, as well as entertainment channels from Channel Nine (Go!) and Channel Seven (7Two). Prior to this, digital content was only available through the government-owned ABC and SBS channels. This additional content, featuring programmes not available on analogue stations, often because they have more niche appeal, has been a large driver of growth and is, at least partially, responsible for the 80% increase in current value sales registered by converters, decoders and receivers in 2009.

The promotion of digital television – whether because of the switch-off of analogue television signals or the additional content provided by commercial television stations – has also led to strong growth in LCD TVs. In 2009, sales of LCD TVs grew by 21% in current value sales, while digital TVs as a whole recorded a14% increase in retail volume sales. Part of the reason for the strong growth in digital TVs is because it is practically the only type of television available from retailers.

The average unit prices of televisions and projectors continued to fall due to competition, and consumers beginning to purchase secondary LCD TVs for their homes, which are smaller and cheaper than the main living room-based television. However, the unit price of televisions increased by 2% in current value terms in 2009, largely due to the phasing out of analogue televisions from the market, which consists almost solely of digital TVs. The growing popularity of LED TVs has also helped to add value to the category by providing a new premium option. LED TVs have been embraced due to their energy-efficiency, which is particularly popular given that there is little price difference between LCD TVs and LED TVs of a similar size (although LED TVs were only available in large sizes). This will lead to a rapid migration from LCD TVs to LED TVs over the forecast period, as consumers feel that they can “make a difference” without making a significant sacrifice.

Although there is still some hope that plasma TVs will make a comeback, since they are held to provide a superior 3D experience, this is still some years away. In the meantime LCD TVs are dominant, due to their availability in a wide range of sizes, including small, whereas plasma TVs are mostly purchased in large sizes, especially popular at 42ins and 50ins, whereas LCD TVs are more popular at 32ins. There is also the issue of “burn in” in relation to plasma TVs, which is particularly crucial to consumers who use their televisions for gaming purposes. For these reasons, sales of plasma TVs declined by 19% in current value terms in 2009. Plasma is definitely the least popular of the two digital television options, although plasma sets still receive much support from retailers as their high prices offer high profit margins.

As digital TVs have progressed, consumers are increasingly demanding improved resolution with full HD televisions becoming more popular. 63% of plasma TVs and 45% of LCD TVs are full HD, due in part to steady declines in prices. In the case of large screens - 32ins-and-above - virtually all LCD TVs are full HD. LCD TVs that are not HD are largely smaller screen and secondary televisions.

Televisions are becoming more converged, as consumers wish to avoid the need to buy a separate set top box. Instead, they decide upon models that have the set top box already incorporated, which has the additional benefit of enabling online access. These models are therefore popular among consumers who wish to embrace the streaming of online video content, a category which has been somewhat retarded in Australia as slow broadband speeds make it impractical.

In order to provide the optimal HD television viewing experience, consumers need to also be in possession of a Blu-Ray player. As a result, the growth of HD televisions and Blu-Ray players are interlinked. One means of establishing this link, and therefore driving growth in HD televisions, is to give away Blu-Ray players to buyers of certain large HD TV sets. Another means is to incorporate Blu-Ray players into the television. The launch of such TV Combis therefore has driven additional growth in the category, particularly in relation to value.

The most important issues for consumers when purchasing televisions are thinness, energy efficiency, and image quality. LCD TVs are also becoming popular among consumers looking for smaller or secondary televisions, partly due to manufacturers giving away small LCD TVs with purchases of large models. Energy efficiency has become increasingly important since the Australian government introduced an energy-ratings system for televisions. Whether or not the television is full HD is another issue, and until the switch to digital television is complete this is likely to remain a key topic.

The target audience for projectors is largely cinema enthusiasts, a consumer group that has remained immune to the growing popularity of plasma and LCD TVs. Projectors can offer screen sizes of 100ins, which even the largest plasma TVs cannot boast. Indeed, projectors is benefiting as consumers become more accustomed to larger screen sizes, as consumers wishing to upgrade from a plasma screen can only go in one direction. This is particularly the case since entry-level projectors are available at prices that are competitive to Plasma TVs. Although over 100,000 projectors are sold each year, the vast majority are sold for commercial purposes. Only 23,000 units were sold to consumers for domestic use in 2009.

With the technology of televisions changing rapidly, consumers tend to be confused, realising that their purchase is both an important and a complicated matter. With the analogue switch-off date beginning in 2010, and the confusion about what is needed to make the migration to digital, consumers are increasingly choosing to shop at specialist retailers - such as The Good Guys, JB Hi-Fi and Harvey Norman – where televisions are a major focus. Department stores such as Myer have also renewed their focus on televisions, due to the level of activity and potential for profits.

COMPETITIVE LANDSCAPE

Samsung was the leading brand in televisions with a 22% share of retail volume sales in 2009. The brand continued to gain significant retail volume shares in 2009 due to its highly recognised name and assertive promotion of its fast growing LED TVs. Samsung replaced its “cold cathode florescent lamp” with LED models, and it is attempting to establish itself as the leading player in LED TVs. The brand is looking to differentiate its offering in store, with – in extreme cases – a display area known as Samsung Gallery, designed with some screens installed vertically, similar to an art gallery. This is proving successful in creating the impression of a quality brand.

Whilst Samsung has achieved the leading position in LCD TVs, Panasonic is the leading brand in plasma TVs. In 2009, Panasonic held retail volume sales of 42% in plasma TVs and 18% in televisions overall. Therefore the fortunes of Panasonic are largely determined by the fortunes of plasma TV, and vice versa.

As Samsung gained the leading position in LCD TVs in 2009 by exciting consumers with its LED models, Sony Australia failed to excite consumers at all and the retail volume share of its Bravia brand fell considerably. Sony no longer manufacturing its own televisions is suggested as one reason for its sluggish performance, but consumers are unlikely to be too concerned by this. As Samsung positions itself as “the” LCD TV brand and Panasonic as “the” plasma TV brand, Sony has lost its positioning.

In converters, decoders and receivers, Topfield was the leading brand with a 36% share of retail volume sales in 2009, followed by Strong (28%) and DGTEC (19%). Topfield is leading the attempt by set top box manufacturers to position themselves as the gateway between television and online content, thereby establishing themselves as the centrepiece of home entertainment systems. Australia’s slow broadband speeds have retarded these efforts, thus Topfield’s products are still mostly used for set top box functions.

Giveaways proved an important means of attracting consumers with Blu-Ray players, DVD players, games consoles, PVRs and additional smaller televisions among the most popular options. These product types particularly benefited from support from strong manufacturers such as Sony. Giveaways also helped manufacturers to immerse their customers into the digital lifestyle, allowing them to make the most of the possibilities of streaming online content, which is expected to deliver the next wave of growth in televisions.

PROSPECTS

Converters, decoders and receivers is set to experience further strong retail volume and growth, and not only because consumers will rush out to buy such items in preparation for the switchover from analogue to digital television. This transition is set to start in 2010 and continue until 2013 when the analogue signal for major metropolitan areas will be switched-off. Converters, decoders and receivers are also likely to play a major part in providing internet connectivity to televisions, although this role will be shared with computers, Blu-Ray players and even televisions with internet connectivity incorporated. The biggest threat to this category, however, is Telstra T-box, a PVR, with a capacity of 200GB, which will be provided for free with certain broadband contracts. It is obvious therefore that Telstra is aiming to play the leading role in the online integration of home entertainment.

With the streaming of online video content likely to be a crucial part of home entertainment, television manufacturers are determined that their products remain the centrepiece of the lounge or sitting room, rather than set top boxes or computers. Thus, they will look to release broadband capable televisions, allowing people to surf the internet via the television.

In the aftermath of the commercial success of the film Avatar, television manufacturers are hoping that 3D television will play an important role in the future of television, particularly since this would contribute to value growth to a far greater extent than internet connectivity. Internet connectivity is more about increasing the availability of media, and not necessarily about the quality of the audio or visual experience. And it is content that is the main obstacle for 3D television. This is because it will be a long time before a significant proportion of broadcasts will be made available in 3D, although some Australian broadcasters such as Foxtel are planning 3D content for sports. Other stations appear less interested, with only token gestures being made towards creating content. Given that it took until 2009 (almost a decade after its initial launch) for commercial stations to embrace “digital television” in addition to simulcasting their analogue stations (that is provide extra programming and content) the provision of more than token 3D coverage is likely to take some time.

The growing popularity of LED will discourage the adoption of OLED technology, with manufacturers having decided to postpone pushing this technology until such time as LED has evolved through the product lifecycle. This is unlikely to begin until 2011, at which time it will be positioned as an ultra-premium option, gradually going mainstream over the following couple of years. At least one manufacturer, Samsung, intends LED to be more than a diversion on the way to OLED. The brand is expecting LED to be a major trend in its own right, and not only for high-end models. The forecast period is expected to witness LED being incorporated into smaller televisions as well, and even computer monitors. This would be quite a shock for manufacturers which assumed that LED TV would, like other innovations, be introduced slowly in order to maintain the price premium. By introducing LED to all of its TV models, and at a rapid rate, Samsung plans to expand its leadership in televisions. Sharp is also planning to use LED screens as a central part of its attempt to become a major player in televisions again.