Tracks historical and forecasted shipments, revenues, ASPs, screen size, and shipment area across 8 regions globally in the LCD, OLED, PDP and CRT TV set market.
- We have marginally increased our 2020 TV shipment forecast by 0.6 million,. However this total picture reflects vastly different moves regionally:
- We have increased our 2020 forecasts in North America (+4.4 million) and Europe (+1.8 million). Consumers have enthusiastically bought TVs to entertain themselves at home during lockdowns.
- At the same time, we see that emerging regions (particularly Latin America and parts of Asia-Pacific) failed to contain the pandemic in its first phase. We expect that it will lead to a weaker Q2 and Q3’20. We have reduced Asia-Pacific by 3.3 million in 2020 and Latin America by 2.3 million.
- Further out, we have reduced forecasts by 7.2 million in 2021 tapering to -0.9 million in 2024.
- We expect that the pandemic will leave lasting weakness in emerging regions’ demand.
- We have reduced our 2021 forecast for North America – the previous version factored a release of pent-up demand from 2020. With a firmer 2020 this is no longer needed.
1.0 Forecast outlook
- Examining the longer data series for the television set business, large market swings are quite common. This year’s events have been unique, affecting all regions almost simultaneously with a common factor.
- For developed countries, TV purchase behavior is largely driven by a technology cycle (CRT replacement, digital broadcast) than the macro-economy; in emerging markets it is indeed linked to the economy and spendable incomes.
- Developed country shipments are historically not significantly linked to the overall GDP trends.
- TVs are more affordable as a share of spendable income. In recessions, consumers will replace a failed TV but may spend less on it.
- Consumers act rationally: television is cheap entertainment, households that are economizing may spend more hours viewing.
- We have been surprised at consumers’ enthusiasm to buy TV sets – however they appear to be a little smaller and cheaper than normal, suggesting that consumers are more price-sensitive and that many sets may be going to new locations like children’s bedrooms.
- A prolonged global recession will likely hit emerging region demand far harder than developed markets.
- The development of the pandemic is hitting emerging regions hardest in late Q2 and Q3’20, while developed regions peaked in late Q1 and early Q2’20.
- Several brands are now reviewing their strategies and may withdraw from some markets.
- Consumer buying behavior has shifted:
- If consumers must buy sight-unseen online, they are more likely to buy from a recognized brand.
- Many bricks-and-mortar retailers were already struggling—their decline is likely to be faster and internet retailing to grow further.
Comparison with last forecast (and previous scenarios)
- We have increased our forecast in Q2 and Q3’20 compared to last quarter.
- North America and Western Europe are seeing strong demand for TV sets in Q2’20 as many entertainment venues remained closed.
- However we see the situation worsening in emerging markets (especially Latin America and South Asia) where containment measures for the pandemic have failed to control infection. We expect that this will lead to slower recovery.
1.1 TV forecast overview
- We expect shipments to fall at least 20 million annually in 2020. The cause is of course the Coronavirus pandemic.
- Developed regions have seen robust demand around lockdowns: consumers have spent money on home entertainment. Many consumers will have spent far less (no meals out, entertainment or recreational travel) and reduced commuting expenses. As a result more cash is available to many. However we expect that this has brought some demand forward and the second half of the year will remain weak.
- We have reduced our forecasts in Asia-Pacific and Latin America as the pandemic appears to be spreading rapidly in these regions. This is likely to suppress demand in 2021 and beyond, with deep recessions resulting.
- The success of countermeasures to the pandemic by governments is the biggest determinant of the forecast. As countries’ responses have been extremely variable in effectiveness, we have low confidence in the forecast. It remains strongly dependent on country-specific factors.
- With shipments in North America above Q1 forecast and brands reporting strong sell-through in Western Europe, we have increased our forecast for Q2’20 by 4.6 million.
- However, we have also reduced our forecasts in emerging regions (especially Asia-Pacific and Latin America) as the pandemic appears to be spreading rapidly. We expect significant disruption to demand in Q2 and Q3 2020.
- The effectiveness of countermeasures remains the key forecast factor. It is highly dependent on country-specific factors. Government effectiveness has been extremely variable.
- Average annual price erosion is expected to be continue in 2020. However, much depends on how quickly TV demand recovers and on brands’ response.
A price war over the reduced market is one possible outcome.
- The exact supply / demand balance between TV sets and LCD panels is far from clear, especially as Samsung and LGE appear to have accelerated their exit plans from LCD panel manufacturing.
- TV sizes may grow slightly faster this year. If emerging market demand is badly hit, then this will tend to remove smaller sets from the mix, leading to a higher average.
- The extent of recessions in developed markets remains the biggest unknown for the forecast.
1.2 TV forecast by technology
TV forecast by technology – Sets
- 2020 LCD TV unit shipments will decline by approximately 20 million compared to 2019. This is 20 million below last year but an increase of 600k over last forecast.
- The Coronavirus outbreak will lead to a collapse in shipments in Q2-3 in emerging markets. Developed markets have declined due to the pandemic but then rebounded sharply.
- Our current forecast is for recovery in 2021, helped by rescheduled sporting events (Olympics and Euro football championships).
OLED TVs are confined to a premium category only, constrained by display cost. OLED shipments will barely grow in 2020, with severe damage to demand in key markets such as Western Europe.
- OLED faces the challenge of keeping pace with declining LCD prices.
- Already OLED is on the small size for North America; it is best suited to Japan and Europe.
- 48-inch OLED is likely to be limited in supply. Production will share glass sheets with 77-inch. As a result it will be a by-product of demand for 77-inch.
OLED will require further capacity investments to grow.
OLED TV forecast
- The long-term forecast is reduced. While it remains capacity-limited, big increases swill come when new capacity becomes active in late 2020, with 2021 seeing the new Guangzhou fab active all year.
- Limited growth in 2020 is a direct result of the market disruption from the Coronavirus outbreak, which appears to have delayed the ramp-up of LG Display’s Guangzhou fab.
- OLED will have to prove its cost-competitiveness against LCD to grow, or risk following the same path as PDP. This year has seen the cost premium of OLED stretch as LCD prices collapsed. While the LCD prices are below cash cost and unsustainable, they have put severe pressure on OLED.
A 55-inch retailing at $999 is a critical price point for OLED to meet to stay competitive: already 75-inch LCD has been below that at entry level for more than two years.
- We are not forecasting any competition from BOE in OLED or Samsung’s emissive technology until investments are proven and capable of making displays at TV sizes in large numbers.
New OLED sizes, OLED screen size/resolution forecast
- 48-inch can run shared on the OLED fab mother glass with 77-inch, improving efficiency overall. It will effectively be a by-product, improving the profitability of 77-inch.
- As a result it will only be available in limited quantities, approximately one for every 77-inch.
- We expect it to be available in Japan and Europe.
- 48-inch OLED has released by LGE in recent weeks with other brands to follow shortly.
- With a new G10.5 fab, we expect that LGD will optimise its efficiency and end production of 77-inch, making 75-inch on the new fab.
- 88-inch is a new product for 8K OLED, available in small quantities from late 2019.
TV forecast by technology – Revenue
- TV revenues cannot escape the huge drop in shipments in the first half of 2020. 2021 will see yearly growth figures as the market rebounds.
- TV OLED TV revenues will grow slowly throughout the forecast. Growth from 2020 is dependent on further investment in capacity and the ability to transition effectively to even larger screen sizes.
- Investing in Gen 10.5 fabs will be necessary for more efficient production of 65- and 75-inch panels and to keep pace with price reductions in LCD TVs.
- For LCD the picture is bleak – hyper-competition and a lack of compelling new market drivers will cause revenues to fall at 6% per year, despite size growth.
TV forecast by technology – Price
- OLED TV pricing, related to limited supply and a different cost base, will remain restricted to premium positions.
- Samsung’s QLED strategy has been highly successful. QLED now out-ships OLED. OLED’s battle is fiercest in Western Europe.
- A strong shift to 65-inch remains critical for OLED to remain competitive, especially in North America, but 65-inch is an inefficient size at Gen 8. New capacity in China will enable efficient 65-inch OLED manufacturing, but its full effect won’t be seen until 2021.
- will need to respond to the continuing price compression of LCD. At present OLED’s percentage premium over LCD is increasing. For example, in Europe Samsung’s entry 82-inch QLED is positioned at similar prices to top-end 55-inch OLED
Resolution share forecast
- As UHD resolutions ship in large screen sizes, there is a direct correlation between it and size forecast by region.
- Globally shipments were over 50% last year, expected to rise to 58% in 2020 and 69% in 2024.
- 2020 sees an odd, off-trend blip in North America as the lockdown boosted demand for smaller, cheaper sets, presumably for secondary locations in the home.
UHD TV shipment forecast by region
- The Coronavirus outbreak has totally altered the outlook for the TV market in 2020, and UHD is seriously affected.
- Our forecast is that UHD TV shipments will decline marginally in 2020, with North America and Western Europe already affected .
- We expect that China may see slight growth.
8K TV forecast
- We have increased the forecast marginally in later years.
- Severe price erosion in China has choked off enhanced features: price compression offers a size instead.
- China will not drive 8K.
- The postponement of the 2020 Olympics removes the compelling purchase motivator this year. With worsening economic conditions, 8K is likely to struggle to justify itself.
8K has to overcome several obstacles:
- Japan is the only country with an 8K channel, broadcast on satellite. No other country has committed to launch 8K channels within our forecast horizon. China and Korea may do so.
- Japan’s preference for small TV sizes does not offer a large opportunity for 8K TV sets.
- 8K TVs outside of Japan have limited 8K decoding capacity and no guarantee that they will be able to decode any future services.
- The forecast dynamic will remain supply-push, not content-pull, for all regions except Japan.
8K TV forecast in context
1.3 TV forecast by region
TV forecast by region – shipments
- All regions will see serious hits to 2020 shipments.
- Japan is the sole exception as pre-Olympic promotions had started on Q1’20 and will be sufficient to lift shipments marginally above 2019.
- We expect that 2023 will be weak in Europe as the World Cup (unusually in November) 2022 will distort seasonality and lead to a severe inventory correction in Q1’23.
TV forecast by region – Revenue
- Total revenues are expected to decline in all regions over the next four years, but 2020 will see extreme falls as a result of the coronavirus outbreak. Note that the revenue growth in 2021 is relatively mild, despite unit shipments returning to 2019 levels.
- Clearly if there is a prolonged recession, revenues will be far worse.
TV screen size forecast by region
- We expect all regions to enjoy screen size growth.
- The Coronavirus pandemic will have different effects by region:
- In emerging markets, the poorest consumers will be hit disproportionately. The result will be a sharp increase in average size.
- North America, lockdown has spurred purchases of smaller, cheaper sets, presumably for secondary locations. This dilutes average sizes.
TV average selling price forecast by region
- We expect all regions to enjoy screen size growth.
- The Coronavirus pandemic will have different effects by region:
- In emerging markets, the poorest consumers will be hit disproportionately. The result will be reduced average price erosion.
- In North America, lockdown has spurred purchases of smaller, cheaper sets, presumably for secondary locations. This dilutes average prices.
- Note China in particular, with the second-largest sets and yet also the lowest average prices.
TV average selling price per inch by region
- We expect all regions to enjoy screen size growth, however this is balanced by falling prices per inch.
- Note China in particular, with the second-largest sets yet also far below other regions on price per inch.
Screen size forecast: 2019 vs. 2024
1.4 Frame rate forecast
Regional 100/120 Hz LCD TV shipment forecast: 32-inch+
- Developed markets will continue to support demand, and large sizes will dominate the 120 Hz market.
- Omdia notes interest from broadcasters in higher frame rates in UHD standards.
- These would enhance the sharpness perception of sports, which is a key value of live TV services and the economic foundation of pay-TV.
- However, there is no plan yet announced for 120 Hz broadcasting, though it is now standardized by the European Broadcasting Union.
- TV set makers are reluctant to move to higher broadcast frame rates due to its cost.
- Fierce price competition led to a severe reduction of the feature. With ongoing price erosion, we expect that the feature will continue to be confined to a shrinking part of the high end of LCD TVs.
- It is difficult for consumers to recognize the feature and its retail value.
Double frame rate penetration: 32-inch+
- The mid-range 120 Hz market was badly damaged by the emergence of 4K, which devalued all 1080p sets and established a large price difference.
- A second round of problems occurred due to the emergence of OLED, which removed many of the premium LCD products from model ranges.
- Ongoing cost pressure is leading to its removal in favor of cheaper backlight-based approaches.
- A shift in broadcasting to higher frame rates could cause the situation to reverse, but this may be solved simply by allowing a dual rate video pipe of 60p or 120p.
- 120 Hz broadcasts do not look likely before 2025.
- The format is reserved in the Japanese Super High Vision specification and the EBU has 100 Hz on its roadmap.
- Broadcasters remain intensely interested in 100/120 Hz, especially for sports coverage as it would offer a far greater sharpness perception than increased resolution.
120 Hz forecast in context
- High frame rate has been struggling in the market for several years. It reached peak share in 2012 at 33% of shipments.
- The feature has failed to carry sufficient retail value to support it. Put simply, consumers do not see it as adding value and will not pay for it. Furthermore initiatives like Filmmaker Mode (which disables frame rate conversion) actively discredit the feature.
- The situation could change if 120 Hz native content and broadcast becomes available. It is of intense interest to sports television providers, because it would deliver excellent sharpness to fast-moving action. The format is reserved in the Japanese Super High Vision specification, and the EBU has 100 Hz on its roadmap
1.5 LED-backlit LCD TV forecast
Backlight forecast by type
- Edge LCD has an advantage in overall thinness, which suits a part of the high-end market. Ultra-thin sets are aimed to compete on looks with OLEDs.
- Using air instead of a solid light guide plate gave edge backlighting renewed cost competitiveness.
- WCG is easier with edge backlights, requiring less QD material.
- However, edge backlighting is not capable of delivering the best contrast performance and QD sheets have come down dramatically in cost.
- Small screen LCDs continue to have edge backlighting. Their small size creates different economics for component costs. They can be easily lit using LEDs on the corners or along a single edge. Small screen sets are a declining category.
- With extreme thinness an important feature in some markets, there remains a tension between depth and contrast performance (best served by direct backlighting) in the high end segment.
- The shock effect of OLED on high-end LCD triggered a return to direct backlighting with many zones, especially by Samsung. This, along with a decline in smaller screen sizes in the mix, will result in a mild shift toward direct backlighting.
- However, the effect of fashion on styling should not be ignored and could reverse the forecast in later years. Cost pressure remains significant.
LED backlight type forecast by region
2.0 Analysis and implications
2.1 Forecast influences
Forecast influences: North America
- We expect that there has been some acceleration of demand and that this will slow in the second half of the year as consumers shift spending away from TV sets.
- The forecast assumes that the extent and effectiveness of stimulus measures remains high. TV sales historically in recessions have proven very robust, and TV sets
- are cheap in the US. Shipments in 2021 should show healthy recovery over 2020 and be similar to 2019.
- US Tariffs
- The US Tariffs on television sets from China was increased by 15% to 18.9% on 1 September 2019. It was lowered to 11.4% in Jan 2020.
- Brands have already started to diversify supply bases into Southeast Asia, Vietnam in particular.
- The Coronavirus outbreak further reduced Chinese exports in early 2020, although we do not have reports that retailers were short of inventory.
- More sourcing is now from Mexico than in past years. With Mexico now being seriously affected by Coronavirus, supply is at risk of disruption.
- In the long term, there is no broad driver of volume growth or an accelerated replacement cycle in North America. We expect the number of sets per household to fall gradually as consumers shift personal video consumption to mobile devices.
- ATSC 3.0 services are launching now, but against a background of low usage of terrestrial and increased usage of streaming services by consumers. Terrestrial TV is being marketed in a pay-TV like package branded as NEXTGEN TV (similar to the proven Freeview business model in Europe, Australia and New Zealand).
- There is little urgency felt by brands to accelerate ATSC 3.0 reception and no government action to drive uptake
2.2 Changes from previous forecast
Changes from previous forecast: short term
- We expect the bulk of the Coronavirus impact to be in Q2’20 in developed regions, with emerging regions hit hardest in Q3.
- North America has its Q2 forecast increased at the expense of Q3-4 2020 and 2021.
- China is on a different timeline, with a recovery rebound later in the year.
- We have revised our long-term forecast downwards for Latin America and Asia-Pacific as severe pandemic effects are likely cause long term demand weakness
Changes from previous forecast – longer term
- The Coronavirus outbreak will continue to weigh on future demand, in particular to consumer spending in emerging markets.
- We have revised our forecast as the outbreak appears to be worsening in key emerging countries.
- Developed markets are generally resilient in TV demand. Sporting promotions for rescheduled events are likely to be aggressive.
2.3 Frame rate analysis
Variable frame rate
- A new dimension is appearing in frame rate featuring: variable frame rate for gaming.
- VFR / VRR targeted at gaming, with two standards:
- Many strange formats are also appearing on internet video, especially user-generated content: 73Hz is common. Therefore this is becoming necessary for good internet compatibility
- 2020 product launches are now including the VFR feature. It appears already to be becoming more important than 100/120Hz.
- LGE’s 8K models for 2020 include 50/60Hz for the first time. TO date all 8K models have been 120Hz.
2.4 LCD backlight analysis
WCG forecast by technology
- Cost innovations in LEDs allowed WCG to become a low-cost feature.
- Japanese brands have not adopted QD and do not appear interested in the technology. Their high-end focus is on OLED. Low-cost KSF allows LCD products to offer improved performance without competing against OLED.
- Samsung has a complete QD vertical supply chain. However, it faces competition in premium segments from OLED TV.
- Samsung is actively encouraging other companies to adopt QD to grow the QD market segment and prevent brands considering alternatives to the ultra-premium space from adopting OLED. So far only TCL is the only large brand to respond enthusiastically.
- This quarter the forecast is changed by the huge adjustment for Coronavirus. This will have a knock-on effect of delaying model transitions.
2.5 Areas of opportunity
- We see the future as being re-shaped in the following ways:
- Lockdowns will accelerate adoption of streaming services, changing TV usage further towards Smart TV.
Bricks-and-mortar retailers, which are already struggling in many regions will consolidate more quickly. Online sales channels will become be even more important.
- Reshoring supply chains to be simpler and more resilient may give competitive advantage at the expense of cost.
- Some brands have initiated strategic reviews which may lead to exits from some markets. This will bring new opportunities to others.
- Features that cannot be easily explained even to an online consumer will struggle to gain acceptance. The opportunity exists for simple, clear features.
2.6 Upside/downside potential to forecast
- So far there has been no significant supply shock to the television market. However with emerging regions (especially Latin America) seeing worsening outbreaks while demand remains robust in developed countries there is a growing likelihood of shortages, especially in North America which is largely supplied by factories in Mexico.
- Upside looks likeliest in North America and Europe; downside risks concentrate in Latin America, Asia-Pacific (especially the Indian subcontinent) and MEA.
- Upside factors:
- TV viewing has increased in value to consumers as a result of lockdown measures.
- In developed markets demand has surged as a result: entertainment away from home (cinemas, live sport) is less available.
- Government stimulus action across the world improves consumer confidence, employment recovers rapidly. This will be heavily country-dependent.
- Rescheduled Olympics and Euro’20 in mid-2021 are supported with strong promotional effort by brands.
- TV viewing has increased in value to consumers as a result of lockdown measures.
- Downside factors:
- We factor the following for a negative scenario:
- Quarantine programmes fail and Coronavirus outbreak continues to spread in emerging markets.
- Repeat outbreaks occur with subsequent quarantines and lockdowns in some developed markets
- Government stimulus action fails to restore business and consumer confidence fully.
- Unemployment rises rapidly, with a drawn-out recession
- Weak promotional effort by brands for 2021 sporting events
- Widespread retailer closures as a result of lockdown, also by consumers shifting more to online
- Assessment: overall we see significant upside in developed markets, but emerging regions appear to be worsening.