TV display demand comes from two segments: first-time purchases and the replacement cycle. First-time purchases come from emerging countries and regions such as India, South America, and Africa, where, as income improves and households grow, the demand for TV displays increases. On the other hand, the replacement cycle involves replacing old TVs, which were purchased several years ago, with newer, better, and in many cases, bigger TVs. The interval between the replacement of old TVs and the purchase of new TVs is jointly referred to as the replacement cycle in the TV display industry. In the past 20 years, both first-time purchases and the replacement cycle drove TV display shipments upward, increasing from less than 10 million units per year to more than 250 million units per year.
However, owing to the pandemic and post-pandemic effects, TV display demand has been changing drastically. During the peak of the pandemic, demand surged in units and base area. However, when the pandemic started to ease, the demand for both collapsed.
TV display shipments have been declining for four consecutive years—2019, 2020, 2021, and 2022—and the demand in unit base is expected to also decline in 2023, even though panel makers are targeting to slightly increase their TV panel shipments in 2023.
However, TV display area has been growing continuously in 2018, 2019, 2020, and 2021 until it started to face headwinds in 2022. This year, TV display shipment area is showing a year-over-year (YoY) decline, which is the first decline since 2001.
Omdia expects 2023 will be a recovery year, and the recovery will focus on larger-sized TV displays, which means 50-inch and above. The recovery will be based on the new replacement cycle along with the heavily slashed LCD TV and OLED TV set prices of retailers, especially in the larger sizes.
The key to the recovery and the new replacement cycle will be the demand-price elasticity, especially the low-priced large-sized (50-inch and above) TV sets, which will trigger new demand and the replacement cycle. In other words, a consumer who has purchased a 32-inch or 55-inch TV in 2018–19 will likely purchase a new 50-inch or 65-inch in 2023–24 as the prices are attractively low.
Figure 1 and Figure 2 show examples of low-priced TVs, as seen in the Amazon Prime Day deals.
1. Figure 1: Amazon Prime Day 2022 TV deals (July 2022)
Source: Omdia
2. Figure 2: Amazon Prime Day 2022 TV deals (October 2022)
Source: Omdia
Because of the decline in TV display unit base demand, weighted average size and TV display shipment area are continuing to grow, with 200 million square meters projected in 2024.
First, let’s look at the TV display unit base.
3. Figure 3: LCD TV and OLED TV display units with the replacement cycle, 2001–24 (million units)
Source: Omdia
In unit base, for the past 20-plus years (since 2001), we can see TV display units growing to 280 million units per year in 2018–19, but that was the peak of the shipment volume. Since 2019, TV display units have started to decline owing to the maturity of the market and the short-term accidental influences, such as COVID-19, global lockdowns, and energy and food inflations. In 2022, we expect to see TV display units decline to 260 million, but from 2023 onward, they will gradually recover thanks to the rejuvenated replacement cycle.
In unit base, we can see the growth is based on the replacement cycle and new purchase demand. In other words, the TV displays purchased in 2006 would have needed to be replaced with new TV units in 2013; these would usually be newer and bigger in size, have a larger display area, and have a better picture performance. Such a replacement cycle is a key driver for TV display unit growth, plus there is some first-time purchase demand from emerging countries and regions, such as India, Africa, and South America. There had been a six to seven years’ replacement pattern until COVID-19 changed everything.
Because of the pandemic and at-home economic trends, we can see that TV display demand has been pulled forward. The demand comes from TVs, which should be replaced in 2023–24 as they were purchased and installed in the peak of 2018–19. Consumers replaced their TVs earlier than planned because they had to stay at home during the COVID-19 lockdown. The demand for 2023–24 has been pulled forward to 2021 because of the lockdown and stay-at-home economic trend, which is why the demand in 2021 was so strong, and there was an unprecedented display shortage. The unit base replacement cycle changed from 6–7 years to 4–5 years when COVID-19 happened. However, the strong demand in 2021 was not seen in unit base but in base area instead.
The figure below looks at the TV display base area.
4. Figure 4: LCD TV and OLED TV display area with replacement cycle, 2001–24 (millions of square meters)
Source: Omdia
Same with the unit base, for the past 20 years, TV displays have grown by 40 million square meters every four to five years; the area replacement cycle is stronger than the unit base replacement cycle because the base area replacement cycle is shorter (4–5 years versus 6–7 years). TV display shipments achieved 40 million square meters in 2007, 80 million square meters in 2012, 120 million square meters in 2015, and 160 million square meters in 2018.
In 2018–19, unit base peaked and then declined in 2020–21. However, in 2018–21, base area continued to grow. This means that, whether from the supply side or the demand side, the larger sizes (50-inch to 75-inch) are growing stronger than the smaller sizes (32-inch or 43-inch), even during the COVID-19 period.
In 2022, owing to the weak demand, TV display area declined for the first time. Moreover, TV panel prices reached a historical low; at the same time, TV unit retailer prices—especially for larger-sized TVs like 55-inch and 65-inch—also reached historically low levels.
When the market starts to recover gradually in 2023, the replacement cycle will be rejuvenated, and this time, it will involve larger sizes. For example, a new 65-inch is purchased to replace an old 50-inch in the consumer’s household, which was purchased in 2018–19 or earlier, or a 50-inch to replace an old 43-inch, or a new 40-inch to replace an old 32-inch, and so on. Meanwhile, panel makers have been focusing their production strategy on larger sizes (50-inch and above) and shifting away from smaller sizes (43-inch and below). The supply of the smaller sizes is diminishing.
This rejuvenated area replacement cycle will push TV displays to eventually reach 200 million square meters in 2024, up from 160 million square meters in 2019. The hypothetical incremental 40 million square meters every four to five years is projected to happen again. Thus, the base area replacement cycle remained at four to five years before COVID-19 and is expected to stay the same even after COVID-19.
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