Retail Observer

JULY 2019 RETAILOBSERVER.COM 51 Doug Wrede, Vice President of consumer electronics, Nationwide Marketing Group RO Three key trends have helped stabilize television revenues, and are expected to encourage slight growth into 2020. 1. Average screen size growth has helped offset price erosion, and screen size is expected to continue growing by 2% compound annual growth rate (CAGR) over the next five years. 2. Panel prices have generally stabilized, with only slight increases in sub-55" screen sizes. 3. The growth in the premium market (i.e., organic light-emitting display [OLED]) will increasingly support revenue stabilization for the next 18 months. While the television market remains a challenging category, a few segments continue to offer retailers profitability and growth potential. 1. 4K/8K TVs – Although commoditization has begun in UHD, production costs are expected to fall faster than retail prices, yielding an opportunity to profit. Coupled with improved price policies for both manufacturer's advertised price (MAP) and unilateral price policy (UPP), this will help protect a disruptive market and stabilize retail. Following 4K TV, we now have 8K entering the market, albeit with limited supply at premium retails. Like 4K, 8K will be limited in volume contribution in 2019. But given the promise of twice the resolution of 4K, this technology has the potential to breathe new life into the television business – at least as far as content will enable it to do so. 2. Larger Screen Sizes – 55" and larger televisions are expected to show the most upside in terms of volume growth over the next few years. The average screen size will grow approximately 2" each year, and the U.S. market heavily favors big-screen TVs. By 2021, the average screen size is expected to land between 46-48" vs. the 39" of just a few short years ago. 3. Premium TVs – After years of price erosion and value television offerings, a trend is emerging around performance. HDR (High Dynamic Range) and WCG (Wide Color Gamut) made possible via better LED chips, thicker color filters and quantum dots are on the rise and offer a technology storyline for multiple brands. There will need to be a true go-to-market strategy to support the full benefits, but these innovations do offer significantly improved picture quality. While the television business can be challenging to understand, I believe retailers have a bright future ahead. Not only is the heart of the home entertainment room centered around the tele- vision, creating endless possibilities for today's consumers, but emerging technologies and more stable price points are opening up a world of sales opportunities. In short, there is much to be excited about. AREAS OF OPPORTUNITY TOTAL TV REVENUE AND GROWTH (BILLIONS) Source: IHS TV AVERAGE SALES PRICE Source: IHS

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