Is there any big-ticket industry that can rival television manufacturing when it comes to pushing new standards in an effort to kickstart a new consumer buying cycle?
HDR is the latest attempt to convince consumers their current TVs are in need of replacement.
Given the industry’s decidedly mixed success rate at selling new “must-have” features, will HDR TV be the next big thing that actually convinces people to upgrade (and pay a premium to do so), or another 3D-style stumble?
What Is HDR TV?
There’s a good chance you’re familiar with HDR (or High Dynamic Range) as a feature on your camera.
When it comes to televisions, HDR means a picture that’s much brighter, with considerably higher contrast and greater dynamic range. Where a typical current generation 4K TV can generate a picture with a peak brightness that measures 100 nits, an HDR TV screen can pump out 1,000 nits.
The result is video with brighter colors, deeper blacks and a much more life-like appearance.
Will HDR Face the 3D Content Problem?
HDR video looks so good that content providers are jumping on board the technology early this time.
Netflix (NASDAQ:NFLX) feels that HDR content is an even bigger leap in terms of video quality than 4K TV was and is reported to have 10 series in production that will be mastered in HDR. Marco Polo is the first HDR Netflix show.
As always with a new technology, there are issues to be resolved, including the final standard for HDR TV. However, Netflix and Amazon (NASDAQ:AMZN) are on board and committed to offering HDR streaming. HDR is being added to Blu-ray’s 4K standard, Dolby is backing HDR, many of the studios are on board and of course, TV manufacturers like Sony (NYSE:SNE) want HDR TV to happen yesterday.
Like 4K TV before it, HDR TV also has a streaming content delivery challenge; but with HDR, it comes with a twist.
4K streaming eats data, consuming 15Mbps of bandwidth. That’s enough to hit many households in the data cap pocket and can also result in pauses while video caches. Adding HDR encoding to 4K means even more bandwidth is required.
However, Netflix has hinted at 1080p HDR streaming that would use only 2.5Mbps for high dynamic video that would have a bigger visual impact to most viewers than the switch from HD to 4K TV. That technology is great for Netflix — HDR content without budget-breaking data requirements would add subscribers — but potentially worrisome for TV manufacturers who have been trashing 1080p resolution for being yesterday’s technology as they try to persuade consumers to upgrade to 4K TV.
Ultimately, content providers and TV manufacturers have to unite and promote the advantages of HDR and let 4K become just another feature, not the major selling point of a TV if this is going to work. Video that’s both HDR and 4K is obviously the ultimate, but now that 4K is approaching becoming the standard resolution for new TVs anyway, the focus needs to be on HDR if this is to catch on.
The Tough Slog of Convincing People to Upgrade
Consider how many new, “must-have” technologies have bombarded TV-owning consumers in just the past 20 years. The first HDTV broadcast in the U.S. happened in 1996 and it was about then that plasma TV sales began to take off, followed by LCD, flat-panel HDTVs.
As Samsung (OTCMKTS:SSNLF) waded into the flat-panel market, kicking off price wars that made HDTV sales a losing game for industry leaders like Sony, an attempt was made to convince consumers to upgrade once again — this time to 3D capable sets. But the need for expensive (and inconvenient) 3D glasses and a lack of content prevented 3D from taking off.
Smart TVs? Consumers have failed to find these Internet-connected TVs worth paying extra for, especially when they could plug in a cheap streamer like Apple’s (NASDAQ:AAPL) Apple TV to an existing TV for the same basic effect.
4K TV had real potential. For a short time, these Ultra HD TVs lived up to the promise of a return to the glory days for Sony and other manufacturers. Consumers were actually shelling out $5k for a new TV. That didn’t last long, though. Chinese manufacturers adopted the 4K TV standard in a big way as they pushed into the American market. You can now buy a 49-inch 4K TV on Amazon for under $500 and Sony’s TV division — which was spun off in 2014 — continues on a decade-long money losing streak.
There have been other attempts: high (240 Hz) refresh rate, curved displays, 8K sets and OLED panels among them.
On average, consumers only buy a new TV once every seven or eight years, despite the best efforts of the industry to convince them to upgrade more frequently. And now there are even more discount manufacturers driving prices down, including a slew of Chinese companies and U.S.-based Vizio.
A Bright Future for HDR?
Will HDR mark the return to glory of premium TV manufacturers? It could fail to catch on with consumers, especially those who just bought a new Ultra HD TV. If the technology doesn’t work, some well-known names like Sony could well exit the business altogether. The technology could also be quickly incorporated into those cheap TVs that are threatening to ruin the 4K TV party.
However, with the early support of content providers, HDR TV is the industry’s best bet at triggering an upgrade cycle in years — perhaps even more convincing than 4K.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
