Selling TVs is a notoriously difficult business. Consumers have resisted forking over cash to replace flatscreens they bought when they first ditched tube TVs, and when they do make the switch, they’ve been reluctant to embrace the model of paying premium dollars for a set.
One of the biggest buzzwords to come out of the Consumer Electronics Show is “HDR TV,” the latest attempt by TV manufacturers to lure buyers into a high-end upgrade.
The switch from bulky CRT tube television sets to flat panel LCD and plasma TVs was a huge upgrade cycle for TV manufacturers, representing the opportunity to make wads of money.
The difference between the two technologies was night and day, and flat screen TVs not only offered a viewing experience that was far superior, they let consumers wall mount the sets and reclaim large areas in their living rooms.
The flat screen TV upgrade cycle turned into a pricing race to the bottom that gutted Sony’s business with a decade of losses from its once profitable TV division.
During the past decade, manufacturers have introduced a number of new technologies in the hopes of not only igniting demand for new TVs — to replace the early generation flatscreens hanging on walls — but of convincing consumers to return to the days of paying a premium for a new television.
CES has been the traditional showcase for introducing these new features. If you follow the news coming out of CES every year, you’ll be familiar with “must-have” TV technology like 3D TV, Smart TV, curved screen TVs and 4K TV. At CES 2016, HDR TV was the buzzword.
With a lack of content and the requirement to wear battery powered glasses, 3D fizzled. Smart TV seemed redundant with the growing popularity of inexpensive set-top boxes like Apple Inc.’s (AAPL) Apple TV. Curved screen TVs look cool, but unless you sit directly in front of these televisions the viewing experience is worse than a standard flat screen.
4K TV or UltraHD was considered the best shot in years at convincing consumers to upgrade and pay extra, but two problems have dogged 4K TV.
For one, content has been problematic. The efforts of companies like Netflix (NFLX) and Amazon (AMZN) to offer Ultra HD streaming content have helped, and 4K-capable Blu-ray players were on display at this year’s CES, but native Ultra HD content that will fully show off a 4K TV’s resolution remains elusive. The second problem — and one that consumers discover once they bring a new 4K TV home — is that the extra resolution may not actually be visible.
4K TV offers 8 million pixels, or four times the resolution of 1080p. However, the human eye has limits, and with a 55-inch TV, you need to sit less than four feet away to tell the difference between Ultra HD content and 1080p. That makes 4K TVs look spectacular in the showroom where consumers walk right up to them, but somewhat disappointing once they get them home.
So add Ultra HD to the long list of technologies that have been rolled into the standard feature list on most new TVs, largely failing to compel consumers to upgrade or to pay extra.
HDR TV is the new 4K.
HDR stands for High Dynamic Range. These TVs have a very high contrast ratio (the screen can get very bright and very dark) combined with much more accurate color reproduction for a life-like viewing experience. The video displayed on a HDR TV will make a standard TV’s picture look dull and faded in comparison.
The average person looking at a big screen 4K TV from 10 feet away can’t distinguish it from a five-year-old 1080p TV; but have them look at an HDR TV and the picture will pop, making it immediately more attractive.
The easiest way to think of the appeal of HDR TV sets and why they stand a better chance of winning over consumers than 4K did is summed up by CNET’s Geoffrey Morrison: “More pixels are cool, but better pixels would be amazing.”
So HDR TV eliminates one of 4K TV’s issues, but the challenge of content still remains. However, that should be less of an issue than when 4K first appeared.
HDR can take advantage of the extra bandwidth being made available for 4K content (all that extra color metadata means large files). And while you can’t magically conjure up more pixels for older content that was filmed in lower resolution to make it 4K native, technicians can process older film and TV library content to make it HDR compatible.
It seems likely that HDR TV has the potential to drive consumer upgrades in the way that 4K TV wasn’t able to. The challenge for Sony is that Chinese manufacturers are already in the game and driving prices down — Hisense was showing off a $399 HDR TV at CES 2016 — but at least this time around, convincing consumers it’s actually worth buying a new TV shouldn’t be as difficult.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.