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TVs That Bend, Stretch Clear Signs Of A Desperate Industry

Jan 7 2014, 8:26am CST | by

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TVs That Bend, Stretch Clear Signs Of A Desperate Industry
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TVs That Bend, Stretch Clear Signs Of A Desperate Industry

There’s no doubt there are plenty of televisions to ogle at CES 2014. Models as large as 120 inches are being announced with picture quality and price tags that are equally jaw-dropping. But nearly every new feature: curved screens (including models that can sit flat but literally be curved via remote control!), wider aspect ratios, and additional pixels solve problems few of us knew we had. The television industry has just come off what will be remembered as its heyday: Across the developed world, hundreds of millions of old, analog CRT sets were replaced with digital flat panels. At the same time, emerging economies were undergoing rapid growth and many there bought TVs with with newfound prosperity. Both trends are over, the industry’s casualty count isn’t.

Remember when?

Forget the nostalgia of the great American age of Magnavox, it wasn’t that long ago that Japanese consumer electronics companies were built on the backs of their TV divisions. Sony and Panasonic became household names in U.S. living rooms; Mitsubishi and Toshiba would dominate the projection-television business. Sharp more or less invented the practical LCD set as the high-definition era dawned with the new millennium. While only Mitsubishi is completely gone from the TV landscape, it’s not unreasonable to believe the rest will join them before long.

None of the Japanese makers are significant players in the market for LCD panels, the guts of the vast majority of TVs. And making profits on televisions without vertical integration has proved nearly impossible. Sony has lost money on TVs in 13 of the past 14 quarters. Sharp’s TV division has sustained billions in losses, putting the entire company’s future in doubt. Panasonic recently announced plans to exit the plasma television business and follow Sony’s profitless business model of branding LCDs, albeit from an even weaker market-share position.

Peak TV?

While most of the media’s obsession has been with the relatively tiny number of people who “cut the cord” and canceled their cable subscription, the big story over the past two years has been the implosion of TV sales even as the global economy has stabilized. From a high of 255 million in 2011, TV sales fell to 238 million in 2012 and an estimated 227 million last year, according to IHS, who tracks the industry closely. The especially bad news is that it’s occurring in both developed and emerging markets. Further, the data is beginning to resemble what looks like a secular and permanent decline in personal computer sales.

And it’s likely the culprit is once again the same device: the tablet. While you probably know someone who sits around and watches video on an iPad now and again (especially if you have kids), the trend it exploding in Asia, where loading video onto inexpensive tablets is mainstream entertainment. While there will likely always be a place for the communal activity of watching a movie or the big game in the family room, the main video-viewing activity is inexorably moving away from that center. Streamed video offers an array of choices that’s not only greater than cable, but growing in variety even faster. And that searchable, clickable universe only has to satisfy the one person holding a Samsung Galaxy, not the whole family.

Gymnastics

Which brings us back to CES 2014. The crazy competition between the Korean companies that bumped off Japan Inc. means LG and Samsung pretty much match one another feature for feature, product for product. Each showed off a television that could be literally bend itself from flat to curved with the touch of a button on your remote. This continues a trend from last year where both insisted what you all wanted was a TV that was curved, even though the past decade has been convincing you flat panels are where it’s at.

The relatively tiny benefits of curved televisions only really manifest themselves at giant sizes, so both manufacturers also showed off 100+-inch televisions that you’ll never buy unless you run a hedge fund or movie studio. Though perhaps not. In perhaps the most damning indictment of the curved screens, Samsung brought out producer/director Michael Bay of Transformers and Pearl Harbor fame to tout the benefits of rounding the screen. When the teleprompter broke forcing Bay to speak off the cuff, he literally couldn’t come up with anything at all to say about the technology. Grasp that for a moment: A guy whose movies are made for big, immersive screens doesn’t know a single reason why you’d care that your TV screen curves. (Samsung and LG’s giant models also was wider than normal widescreen, a nice feature for a lot of films that are shot that way, but irrelevant for most HD programming, which would then be displayed with giant black bars on the side… The very bars we got rid of once everything went from old 4:3 to HD in the first place.)

Sony, for its part, had a more polished presentation to talk up “4K,” the increased resolution that will be coming soon to a TV near you — or at least a TV in China. Like 3D before it, the cost to add the additional pixels to your TV is low, so most sets will eventually be built with 4K inside. In the meantime, the technology is getting popular in China quickly because domestic brands there are selling it especially cheaply. Elsewhere, the old guard is hoping the additional margin from selling it will prop out their flagging profits. Those Chinese brands, on the other hand, are planning on taking their low prices worldwide, as the Koreans once did to the Japanese. And the Japanese once did to the Americans.

In the meantime, everyone hopes you’ll even notice the difference in picture quality. That’s a challenge for 4K, which provides pretty clear benefits on really big screens with really good source material. But 4 of 5 TVs sold in the U.S. are still too small to get any benefit from those pixels and though sizes do creep up over time, it’s actually a slow progression. With the decline in TV sales, it’s likely to get even slower.

Though Netflix is bringing some 4K streaming online this year and both Sony and Samsung have services of their own to deliver more current films directly to you in the format, what you can watch will be limited for quite a while. And, of course, you’ll need a 4K TV of sufficient size that you sit close enough to in order to really experience the difference. You’ll also need, at least in the case of Netflix, 15 megabits of internet bandwidth to enjoy it. That’s going to be a near impossibility for anyone still using DSL and many U-verse customers as well as those on lower tiers of cable-modem service.

Similar roadblocks doomed in-home adoption of 3D, which was going to save the TV business just a couple of years ago. A dearth of programming, the need for glasses to be worn, et al. have limited the appeal of 3D in the living room to the point that Vizio, one of the dominant sellers of TVs in the U.S., is dropping 3D from its offerings this year.

What’s left is a TV industry desperately seeking sales by focusing on the wrong end of the equation. “Gadgets don’t interest general consumers by virtue of their … value as objects unto themselves,” Darrell Etherington wrote on TechCrunch. ”They appeal because … they answer a specific question consumers have of “How I can I do x, y or z?” No one was asking how they could curve the TV with their remote control. But they still want to find something good to watch when they sit on the couch.

Follow me on Twitter and on Facebook. Find the rest of my Forbes posts here.

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