As 4k gains momentum, panel makers are already looking ahead and starting to add 8K resolution to their roadmaps and product plans.

4K and UHD are much misused words that can mean a lot of different things depending on whom you ask. They cover a range of new technologies that go beyond conventional HD (high definition) video. In cinema, 4K is 4096×2160 resolution. For television, it is double full HD or 3840×2160 – which the consumer electronics industry rounds to 4K.

UHD (ultra-high definition) is generally used to describe the transmitted video content. Not only does UHD have more pixels (3840×2160) than full HD, but it also offers enhancements that improve image quality and realism.

4K TV Market Dynamics

The number of households with a 4K TV are expected to grow from 28 million in 2015 to 335 million in 2020. However, not all of these households will have a 4K TV content service. In 2016, the number of 4K households more than doubled over the previous year, to 66 million, as per an IHS report.

China remains on a different trajectory from the other regions, with 42 percent of TVs expected to ship with 4K panels this year. According to IHS, China will continue to dominate 4K TV shipments through 2020. China will be roughly the same as North America and Western Europe combined through 2016–2020.

Japanese set makers have been very aggressive in switching to 4K product ranges in their domestic market. But the forecast for 4K TV shipments in Japan remains limited due to a preference for smaller screen sizes. The accessible market for 4K TVs in Japan remains relatively small. The 50-inch+ market in Japan is expected to comprise only 21 percent of shipments in 2020, compared to 32 percent in Western Europe, 48 percent in North America, and 47 percent in China.

Looking Ahead to 8K TV

Panel makers are starting to add 8K resolution to their roadmaps and product plans. Aggressive competition in the panel industry will likely fuel a race to higher pixel counts, especially as new Chinese fabs start production, eager to demonstrate their capabilities. Taiwanese and Korean panel makers are facing new competition from China and will respond by raising performance requirements to levels that new competitors may find hard to reach. Existing panel makers have used increased performance (4K resolution) to raise barriers to entry. Chinese panel vendors have struggled to make 4K panels efficiently.

8K presents several obstacles.

  • Japan is planning 8K broadcast for 2020, a demanding timescale. No other country has plans for 8K broadcasting. The Japanese consumer’s preference for smaller TV sizes directly contradicts the broadcast plan. The plan has more in common with historical format launches, where transmission led the consumer electronics industry.
  • For most regions, the forecast dynamic will be supply push, and not content pull. 8K video content will be scarce.
  • China is the region most receptive to new TV technology, and it is expected that Chinese consumers will be prepared to buy 8K sets if pricing is accessible.
  • The fashion factor and numbers marketing will be the dominant drivers of the 8K TV market; however, volumes will be low.

For true 8K viewing, either a very large screen or close proximity to the screen is necessary. China will dominate 8K TV shipments. Its early-adopting consumers are likely to be eager for new features and will drive the fashionability of 8K. The 65-inch 8K TV will be the key size. Indigenous panel makers will have fabs optimized for 65 inches and pricing should be acceptable if panel manufacturing yields are achieved.

North American consumers are already buying the large screen sizes that can feature 8K, but available content will be sparse. European and Japanese shoppers have high-end tastes, but smaller home sizes limit the market for 65-inch+ TV sets in these regions. Tiny quantities of 55-inch 8K sets may eventually ship in Europe from high-end specialists with Chinese connections, such as Loewe and Metz.

UHD Media Consumption

IHS

Cinema is the UHD benchmark for consumers. While not strictly in the home entertainment space, consumers will be aware of quality 4K cinematic productions. For many, cinema is the first location where they will experience the latest in media technologies including high definition, wider colors, and higher frame rates. 4K in the theater will be a premium experience with a price to match, and as such will create expectations of a premium-quality product associated with UHD. This enables UHD to be sold at a higher price. However, it must also meet consumer expectations to maintain the perception of quality. A theatrical setting does allow for variances in resolution, as the aspect ratios of theatrical productions are not standard. But this is not a technical issue of which the consumer needs to be aware. As long as the content is rightfully UHD, the consumer experience will be fulfilled.

IHS

OTT and SVOD service providers use UHD as marketing. SVOD (subscription video-on-demand) providers will not as much market their UHD/HDR content as use it in the marketing of their own services. The fast refresh rates of a software-only platform enable SVOD services to be deployed now and perfected later – meaning that any bit rate or quality issues can be tweaked subsequently based on consumer feedback.

SVOD platforms can also be added in other UHD technologies besides higher resolution, without significant further hardware investment. A low- or no-cost SVOD option will be many consumers’ introduction to UHD, as free trials and low-cost subscriptions are cheap and easy ways to access content. The use of UHD in SVOD will allow for high-tier packaging to be pushed to consumers – something that is much needed as markets become saturated and competitive.

Availability is currently most prevalent on SVOD. Although VOD services have the largest number of UHD shows, content is not delivered to customers in true UHD quality. In particular, SVOD is likely the most frugal in terms of bandwidth allocation for content, while physical discs provide the highest-quality content available. While film is often considered the most suitable format for 4K, SVOD giants are investing in UHD TV series. Amazon and Netflix are not only acquiring films and documentaries, but they are also heavily involved in producing their own content using both higher resolutions and HDR technologies. SVOD services have among the lowest revenue per hour of content viewed, making premium content a greater risk. While films comprise the largest number of titles, TV series offer a better return on hours of content viewed per dollar invested. Online video providers generally offer a broader range of UHD genres than traditional pay-TV platforms. A strategic focus on high-end TV drama has pushed up production budgets to film levels. The price of the average TV series has been creeping upward as viewers increasingly turn to TV drama to fulfill their blockbuster viewing needs. Top TV shows now cost around as much per episode as lower-budget films – meaning that more expensive production methods like UHD make up a smaller proportion of the total budget.

Based on a report by IHS Markit, 4K TV and UHD: The Whole Picture.


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