New pricing announced by LG Electronics for its hot 55-and 65-inch 4K OLED curved TVs puts the UHD premium for these sets at just $500 over the same curved, lower resolution OLED HD (1080p) versions in the same size, according to a recent company announcement.
Specifically LG Electronics announced a $1000 price cut to both the 65-inch (65EG9600) and 55″ (55EG9600) now selling at $4,999 and $2,999 respectively. Meanwhile the lower resolution (full-HD) versions of the curved OLED models in the same size configuration are selling for only $500 less (you do the math.)
The move comes as LG executes on its stated plans revealed at IFA by Kwon Bong-seok, who heads the company’s home entertainment group, to make its TV business profitable by the third quarter of this year. This includes the release of new (low cost) Quantum Dot LCD sets, and a new price structure that is meant to keep Chinese competition in check. “The company also needs to respond to growing demand from consumers for affordable models with enhanced viewing technology,” Kwon said at LG’s IFA news conference last month. He also stated that the strength of the US dollar and Russia’s growing currency slump had created headwinds for the company in past quarters of 2015. “LG’s TV business was in trouble for the first six months of the year. However, our TV business will turn profitable from the third quarter of the year thanks to the gradual recovery in consumer demand in key markets,”
LG is also riding the growing wave of 4K TV shipments set to pass full HD sets. This is underscored by an IHS / Displaysearch study that tracks the mainstream global flat-panel TV market, covered in a recent KoreaTimes (KT) article that said the market research firm sees televisions “rapidly moving to the UHD television from previous generation full high-definition sets.” IHS reckons that the UHD models will “…hold 43.4% of the entire market, outpacing the 39.4% of full-HD sets by 2016.
There was also some speculation that LG’s introduction of QD technology may spell the end for its OLED business, the company is now using to target the high-end TV buyer. Korean rival, Samsung went down the OLED path for its premium TVs only to abandon the technology in favor of QD LCDs early in 2015. But for now LG remains committed to the new OLED technology. “The launch of LG’s new TV using quantum dot tech doesn’t necessarily mean LG’s OLED strategy has been changed. OLED TV is premium. LG will push for that,” the KT article reported. He also emphasized the group sees global premium TV sales hitting 4M units in 2016 with LG targeting up to 20% market penetration with its OLED sets.
LG said it will use pricing to differentiate between its OLED and LCD based sets with up to 40% premium for OLED TVs this year and that number will shrink to just 20% price by 2016, making the price announcement the baseline for its premium sets going forward.
Meanwhile 4K content is still the weak link in getting customers to upgrade to either technology. In July 2015, LG said it has successfully completed round two of its ATSC 3.0 field trials that will allow over the air (OTA) broadcast of UHD images using HEVC (high efficiency video codec) and even empowering mobile TV viewing. The technology will go a long way to delivering UHD images to the masses, and perhaps even creating the “must-have” demand TV makers long for in their efforts to grow profits.
So get ready for an interesting holiday TV buying season, as the new (lower cost) curved OLED and yet to be released QD LCD sets from LG establish benchmarks in the space, and the ripple effect from the rest of the industry’s inevitable response. – Steve Sechrist
Analyst Comment
The same trend is evident in Europe. This week, Inside Satellite reported GfK’s forecast at an event last week that the European TV market would shift from 26% at 50″ and over to 34% this year, with a big push to UltraHD. (BR)
