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Next Step in TV Evolution? Paying Up for 'Ultra HD'
From The Wall Street Journal - Wednesday January 02, 2013
By DAISUKE WAKABAYASHI
TOKYO—Convincing consumers to trade in bulky old-school televisions for slim, high-definition models was a huge success story for the TV industry. Now manufacturers are angling to kick off another buying spree.
They are gearing up to promote what the industry calls "ultra high-definition" televisions, or UHDTVs, which promise four times the resolution of existing TVs and are likely to be a hot topic at next week's Consumer Electronics Show in Las Vegas.
Such TVs create images using more than eight million pixels, compared with about two million pixels of today's full high-definition televisions. At the moment, however, a major obstacle stands between consumers and sharper pictures: price.
Sony Corp. 6758.TO +1.70% and LG Electronics, 066570.SE +5.30% for example, have introduced 84-inch ultra high-definition sets priced at $25,000 and $20,000, respectively. Toshiba Corp. 6502.TO +4.98% has announced a 55-inch set in Japan for ¥750,000, or $8,700. UHDTVs are expensive because they use a new liquid-crystal-display panel that requires a greater degree of precision from component manufacturers. So far, the manufacturing efficiency for such panels is low, but production quality is expected to improve over time.
The stratospheric price tags—often the case with new technology—don't worry some industry watchers, who recall that HDTV sets, cellphones and other products were initially out of reach of most consumers but became hits as prices declined. In this case, they add, consumers have come to appreciate the benefits of higher resolution on TVs, tablets and smartphones.
"If you're a consumer, you'll pay more for a technology that you understand," said Paul Gagnon, director of North American TV research at NPD DisplaySearch, a research and consulting firm. "And in the case of higher resolution, that's a very easy thing to understand."
That said, there are also reasons for skepticism. Since the HDTV sales wave crested in the last decade, TV makers have tried to slow the unrelenting fall in prices and profit margins by introducing premium models with new technologies such as 3-D or Web connectivity. Those technologies have become common features on mainstream TVs but haven't reversed the downward price spiral.
Very little content has been created specifically for home viewing on ultra high-definition televisions. Meanwhile, early adopters will have to settle for high-definition footage that is adapted, or "upscaled," for the new sets—though proponents say the results look better than upscaled programming first did on HDTVs.
The new format is arriving as consumers clamor for ever-larger televisions. When the early high-definition displays hit the market in the early 2000s, the main class of televisions was around 30 inches in size.
When the bulk of television sizes shifted to more than 40 inches and 50 inches several years ago, TV makers introduced full high-definition displays packing twice as many pixels. Now screen sizes are creeping above 60 and 70 inches, and TV makers again want to add more.
UHDTVs are also known by the moniker "4K" for the roughly 4,000 pixels in the screen measured horizontally, which is roughly twice the resolution.
The greater density allows viewers to sit closer without seeing the effect called pixilation that can appear at times on lower-resolution TVs. Also, it may allow viewers to turn to the television for new purposes, such as reading the news.
"As the trend to larger screen sizes continues, the ability to make that picture more and more realistic from any viewing distance is valuable," said Tim Alessi, director of new-product development at LG Electronics USA. "It's a natural transition."
By 2017, NPD DisplaySearch estimates UHDTVs will account for only 2% of all LCD TVs sold but will represent 22% of all televisions over 50 inches in size. (LCD is the current, widely used technology for TVs.)
Hollywood is beginning to embrace 4K video cameras and 4K movie projectors. Around 60 recent movies—including the latest James Bond film, "Skyfall"—have been offered in the higher resolution, but if a theater doesn't have the 4K projector, the movie will look like a regular HD film.
Sony, which introduced a 4K digital-video camera last year and controls about 10% of the digital 4K-projector segment, said it has built up the industry's largest database of 4K video through its work with Hollywood and its early research on the technology.
"From now on, we'll continue to move 4K from professional use to consumer use by expanding and introducing additional products," said Sony Chief Executive Kazuo Hirai at a news conference in April discussing Sony's corporate strategy.
A big question is how quickly television manufacturers will bring down prices. The introduction of full high-definition televisions in the mid-2000s provides a model for how quickly prices can decline. A 40-inch, high-definition television, which cost about $4,800 in 2005, sold for about $560 in 2012, according to NPD DisplaySearch.
There should be no shortage of competing 4K set makers to help push prices down, at least to judge by expected activity at the CES. Westinghouse Digital LLC is planning to show, besides conventional sizes, a 110-inch UHDTV set available for custom order in the first quarter; pricing hasn't been announced.
Samsung Electronics Co., 005930.SE +3.55% Sharp Corp., 6753.TO +1.00% and four Chinese manufacturers including Haier Group and Hisense Group also are expected to debut ultra high-definition televisions this year.
While hopes run high, manufacturers don't see UHDTV as a silver bullet to cure the industry's ills. Without changing how consumers see the television and its value, 4K—like 3-D before it—may not do much to help TV makers, said Atsushi Murasawa, general manager of Toshiba's strategic-planning division.
And no one is assuming a surge of the magnitude that accompanied the advent of high definition, when revenue from U.S. wholesale sales rose nearly fourfold between 2003 and the 2008 sales peak, according to the Consumer Electronics Association.
"HDTV was like your first love," says Gary Shapiro, the group's president and chief executive. "Nothing will be as good as that."
—Don Clark contributed to this article.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com
A version of this article appeared January 2, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Next Step in TV Evolution? Paying Up for 'Ultra HD'.
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