3D TV Another Case of Irrational Exuberance?
Colin Dixon, Senior Partner, Advisory
April 6, 2010
At CES in 2009, 3D movies were introduced to great fanfare. The format was supposed to draw us all back to the theaters and in at least one case, Avatar, this clearly happened. One year later and CES 2010 hailed 3D TV as the next great home technology. Since then the hype has been building to feverish levels with expectations of big sales in 2010 and beyond. So should you be preparing to bring your video product or service into the 3D era? Will next year be the year of 3D mobile video?
The Claims for 3D TV Sales
There are many numbers being thrown about predicting exactly how many 3D TVs will be sold in the US in 2010. The high mark for estimates understandably came from TV manufacturers themselves. Tim Baxter, Samsung’s US President, believes between 3.5 and 4 million 3D sets will be sold in the US by the end of the year. Comcast also feels the US public is ready to embrace the new medium and they’re estimating about 1 million US homes will have a set this year.
Further into the future analysts see the market expanding rapidly. Insight Media expects half of US homes to have a 3D set by 2015 and Future Source Consulting thinks we’ll reach that mark a year earlier. Insight also expects over 140 million sets to be sold worldwide over the same period. These are impressive numbers but are they to be believed?
Are These Claims Possible?
Quixel Research says that around 41 million flat panel TVs were sold in the US last year. So on the face of it 4 million 3D TV sales sounds at least possible. But if we look deeper at the numbers we find that, courtesy of Quixel again, only around 5% of those sales were for sets costing $2000 or more. Since all announced pricing of the 3D TVs is at or above that price the ceiling on sales in the US would seem to be 2 million. Actual sales are likely to fall far short of that.
CEA is positively giddy at the prospects for sales. According to their recent survey consumers simply can’t wait to get their hands on the sets. This study of 1,914 US adults found that 25% of them expected to own a 3D set within 3 years. So, if every single one of these people follows through and buys a set it is possible that we can reach 50% penetration within a 4 to 5 year time frame as predicted by Insight and Future Source.
But as we know, intention is often far different than action. The stars will have to align perfectly in the market for mass adoption to occur.
Are the Market Conditions Right for 3D Adoption?
Before DVDs were adopted en masse by the US public two things needed to be in place:
In 1998/99 DVD players prices had fallen into the reasonable range for consumers; below $200. This price compared favorably with better quality VCR players. In addition, by then pretty much every movie was available in DVD format. By comparison, the Blu-Ray format is in about the same state today and, despite the worst economic depression in decades, player sales increased by 67% in 2009.
The same conditions seem several years away for 3D TVs. With the sets just being introduced it will take several years for the prices to drop into the acceptable range for the average US consumer. We should also remember that many consumers have just purchased a new primary TV for their home to cope with HD and the digital transition.
But 3D television has other barriers to mass adoption. The sets are dependent on ancillary equipment such as Blu-Ray players and 3D glasses to arrive. These are only just being introduced and will also need to ride the cost curve down to acceptable consumer levels before mass adoption will occur. Finally, there is still very little content available in the format. Avatar is sure to draw a lot of interest when it is released in Blu-Ray 3D but it is unlikely to prompt lots of consumers to run out and spend upwards of $3,000 to enjoy it at home.
Much has been debated about the sociological aspects of watching 3D TV at home. Will consumers really want to don 3D glasses to enjoy their favorite shows and sports events? These debates are important and their subject matter of fundamental importance to the adoption of the technology. Yet even ignoring this issue, it is very clear the market for 3D TV is still several years away from the conditions necessary for mass adoption.
So while the industry rallies behind the 3D flag and pours money into promoting the technology expect consumers to keep their wallets in their pockets for some time to come.
ShareThis