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© 2016 IHS Markit. All Rights Reserved. © 2016 IHS Markit. All Rights Reserved.

Arrival of New Paradigm in TV Industry 2016 November - Korea Display Conference

Ken Park, Principal Analyst of TV Sets Research, IHS Markit Technology

© 2016 IHS Markit. All Rights Reserved.

Agenda

• New TV Paradigm Shift

> Look the TV or Look through TV?

• TV Brands Strategy

> New Comer (Go big or Go home?)

> Hybrid (Fast Follower)

> Traditional Brands (Power of Brand and Technology)

• Premium TV Market Forecast

> LCD TV 4K

> OLED TV

> 65”+ 4K HDR WCG

2


New TV Paradigm

Look the TV or Look through TV?

3


2016 has another decline in revenue after big drop down 7.4% in 2015, with long stagnation until 2020

4

-15%

-10%

-5%

0%

5%

10%

15%

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Revenue Y/Y GrowthSource: IHS Markit Technology © 2016 IHS

Reven

ue(m

illi

on

s U

S$)


Worldwide TV household penetrations have reached almost 80% in 2015 with Net Additions falling rapidly

5

71.0%

72.0%

73.0%

74.0%

75.0%

76.0%

77.0%

78.0%

79.0%

80.0%

81.0%

0

50,000

100,000

150,000

200,000

250,000

300,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Replacements(000s) Net Additions(000s) Worldwide TV Household Penetration(%)

Source: IHS Markit Technology © 2016 IHS

Do

mesti

c C

on

su

mp

tio

n(0

00s)

TV

Ho

useh

old

P

en

etr

ati

on

(%

)


Premium TV defined by price point top 5% of ASP is pressured by fast price falling of 65” 4K below $1000

6

60%

65%

70%

75%

80%

85%

90%

95%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

<$500 $500-$750 $750-$1000 $1000-$2000 $2000+

© 2016 IHS

Sh

are

of

Sh

ipo

men

ts(%

)

Source: IHS Markit Technology

~3%

~6%


32” TV is just a commodity to give a way for promotion or a package product of 24 units at $2,856 for B2C consumers from Sam’s Club

7

Source: Costco.com © 2016 IHS


In order to boost up TV demand again, new product life cycle must emerge disruptively from current product cycle by technology or by content

8

Innovators Early Adopters Early Majority Late Majority Laggards

The Chasm

New Tech

Introduction Growth Maturity Decline

New Biz


To break current paradigm, Innovative technology, disruptive business model, and divergent value chain should revolutionize the TV industry

9

CRT TV

LCD TV

LED TV

3D TV

Smart TV

4K TV

QD TV

8K TV

HD TV

Im

provem

en

t

Beyond LCD TV

Innovation

Disruptive

Revolution

Divergence

Improvement

Sustaining

Evolution

Convergence

LED

MOCVD

LGP

PMMA

CCFL

R-E-E

X


Smartphone is a good example to learn how mobile industry has grown from traditional phone market

10

Content Network Distribution Mobile Phone Key Technology

2G cellular phone Voice

3G

- Voice Quality - Connectivity

Telecom Carriers

smartphone

Wifi

iTunes

Data

Apps

LTE - Touch - Display Technology Screen size Resolution …

The Paradigm Shift tends to occur from the effort changing the key content of end-user, so innovation must arise in entire industry ecosystem by breaking the traditional boundaries

Apple is a good example of entering the mobile industry, fetching a paradigm shift

- Health & Fitness - Social Networking - Weather, Travel - News, Navigation - Sports, Lifestyle, - Game, Entertainment - Etc.


What about TV industry? Let’s turn our views from specific TV display industry to whole TV industry

11

Content Network Distribution Display

CRT LCD

LED backlight

3D

Smart

4K

HDR

Analog Digital

HD

8K

HD

3D

4K

HDR

8K

Free To Air

Cable/Satellite /Telco/IP

#1 Paradigm Shift

#2 Paradigm Shift

Su

sta

ined

News

Sports

Entertainment

Liv

e

On-line Streaming

#3 Paradigm Shift

Tim

e S

hifte

d

Drama

Soaps

Documentary/Life/Children

Movies

Comedy

#4 Paradigm Shift

Disruptive


Netflix, as a content creator, increases original contents as well as video subscriptions every year

12

Source: THR research © 2016 IHS


Netflix, a content provider gradually gains a strong position controlling TV players, even involving in product development

13

2016 4K UHD TV(webOS 3.0)

2016 4K SUHD TV (8/9 series)

2016 Android 4K UHD TV

TV instant on TV resume Latest Netflix version

Fast app launch Fast app resume Netflix button Easy Netflix icon access

V

V V V V

V

V V V V

V

V V V V V V V V

7.99$ 9.99$ per month

Source: pictures from Netflix website © 2016 IHS


Roku, a platform service provider works closely with traditional TV manufacturers in the US with more well-known brand image

14

Hitachi

TCL Hisense

Sharp

LGE

Insignia

Source: pictures from Roku website © 2016 IHS


Amazon, a content aggregator succeeded in several devices distributing killer contents, but failed in the fire-phone due to a strong focus on hardware

15

failed

success success

ongoing

ongoing

developing ongoing

Book Video

VR

Music

Game

success

99$ per year

Source: pictures from Amazon website © 2016 IHS


Apple is ambitious to become an operator after a content aggregator and distributor through powerful combination of its AppleTV and AppStore

16

Live tune-in

HomeKit™ accessories

Single Sign-on

6,000 apps

Source: pictures from Apple website © 2016 IHS

Apple TV Gen.4th


Merge & Acquisition is likely to occur in such paradigm shift as typical TV industry growth is stagnated and matured in traditional ways

17

Merge & Acquisition

Licensing Business

Partnership

Done

On going

Rumor

Source: IHS Markit Technology © 2016 IHS

Chinese brands licensed a brand from Japanese brands

Global TV brands invested in panel makers


TV Brand Strategy

New & Traditional Players

18


LeEco announced on July 26th the acquisition of Vizio for US$2 billion

19

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LCD PDP

Vizio TV Shipments History

© 2016 IHS

Sh

ipm

en

ts(0

00s)


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LCD

LeEco TV Shipments History

© 2016 IHS

Sh

ipm

en

ts(0

00s)

Source: IHS


Merge & Acquisition is likely to occur in such paradigm shift as typical TV industry growth is stagnated and matured in traditional ways

20

Panel OEM Content Brand Channel

owned 100%

owned Multimedia

20% owned

2015. Dec

100%

acquired

acquired

2016. Jul partnership


By combining Vizio and LeTV shipments, LeEco jumped into top 7 brands at once in 2015 and will be likely to rank at top 4 in 2016

21

0

10,000

20,000

30,000

40,000

50,000

Samsung LGE Hisense TCL Sony LeEco+Vizio Skyworth

LeEco+Vizio

2015 R

esu

lt

Sh

ipm

en

ts(0

00s)

0

10,000

20,000

30,000

40,000

50,000

Samsung LGE Hisense LeEco+Vizio TCL Skyworth Sony© 2016 IHS

2016 E

sti

mati

on

Sh

ipm

en

ts(0

00s)



TCL

Fast Follower

• One of only 3 TV brands in the world and the only one in China to be vertically integrated

• World’s largest generation 11 line

• Oxide semiconductor, Cu process

• POA, Super GOA tech

• QD OLED Printing tech

• 43”, 65”, 70”(21:9), 75” LCD displays

• Ultra-large public displays as well as OLED displays

Source : TCL media day at IFA2016


22


TCL appears to step up to its own technology roadmap by taking advantage of each technology from Samsung and LG

23

LCD QD LCD OLED QLED

LCD QD LCD WOLED RGB OLED

Step 1: Skip Step2:

Skip Step 1:

LCD QD LCD QD OLED OLED

Step 1: Step 2: Step 3:

Step2:


New business model of “Buy hardware get content free” striving to discard the mindset of traditional TV manufacturers by strategic transformation in the internet era

24

Technology

(Quantum Dot TV)

Platform

(Roku)

Content

(Tencent)

Partnership

(LeEco)

New Business

Model

http://www.technologypep.com/tcl-32s3800-roku-smart-led-tv-reviews.html


Mid-tier brands strike back in2017 with a license by OEM’s aggressive volume scale and cost efficiency

25

Top-tier brands

Mid-tier brands

Low-end products

1H 2016 2010 2017

15%

3%


Top-tier brand’s high-end product competition

26

Color

Wide Gamut

Quantum Dot

Contrast

OLED

Brightness

Backlight Master Drive

Top premium line-up comparison

Model KS9800 G6 XBR-Z9D

Brand Samsung LGE Sony

Display LCD OLED LCD

Resolution 4K 4K 4K

Peak Brightness 1000 750 2000

Color Depth 10bit 10bit 14bit

Curved Design O

Ultra Thin O O

HDR O O O

OS Tizen WebOS Android

65" $4,499 $7,999 $5,499

75" $8,999

77" $19,999

78" $8,999

88" $19,999

100" $59,999

Source: IHS Collection from each US sites © 2016 IHS


Premium Market

65”+ 4K HDR TV is …

27


LCDTV, 4K growth is expected to skyrocket, but price is falling fast as a common feature, so premium is looking for a chance with 4K HDR w/WCG over 65”+

28

5,267 7,644

9,482 11,343 12,858 14,126

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

2015 2016 2017 2018 2019 2020

4K+ WCG HDR 65"+© 2016 IHS

Sh

ipm

en

ts(0

00s)


74% Y/Y

37% Y/Y

26% Y/Y

13% Y/Y


OLED TV, new players will surly help enrich OLED TV line-up as well as product enhancement in 2017

29

0

200

400

600

800

1,000

1,200

1,400

2016 2017

55" 1080p 55" 4K 65" 4K 77" 4K

OLED T V Forecast for 2016 and 2017

LGE, 95.5%

Konka, 0.7%

Skyworth, 3.6%

Other, 4.3%

LGE Changhong Panasonic Konka Skyworth

© 2016 IHS Source: IHS Markit Technology

2016 1H OLED T V Shipment share by brand(%)

106% Y/Y

http://pdf.directindustry.com/pdf/sichuan-changhong-battery-co-ltd-71984.html


Given 65”+ market, LCD 4K HDR WCG(incl. Quantum Dot) TV and OLED 4K HDR TV will grow to 2020 by taking shares of SDR or HDR Compatible 4K LCDTV

30

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2015 2016 2017 2018 2019 2020

65"+ 4K HDR WCG LCDTV 65"+ 4K WCG LCDTV 65"+ 4K LCDTV 65"+ 4K HDR OLEDTV

© 2016 IHS

Sh

ipm

en

ts (000s)



Thank You

Ken Park, Principal Analyst, IHS Markit Technology

[email protected]