M+E Daily

By Paul Sweeting

Several TV manufacturers are expected to be showing off their 4K ultra-HD TV (UHDTV) prototypes next week at CES in Las Vegas, and at least a few, including Sony, LG and Toshiba, will be showing production models in their booths.

The surge in interest in the new format follows an industry agreement in August that defined two new standards for UHDTV corresponding roughly to 4K and 8K flavors. CEA also established a standard definition of the term “Ultra-HD” for use in marketing consumer electronics products, referring to displays with at least eight million active pixels, including at least 3,840 horizontally and at least 2,160 vertically; an aspect ratio of at least 16 x 9; and at least one digital input capable of carrying and presenting native 4K format video from this input at full 3,840 x 2,160 resolution without up-conversion.

Don’t expect “Ultra HD” TVs to achieve mass-market sales levels anytime soon, however. Sony’s and LG’s 84-inch Ultra displays go for a cool $25,000 and $20,000 a piece, respectively, while Toshiba’s somewhat smaller set (55-inches) goes for $8,700. As of now, there is also virtually no native Ultra-HD content to watch on those pricey displays. NPD DisplaySearch currently projects that Ultras will account for only 2% of display sales in 2017.

The history of new CE formats, of course, is characterized by high-priced introductions followed by a fairly rapid decline in prices as manufacturing ramps up, component prices come down, sales volume increases and manufacturing yields improve. Standard HDTV displays that cost $4,800 as recently as 2005, for instance, can be had for just $560 today, according to DisplaySearch. So there is reason for optimism that UHDTV will follow a similar cost curve.

There is also reason for skepticism, however, and it has to do with the starkly different circumstances of the CE business today than in 2005. Several major manufacturers, including Sony, Panasonic, Toshiba and Sharp have posted substantial losses over the past two years, with much of the shortfall coming in the display business.  Panasonic recently skipped a dividend payment for the first time since 1950 to conserve cash and its cost of borrowing to fund operations is skyrocketing.

Right now, UDHTV is essentially still in prototype. The few sets LG or Sony may be selling at $25,000 a piece are essentially bespoke items, like built-to-order sports cars. There is no real commercial UHDTV “market” as such. Getting from the prototype stage to commercial volumes, however, is going to take considerable investment — in improving manufacturing processes to achieve sustainable yields, in developing chips and software, in building production lines, in sourcing components and other costs, all before sets can start rolling off the lines at commercial volumes, let alone selling through.

Right now, it’s difficult to see where that investment is going to come from, at least where traditional CE makers are concerned. Many of them would probably prefer exiting the display business altogether at this point to investing in it if they could figure out how to get out without further losses or write-downs. If the investment needed to fully commercialize UHDTV is to come, it will probably have to come from somewhere outside the traditional CE business. Rather than starting out in huge 85-inch TV sets and then spreading to smaller display categories — the typical pattern for TV formats — Ultra displays may find their niche first in smaller form factors, like tablets or smartphones, where initial volumes can be bigger, and building out from their to larger configurations. But that sort of rollout is more likely to come from Apple or Google than from Panasonic or Sony.

So enjoy the giant Ultra-HD TVs you see on display at CES. It may be a while before we see many more.