The color TV market will be bright in 2018, and product strength is the key to success

Color TVs were the first major home appliance to enter Chinese households, and every household has one. According to data from the National Bureau of Statistics in 2012, color TVs are the most common major home appliance per 100 households, with 122.3 color TVs per 100 households in cities and 116.9 color TVs per 100 households in rural areas. This data is far ahead of white major home appliances such as air conditioners, refrigerators, and washing machines. Refrigerators and washing machines still have room for growth in both urban and rural areas, but color TVs, whether in rural or urban areas, each household has more than one TV.

The early development and high penetration rate have led to a very high color TV market. According to CMM's estimates, China's LCD TV ownership in 2017 was 380 million units, plus more than 130 million CRT TVs, China's color TV ownership exceeded 500 million units. The color TV market is mature and stable, with sales of 40 million to 50 million units per year. Hundreds of millions of CRT TVs and LCD TVs that have exceeded their service life are waiting to be replaced, so 80% of annual sales are replacement purchases. Only 20% are new purchases, and new purchases are gradually decreasing over time.

Replacement market sales are stable

We divide replacement purchases and new purchases into four categories according to the motivation for purchase to analyze the characteristics of the purchases, so as to look at the characteristics of a market dominated by replacement purchases.

New purchases can be divided into two types based on the motivation for purchase. The first type is the purchase of a TV for a newlywed or new house. This type is affected by the number of newlyweds each year. The second type is the purchase of a second TV, which means that the original family already has a TV, but because of the improvement of housing area or economic conditions, they now want to buy a second TV as a bedroom TV. This type is affected by factors such as real estate and user consumption capacity. Overall, new purchases continue to shrink.

Replacement purchases are the top priority of the color TV market, and can be divided into two categories according to the motivation for purchase. The original TV is broken and a new TV needs to be purchased, which accounts for a relatively small proportion. The largest part of TV buyers have old TVs at home, and they need to replace the original TVs at home due to requirements such as size, clarity, and online video. This type of purchase has a major feature. There is a time interval from the generation of purchase motivation to the actual purchase of the TV, and this time interval may be forward or backward. A user saw that a certain brand of Internet TV had the copyright of the Premier League, so he bought a TV. This part of the consumption intention is stimulated by products or promotions, and the market is overdrawn. However, another part of the population, which is opposite to this type of people, takes a wait-and-see attitude when purchasing. After the purchase intention begins, they compare brands, products, and channels, and finally wait until activities and promotions to purchase. At this time, market demand is shelved. The motivations and purchase proportions of these people have created a relatively stable sales in the replacement color TV market in the long run. The annual sales volume of 40 million units can be maintained overall, but there are differences between years.

The replacement market has two natural enemies. The first one is overdraft in advance, and the second one is the rising product prices. In 2017, the color TV market encountered two natural enemies, and the market declined. In 2016, Internet brands and e-commerce channels achieved explosive growth with the help of product prices. Large-scale publicity also stimulated the purchasing intention of some consumers, and sales reached 52 million units, which is the highest point in the history of color TV. In addition, in 2017, due to the supply and demand relationship, the panel price of color TV products increased, and the average price of color TV products increased by about 400 yuan, which delayed the purchasing desire of some users. According to our calculations, for every 100 yuan increase in product prices, the market size decreases by 2 to 3 percentage points.

Recovery growth will be seen in 2018

"Prosperity is followed by decline, adversity is followed by prosperity" is a saying in the Book of Changes, which means that everything in the world is in a dynamic balance, and the color TV market is no exception. In the past 10 years, the market size of the color TV market has been moving forward in a wave-like manner, with ups and downs. After a big growth, the market decline followed. In the past 10 years, the market capacity of color TVs has had two peaks. The first was in 2013, the year when smart TVs surpassed non-smart TVs for the first time, and it was also the last year that the energy-saving subsidy policy withdrew from the market. The sales of the color TV industry reached the highest point in history at that time, with a total market volume of 50.46 million units. Then it declined in 2014 and the market entered a period of adjustment in 2015. The market reached its peak again in 2016. At present, it is very similar to the situation after the peak in 2013. In 2017, the market has experienced a large decline, conservatively estimated to be 5 to 10 percentage points. The situation in 2016, 2017, and 2018 is very similar to that in 2013, 2014, and 2015.

Therefore, we judge that after overdrawing the market in 2016, sales volume declined in 2017. In 2018, the market will enter an adjustment period again, with sales of 51.19 million units expected, a market size larger than that in 2017 but smaller than that in 2016.

Panel prices enter a falling range

Since May, the price of panels has stopped rising for 14 consecutive months, and panel prices have entered a falling range. In August, the price of 65-inch panels has fallen to US$375, and is expected to fall by another US$15 in September. The prices of panels of other sizes will also fall by about US$5. Panel prices generally rise in stages of half a year to a year, and this round of panel prices is expected to continue until the second half of 2018. The decline in panel prices has reduced the operating pressure on companies, and the price of the whole machine is expected to fall to RMB 3,085 in 2018.

Color TV brand product upgrades continue

As the entertainment center of the family, the speed of product upgrade of color TV is ahead of other home appliances. In 2017, artificial intelligence has achieved initial results, and TVs with artificial intelligence functions will shine in 2018. In the color TV industry, the original 4K, curved, and ultra-thin products will still be the mainstream products in the market in the future. Quantum dot TVs and OLED TVs grew significantly year-on-year in 2017, and the market scale will reach 3.19 million and 550,000 units respectively in 2018.

Screen enlargement is an irreversible industry trend in the color TV industry. In the past, it increased at an average rate of 2 inches per year. It is expected to reach 49.3 inches in 2018, and 55 inches will become the starting size of living room TVs. The market share of 65 inches is expected to exceed 8%, and super-large screen TVs have broad development space.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.