As panel manufacturers have turned losses into profits, are good days coming for TV companies?

Unlike the TV industry, which has been in deep trouble since the first half of this year due to market shrinkage and rising production costs, the display panel industry at this stage is a completely different picture.

According to the relevant data released by the statistics agency not long ago, BOE's total revenue in the first half of the year was 44.6 billion yuan, a year-on-year increase of 68.65%. In addition, the net profit of shareholders of the listed company also increased to 4.3 billion yuan, a significant turnaround year-on-year. In the end, after deducting non-recurring gains and losses, BOE's net profit in the first half of the year was 4.018 billion yuan.

At the same time, as another well-known panel manufacturer in China, Shenzhen Tianma also announced its performance report for the first half of 2017 at the end of August. The report pointed out that Tianma’s revenue in the first half of this year totaled 6.204 billion yuan, a year-on-year increase of 24.83%. The net profit attributable to shareholders of listed companies also increased by 69.15% year-on-year to 448 million yuan. After deducting non-recurring gains and losses, the net profit in the first half of the year reached 241 million yuan.

From a certain perspective, traditional TVs are not making money, Internet TV brands are selling at a loss, but upstream panel manufacturers are making huge profits. This has clearly become the new situation in the TV industry chain in the past few months.

The fundamental reason why TV companies are unable to make profits is that the upstream and downstream industries are in very different situations

Although the wave of Internet has kept TV products popular in the technology field, TV companies are still under tremendous pressure due to product production costs and market factors.

In fact, since April 2016, the price of LCD panels has continued to rise, resulting in the longest price increase in the history of panels, lasting more than ten months. As of mid-2017, the increase in panel costs over the same period has reached about 40%, which has directly led to the net profits of most TV manufacturers showing a downward trend to varying degrees.

If the rising cost of television production can be understood as a condition for the transfer of industry profits upstream, then the contraction of the entire consumer-end television market has become an important external reason why television companies are unable to reverse their downward trend.

According to data from the "2017 China Color TV Market Semi-annual Summary Report", in the first half of this year, the domestic color TV retail volume was 21.81 million units, a year-on-year decrease of 7.3%.

In addition, the online market, which is favored by emerging companies such as Internet TV brands, is also not optimistic. In the first half of this year, the online retail volume of color TVs was 7.68 million units, accounting for 35% of the market, which was also a decrease of 1 percentage point from the same period last year.

Faced with the current bleak predicament of the TV market, many TV company executives have said that the color TV market is under great pressure, especially the rising costs of raw materials and labor, which have put manufacturers' profitability under severe test.

This also forces the entire television industry to accelerate its transformation and upgrading and find new ways to reactivate the market.

Upstream profits bring transformation opportunities and new opportunities for the color TV industry market rebound

Obviously, for the TV industry, it is not a good thing for TV brands in the market not to make money. However, it is not a bad thing for downstream whole machine enterprises that upstream panel manufacturers are making money.

Take BOE as an example. In the first half of 2017, as the company turned losses into profits, it increased its R&D investment to 3.17 billion yuan. Not only did the number of new patent applications exceed 4,000, but the number of patent applications in the fields of OLED, artificial intelligence and big data also increased by 22% year-on-year, and the cumulative number of available patents exceeded 55,000.

It is foreseeable that the overall boost of panel manufacturers will help accelerate the release of potential in the TV industry chain and promote the accelerated transformation of the entire TV industry.

For example, in terms of basic display technology, OLED technology is expected to explode this year, and many TV manufacturers at home and abroad have begun to steadily deploy multiple OLED product lines.

New interactive methods such as AI artificial intelligence and voice recognition will help open up more new usage scenarios for large-screen TVs. In the upstream and downstream environment of joint upgrades of software and hardware, it will help domestic TV companies move into high-end markets with high profit margins.

However, as the potential of upstream manufacturers' technology is released, whether downstream companies can seize the new industry turning point opportunities has become a new test for major TV brands.

At least in today's market, there are still many brands that stick to LCD technology and rely on "selling logos" or even loss-making pricing strategies to seize the market. This has not only been proven to be a long-term solution for the healthy development of the TV industry, but it also raises huge questions about whether these companies can catch up with the opportunities of the new era.

There is reason to believe that along with the transformation and upgrading of the television industry, there will inevitably be another round of reshuffle of television brands. As the fittest survive among brands and new market growth space is continuously discovered, the turning point of the predicament of television companies may be just around the corner.

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.