In a state of disorder, can OLED become the savior of the TV industry?

As 2019 begins, the downward trend of China's television industry continues.

It may be difficult for the general public to notice that after experiencing the "demographic dividend cycle and policy stimulus cycle", China's TV industry is now facing the most difficult "internal development cycle". In this cruel cycle, there is almost no support and stimulation from external forces, and all growth depends on the efforts of the industry chain itself.

But it is not easy. Unlike the warming weather outside the window, China's color TV industry has frequently encountered cold weather in the past few years. The latest data shows that in the first quarter of 2019, China's color TV retail volume was 12.02 million units, a year-on-year decrease of 1.1%; retail sales were 34.9 billion yuan, a year-on-year decrease of 13.1%.

This figure is not surprising. The color TV market capacity fluctuates narrowly around 50 million each year, and the industry is very familiar with this.

In fact, not only in China, but also around the world, people's entertainment time is being eroded by various screens. It is an indisputable fact that the sales and quantity of the TV industry are on a downward trend. However, in recent years, the price of LCD TVs has continued to fall, and all links in the industry chain, such as channels, complete machine and panel manufacturers, are facing operating difficulties.

This is largely because when innovation in traditional LCD TVs reaches its peak, "homogeneity" is faced by almost everyone, and their "rational" choice based on limited game is, of course, price war.

But it is common sense that in the display industry, which requires a lot of development and equipment investment, overly fierce price wars are detrimental to the overall development of the industry and will fall into a vicious circle in the long run. Therefore, in the eyes of many analysts, the display industry can no longer quench its thirst with poison, but must change the rules of the game.

The two important aspects of changing the rules are technological innovation and improving consumer value.

1

Technological innovation is easy to understand. For example, the industry consensus is that OLED is most likely to become the next-generation display technology to replace LCD.

Looking back at the short history of OLED, the global OLED TV market has gradually matured since 2013, but the market growth is still slow. Since 2016, OLED TVs have broken through the technological critical point and the market has undergone a major leap: in the high-end market above US$2,000 last year, OLED TVs accounted for 36% in terms of sales; from a regional perspective, North America, Europe, and Japan rose to 35%, 48%, and 65%, respectively. In these places, OLED is almost equal to high-end TVs themselves.

In the broader Chinese market, although OLED sales are not as good as those in developed countries, similar to China's overtaking in other new technology fields, China's OLED TV sales have grown at an astonishing rate. Here are a few sets of data: Last year, China's TV market sold 47.7 million units, with a year-on-year decline in sales, but OLED sales increased by 47%;

According to the survey results of IHI, the Chinese OLED TV market will have a growth rate of about 110% in 2019; and the data given by Aowei Cloud Network is that China's OLED color TV will grow by 130% year-on-year in 2019, with sales of about 380,000 units, and it is expected to exceed 800,000 units in 2020; at the same time, unlike the overall market downturn in Q1, JD.com's sales data showed that JD.com's OLED sales in the first quarter of 2019 increased by 143% year-on-year.

In short, various data are cross-correlating: the increase in OLED penetration rate will become a breakthrough for the recovery of China's color TV market.

Of course, it might be worth mentioning here that the breakthrough paths left for OLED in the future are far more than just the single direction of color TV.

The industry has now reached a consensus that in the era of the Fourth Industrial Revolution, along with IOT and AI, there is also "DOT (Display of things)" as their "external display" - from now to the future, displays will be everywhere and become the most important communication tool between people and people, and people and machines, and OLED is the best carrier of DOT.

This is not difficult to understand. Since OLED has no backlight due to its self-luminescence, it can be freely integrated with different product forms and spatial scenes.

Without talking about products you may know, let’s take a recent example: LV.

Just a few days ago, the Louis Vuitton Cruise 2020 Early Spring Resort Collection was officially launched in New York. The most eye-catching design of the entire conference was undoubtedly the new bag item equipped with an OLED screen. The intimate touch of retro modernity and the latest technology also allowed the audience to touch the imagination space of the era of "everything is displayed".

Through the embrace of OLED and LV, it is not difficult to find that when this display technology was first born, its original genes have already broken away from the constraints of traditional display forms. In fact, in addition to the wallpaper, self-sounding, transparent, curved and other screen forms that have already been launched, OLED will play a greater role in various scenarios such as automotive, wearable devices, commercial displays, and homes in the future.

In the future, everything is revealed.

2

Of course, if we shift our perspective from the future to the present, the technological benefits of OLED TVs will also allow manufacturers and channel partners to obtain higher benefits.

As mentioned earlier, not long ago, the lack of technology as a core link affected the entire color TV ecosystem. After a brief game, manufacturers and channel dealers gradually reached a consensus that the high added value of OLED is a key factor in promoting win-win cooperation between upstream and downstream of the industrial chain.

It is easy to understand for manufacturers. They know very well that in the quagmire of price wars, if they only use sales and profits to exchange for market, it is tantamount to degenerating into a "sunset industry". If there is anything that can be called a barrier in the future, the most likely one is technology itself.

So we see that mainstream manufacturers such as Skyworth, LG, Konka, Philips, Sony, Changhong, Hisense... have gradually joined the OLED camp. Currently, 15 brands in the world have launched OLED TVs (in 2014, this number was only 3) - after all, OLED's contribution to traditional TV manufacturers in improving product structure and enhancing profitability has been seen by other friendly companies. Don't forget, in any business field, as long as there is full competition, convergence is almost inevitable.

From the channel dealer's side, offline, many TV channel dealers will spontaneously set up OLED areas in order to attract consumers, and the store image continues to develop in a high-end direction.

More importantly, channel vendors are beginning to promote OLED online. Not long ago, LGD, an upstream OLED panel manufacturer, jointly established the JD OLED Matrix with JD.com and seven major OLED TV manufacturers, and opened a unified OLED online store on JD.com, which partially opened up the entire process of the industry chain from technology to terminals, and attracted consumers to return to the big screen through JD.com's "Fun Opening" content, reigniting the hot trend of the TV market.

In my opinion, this is a belated greeting from online channel operators to OLED and the future it represents.

You should know that the proportion of online channel sales in China's color TV market has been increasing year by year, reaching 47% last year. The biggest feature of online channels is that they allow consumers to more easily access rich information about products. However, in the previous price war, online channel operators, including JD.com, did not do much to promote OLED in a concentrated manner. Instead, they gave more promotional resources to some models that emphasized "cost-effectiveness", and information resources for high-end users were not released.

Obviously, this goes against the trend of consumption upgrading. Let’s break down the data. There are about 650 million TV sets in Chinese households, of which 300 million have a safe use cycle of more than 7 years. Among these 300 million, 120 million are the earliest LCD TVs launched on the market, which means that their buyers are the first to try out the latest technology at that time.

Today, when display technology has completed an iteration and the TVs in their homes are showing signs of fatigue, channel operators are fully capable of converting these non-conservative users into OLED users by increasing promotional resources. You know, a major pain point of this round of consumption upgrades is that there are not enough ways and paths to provide more people with knowledge that matches the upgrades, which leaves many consumers relying solely on brands.

Online channel operators can activate more word-of-mouth conversion and technical recognition of OLED products by increasing the entrance to core resource positions, so that consumers, manufacturers and channel operators can benefit together.

Conclusion

In short, it is not difficult to find that if the entire color TV industry wants to achieve a value leap, it is inseparable from the win-win cooperation between upstream and downstream.

Today, in the face of common interests, both brand owners and channel operators regard OLED as their most promising dawn. In this process, the entire industry will gradually bid farewell to the disordered state of price wars.

And I believe that as the OLED ecosystem integration capabilities become more and more perfect, OLED TVs may be at the dawn stage before a large-scale outbreak.

Wait for good news.