Japan TV – A glimmer of hope

I have been very damning on the outlook for Japanese Consumer Electronics, but have I been slightly too hasty?

• Japanese Consumer Electronics looks to be in a downward spiral to inevitable doom but 4K televisions may offer a temporary respite.
• At the CES show this week, 4K televisions are the belles-of-the-ball and it is the Japanese who are making the most noise about them.
• To date I have considered 4K as a gimmick but there is a possibility that they might take off.
• Should this happen, then I think that they should offer a chance for the Japanese TV makers to get some share back at reasonable margins, albeit temporarily.
• How can I make such a crazy forecast? The rationale is the same as when HDTV was the big new thing almost 10 years ago.
• At that time almost all of the available content was only available in standard definition and an HDTV needed to use electronics to convert the picture to high resolution in order to display it.
• At the time the Japanese had a real edge in the electronics to do this and as a result the picture quality of SD signals on a HDTV was far superior on Japanese TV’s compared to anyone else’s.
• This allowed the Japanese to charge premium prices and to make positive margins as well as maintain a bloated cost base.
• The standard now is HD and the signals need to be up-scaled to 4K to be displayed on a 4K TV.
• The art of up-scaling has almost died out but if 4K is to be the next standard to which everyone migrates to over a 10 year period, then there will be demand and recognition for high quality up-scaling.
• If the Japanese have held onto their edge in up-scaling technology then, their 4K TVs are likely to be seen as superior when it comes to picture quality and hence pricing power will return to the Japanese.
• At the show this week everyone is demonstrating the televisions with native 4K signals so we have no idea at all how good any of them will be up-scaling.
• Frankly, it is not going to matter until these devices hit the shelves at a price point within grasp of consumers but it offers a glimmer of hope.
• That is going to be a little while as large screen OLED TVs (which these all are) are currently pricing at $10,000 which is about 5 times would it should be to see mass adoption.
• If the Japanese can hang on that long, they might just see a temporary respite from the ravages of the Koreans who I still believe in the long-term, will end up carving the market up between them.