Japanese electronics makers are increasingly focusing on high-value added products, such as high-definition 4K TVs, to bolster their TV businesses.
In the domestic flat-screen TV market, there has been a vicious cycle in which inexpensive overseas products led to falling prices, hurting Japanese makers’ profits. Now attention is on whether this new strategy centering on high-value-added products will succeed.
On Tuesday, Sony Corp. unveiled its new Z9D series of 4K TVs offering crisper contrast and capable of broadcasting high dynamic range (HDR) content, which has an even higher resolution than existing 4K content. This series uses Sony’s latest backlight technology, and the manufacturer’s asking price for the 100-inch model is JPY 7 million, or $67,200 (roughly Rs. 45 lakhs). Sony expects to start accepting orders for this TV from late November or thereafter.
In the fiscal year ending March 2015, Sony’s TV business recorded its first operating profit – an indicator of its core business performance – in 11 years. According to a Sony spokesperson, the main driving force behind this turnaround was “narrowing our target customers to people seeking value-added products.”
Panasonic Corp., another maker whose TV business had been awash in red ink, has pushed ahead with structural reforms, including withdrawing from TV production for China, where sales were poor. It has switched to a strategy revolving around high-added value products, with 4K TVs as the centerpiece. Sales have been solid, and in the fiscal year ending March 2016, Panasonic’s TV business turned its first profit in eight years.
4K TVs have surged in popularity in Japan. In fiscal 2015, around 650,000 units were sold, and the figure is forecast to reach 1.3 million units in fiscal 2016.
However, prices of high-value-added 4K TVs are already starting to fall. A growing number of products are selling at affordable prices, with a Chinese manufacturer selling 50-inch 4K TVs for about JPY 100,000 ($960).
According to market research company BCN Inc., the average price of a 4K TV dropped from JPY 475,000 ($4,560) in July 2013 to JPY 166,100 ($1,595) in July 2016.
8K broadcasts, which are even higher-definition than 4K, will start before 2020, when the Tokyo Olympic and Paralympic Games will be held. Expecting this will increase TV sales, Japanese makers will continue to bring high-value-added products to the market, with the aim of boosting their popularity and preventing them from falling into a high volume, small profit situation.