Home Appliance Industry Faces Setbacks in Premium TV Strategy to Defend Profitability

Red Light for Profitability in Home Appliance Industry Ahead of Next Month's 'Shopping Season'
Premium Large TVs Expected to Struggle with Sales Amid Consumer Slowdown
Double Burden with Strengthened European Energy Efficiency Standards

2022 Neo QLED 8K

[Asia Economy Reporter Park Sun-mi] A red light has been lit on the premium strategy in the home appliance industry. Although companies are betting on premium large-screen TVs with high profit margins to defend profitability, consumers are reluctant to open their wallets due to the weakened economy, compounded by the strengthened European energy efficiency standards.

On the 22nd, the home appliance industry is tense that the environment, which could sharply boost premium TV sales in the fourth quarter with events such as the Qatar World Cup next month, Black Friday, and Christmas, might be diluted by the issue of strengthened European energy efficiency standards to be implemented from March next year. The TV sector, whose profitability is deteriorating due to the sharp rise in raw material prices, has set a strategy focusing on premium TVs with high profit margins, but the common specs of premium TVs?large screens and high resolution?have encountered the obstacle of sales bans in Europe. The home appliance industry is in a position where it must sell as many premium products as possible in the fourth quarter before the TV market’s off-season begins again in the first quarter of next year.

An industry insider said, "The performance of 8K is superior to 4K, and the implementation of ultra-large screens and ultra-high resolution requires more energy consumption, but to launch products that meet the European energy efficiency standards starting in March next year, the strengths of 8K that have been marketed so far will be significantly diluted. In a situation where sales are already failing to meet expectations due to consumer recession, another obstacle has emerged."

In fact, as global economic uncertainty grows and consumption slows down rapidly, sales of 8K TVs are failing to meet initial expectations. Market research firm Strategy Analytics (SA) had optimistically predicted that 8K TV sales, which were only 350,000 units in 2020, would reach about 1 million units last year and soar to 4 million units this year, but actual sales last year remained at the 350,000-unit 'standstill' level. Another market research firm, Omdia, also forecasted that the 1 million unit sales milestone for 8K TVs might only be reached around 2023.

For the home appliance industry to defend profitability, premium TVs with higher price points must sell well, but the overall TV market downturn is becoming increasingly bleak. Taiwanese market research firm TrendForce analyzed that global TV shipments in the third quarter of this year were 51.39 million units, down 12.4% from the previous quarter and 2.1% from the same period last year. Even in the fourth quarter, which has special demand from the World Cup, Black Friday, and Christmas shopping, shipments are expected to be around 56.96 million units, a 3.5% decrease compared to the same period last year.

Given this situation, global TV shipments this year are projected to be 202 million units, a 3.8% decrease from last year, marking the lowest level in the past decade. Due to demand contraction caused by inflation and economic recession, next year’s TV shipments are also expected to fall to around 201 million units, lower than this year.

This content was produced with the assistance of AI translation services.