Chinese policy builds parallel demand for tech, broadband

by Steve Blum • , , , ,

4K televisions and home automation, two product categories that are particularly tied to broadband demand, grew significantly in 2015 and the trend is expected to continue into 2016, according to market research presented yesterday at CES in Las Vegas, by the show’s organiser, the newly rechristened Consumer Technology Association.

Home automation accounted for about 9 million units. The $1.2 billion in revenue that generated is an 18% bump over 2014.

On the other hand, CTA researcher Steve Koenig said it looks like 13 million 4K sets sold world wide – outside of China – in 2015. The 4K forecast for the world, again outside of China, is 19 million units in 2016, a growth rate just under 50%.

The real story, though, is what’s happening inside China. Koenig said that 29 million 4K televisions will be sold in China alone in 2016, bringing the global total to 48 million sold this year. In 2015, 27 million 4K sets were sold in China, an even bigger proportion of the global total. Part of the reason is undoubtedly due to economic growth simply making it possible for more Chinese households to buy televisions. Even if 4K sales represent a small fraction of the total, it’s still a lot in absolute terms.

“It’s a numbers game”, Koenig observed. But it’s also a matter of government policy.

“There’s a wish on the part of the central government in China to drive these technologies into the market”, he said.

It also hints at something about broadband availability in China. Even if the selling proposition were mostly about the status symbol, at least the promise of sufficient content has to exist for China to account for three out of five 4K televisions sold worldwide. It’s not just televisions that upwardly mobile Chinese are buying. They’re buying new homes, too. And when those homes are built, it’s also government policy to connect them with fiber.

Correlation doesn’t prove causation, but it does offer clues for policymakers to ponder.