Fears that Internet routers and switches will melt under an onslaught of 8K-enabled cord cutters can be put aside for a few years, according to projections released by the Consumer Technology Association (CTA). But the number of U.S. households with 4K screens will continue to grow rapidly, and that will be problematic enough for broadband service providers: 25 Mbps download speeds will be the minimum needed to serve the typical U.S. home.
8K is a big screen technology. According to Steve Koenig, CTA’s vice president of research, those sets are in the 70-inch and up range, which is more limited market – not everybody wants something that big in the living room (although the same could have been said about 40-inch to 50-inch screens a few years ago). He projects half a million 8K screen shipped into the U.S. market in 2020, which is a drop in the bucket, particularly considering that many, if not most, of those will be used for commercial and industrial applications.
On the other hand, CTA’s projections show 4K sets hitting a steady state shipment rate in the upper 20 million annual unit range for the next three years, climbing to 32 million by 2023. Using the same, back of the envelope calculations that I used a couple of years ago, that means that about half of U.S. homes have 4K screens now, and that share will climb to at least three quarters by the end of 2021. We’re to the point where 4K resolution is the market standard, and it’ll soon be almost as hard to buy anything less as it is to find a black and white TV set now.
4K video needs a steady 15 Mbps stream to function in real time, and to have a fighting chance of getting that bit rate consistently requires service specced at 25 Mbps download speeds or better. That’s the minimum set for rural homes by the federal agriculture department, and it’s the FCC’s de facto minimum as well.
The consumer adoption rate of 4K television sets blew past last year’s expectations, climbing to 25% of U.S. households by January 2018, according to the Consumer Technology Association (CTA). My rough estimate that ultra-high definition 4K sets would be in 20% of U.S. homes by the end of 2017 was low. The adoption rate grew even faster, amidst falling prices, increased content availability and 4K’s status as the default standard for large screen TVs (50 inches and larger).
CTA isn’t releasing a household penetration projection for 2018, but its U.S. Consumer Technology Sales and Forecasts (January 2018) report predicts that 22 million 4K sets will be sold in the U.S. this year and 25 million in 2019 (versus 17 million in 2017). That would imply that the 4K adoption rate will continue to accelerate in 2018 and 2019.
There are 120 million homes with televisions in the U.S. A 25% adoption rate translates to 30 million with at least one 4K set. If all 22 million of projected unit sales ended up in homes without a 4K set, then the adoption rate would climb to 43% by the end of this year. But some of those sets will end up in homes that already have one – as replacements or second (third, fourth…) sets – and in commercial establishments.
Let’s do the same kind of back-of-the-envelope estimating as last year (which turned out to be conservative). Make a wild guess and say a fifth of sets sold will end up in existing 4K homes and another fifth will go to bars, offices and other businesses. That leaves three-fifths to add to the 4K universe, which would result in a 36% adoption rate at year end 2018, and 49% by the end of 2019.
Adding CTA’s numbers up, by the end of 2018, there will be something like 300 million 4K television sets in homes and business worldwide. We don’t have sales figures for 2016 yet, but in 2015 the U.S. accounted for about 20% of 4K sales. That share appears to be dropping, though. According to CTA, 4K sales in China have been accelerating and account for the largest chunk worldwide. But even if you discount the U.S. share by half – make it 10% – we’re still looking at something like an addressable universe of 30 million 4K sets.
If you make another back-of-the-envelope cut and say that about a fifth of those – 5 or 6 million – are used in commercial establishments or for industrial purposes, then the ballpark estimate is that within two years, 20% of U.S. homes will have 4K UHD sets.
That’s good news for the consumer electronics industry, which has seen falling television sales. CTA estimates that worldwide TV sales have slipped by about 20 million units since 2014 and the dollar value is dropping even faster, at more than 10% per year. A quantum jump in picture quality will be a good reason for consumers to replace HDTV sets that are still working just fine.