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4K TV will be in half of U.S. homes by end of 2019

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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.

In other words, the number of U.S. homes with 4K viewing capability – and commensurate bandwidth demand – will all but double in two years.

4K TV sales growing, with 20% U.S. market share in sight

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About three-quarters of all large screen televisions – those more than 50 inches – that were sold last year in the U.S. (and worldwide) were 4K, ultra-high definition (UHD) sets, according to Paul Gagnon, the director of tv sets research for IHS Markit. By 2018, all but 100% of big screens sold will be 4K-capable. In raw numbers, the Consumer Technology Association – the trade association for the U.S. consumer electronics industry – estimates that more than 80 million 4K sets will be sold worldwide this year, and next year the total will be in the 100 million unit range.

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.