Tablets and the Decline of TVs
Not long after the iPad came out I began to wonder just how much of an impact the iPad would have on the PC market. For 15 years, much of our research at Creative Strategies has looked closely at what we call the “screens of the digital lifestyle.” In the 1990’s it became clear that the two major screens for most people were the TV and their PC’s. With the introduction of the Blackberry in 1997, for some a 3rd screen was added to their mix and when the iPod came out many added this screen to their lifestyles too. Of course, once the iPhone hit the market the smartphone revolution was on and for billions of people today, the full feature phone or smartphone has become the most ubiquitous screen in our lifestyles next to the TV.
But since the iPad has come out it has become clear that this versatile screen has had a major impact on one of the major screens in our digital lifestyles, that of the PC or laptop. In 2010, the year the first iPad shipped, we were selling about 390 million PC’s a year world wide. When we end 2013, we will be lucky if we sell 300 million. Most analysts attribute this decline in PC and laptop sales to the role tablets have played in replacing the need for a PC or laptop for many people.
There is another market that it has disrupted too. I recently received a very interesting press release from IHS that gives their forecast for TV sales. Here is their perspective and numbers on the decline of TV sales.
TV Market Declines Again in 2013 as Sales in both Developed and Emerging Regions Decrease
Following a dismal third quarter, the outlook for global TV shipments appears even dimmer in 2013, with shipments now forecast to fall by 5 percent, marking the second consecutive year of decline.
Global shipments of televisions are set to slide to 226.7 million units in 2013, down from 238.2 million in the previous year, according to the latest Worldwide TV Tracker from IHS Inc. Every type of television will suffer a decline, including the major categories of liquid-crystal display (LCD), plasma TV, cathode-ray tube (CRT) and rear projection.
This follows a 7 percent decline in 2012, when shipments fell from 255.2 million in 2011, TV Systems Intelligence Service.
Shipments previously were expected to decline by 2 percent this year.
“A wide range of factors are conspiring to undermine television shipments in 2013, from economic weakness and market saturation of flat-panel TVs in mature regions, to plunging CRT sales in developing countries,” said Jusy Hong, senior analyst for consumer electronics & technology at IHS. “This is all adding up to a second consecutive year of decline for the television market.”
The dominant LCD TV segment will see shipments decline by 1 percent. The smaller plasma segment will suffer a sharp 27 percent decline.
The moribund CRT segment will decline by 40 percent. Meanwhile, the already infinitesimally minute rear-projection TV segment will dwindle to nothing this year.
The third quarter’s not the charm
Shipments in the third quarter of 2013 declined by 7 percent compared to the same period in 2012. While shipments rose 12 percent compared to the second quarter, this came during a time when TV set shipments normally grow as the Christmas season approaches.
With shipments also having declined on a year-over-year basis in the first and second quarters, the third quarter decrease ensured the global TV market would drop again for the full year of 2013.
Mature markets slow down
The biggest reason behind the shipment decline this year is the continuing global economic recession and maturity of the TV market in advanced regions.
The Western European and Japanese TV markets have been declining for three consecutive years since 2010. The North American market has been shrinking as well, dating back to 2011.
Emerging markets are underwater
Meanwhile, the TV markets in Asia-Pacific, Eastern Europe, and the Middle East and Africa, which are regarded as emerging regions, have also been contracting since 2011—but for different reasons than the mature countries.
In the emerging regions, CRT TVs are disappearing from the market, causing overall shipment to decrease. Because CRT sets are the cheapest option, this disappearance is having a major impact on overall sales. Low-income consumers in these regions often cannot afford more expensive LCD TV sets.
Television vendors are increasingly reluctant to sell unprofitable, cheap sets, such as CRTs, or LCDs that use the older cold-cathode fluorescent tube (CCFL) backlighting technology. This is narrowing the choices for cheaper televisions among consumers in emerging economies. As a result, consumers in these regions are holding off on television purchases until pricing for other types of television sets decline to affordable levels.
I am sure that their perspectives on the decline of TV sales is accurate. However, I would suggest that there is another reason too. I think the impact of the iPad and tablets as portable media players–and in some cases when using something like a Slingbox as an actual TV–that the iPad and tablets have played a role in the lower demand for TVs as well as PCs. We are hearing that for many who would perhaps buy a TV for their bedroom or even a kids room, an iPad or tablet is actually preferred.
People can lay in bed or sit in a chair and watch their favorite show via Netflix, Hulu, etc. And with more and more TV networks directly streaming their programs over the Internet or through dedicated tablet apps, these tablets will become more TV like in the future.
Homes used to have two or three TV’s. But more and more we are seeing a single large flat screen TV bought for the living room and the iPad or tablets are becoming the extra viewing screens for many that can be used anywhere in the house instead of putting another TV set in a dedicated room.
As for emerging markets, as the above report points out, vendors are pulling back on making cheap CRT’s in these markets and these folks can’t afford the flat screens TVs. So for many a tablet will serve as their PC and TV, something that has not really been factored into most PC and TV decline models yet.
Within six months of the iPad hitting the market, it became clear to many of us that it had the potential to disrupt the PC market and over three years this has proven itself out. I don’t think any of us saw its potential in disrupting the TV market back then, but if you look closely at the declines in demand for TV’s, it is hard not to consider the fact that the iPad and tablets are just as disruptive to this market.