Tablets and the Decline of TVs

Tim Bajarin / November 8th, 2013

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.

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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.

Screen Shot 2013-11-07 at 4.46.17 PM

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.

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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.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Glaurung-Quena

    What counts as a tv? For people who get their video over cable, the receiver in their TV never gets used… And for people who pump their TV audio through speakers, the audio on their TV never gets used either, so they can just buy a computer monitor instead of a TV. Obviously this doesn’t work if you’re buying a TV bigger than you are, but for an old-school TV that sits unobtrusively in a corner, it works.

    When our 20 year-old CRT TV finally died, I was very vexed to discover that the only flat panel TVs I could buy in stores were either far too large to fit in our old media cabinet, or else were significantly smaller than our existing 20″ CRT (I could get a 20″ widescreen LCD, but that would have delivered a much smaller picture than our 4:3 CRT). In the end, I bought a couple of used 20″ 4:3 IPS LCD computer monitors (one extra in case it dies suddenly) that had s-video as one of their input options, hooked up the cable box audio output to some computer speakers we had lying around, and had a perfectly good “TV” in the exact size we wanted at a fraction of the price of getting a new giant TV and a new cabinet to put it in.

    A few months later we ended up cancelling cable altogether, but that’s another story.

    • FalKirk

      “What counts as a tv?” ~ Glaurung-Quena

      That is a great and thought-provoking question. Gave me a whole new way of looking at the issue.

  • Matang_Lawin

    Tim, This being the case.. what is its business impact with Apple releasing its rumored Apple TV by 2014? Or will Apple TV remain as a “hobby” for them?

    • Tim Bajarin

      For Apple, the TV is just another screen in their eco system of devices. The heart of their program will be the Apple TV external box that will be tied closely to the iPad and iPhone and they will nail the concept of viewing your content anytime anywhere on demand, viewing that is enhanced by contextual content and probably uses Bluetooth low energy iBeam sensors to deliver that while in front of the TV. As for the TV itself, you can bet it will be a 4K TV with all of the Apple TV features built in, which will be an optional product for those that want a fully integrated Apple TV system.

  • Mauryan

    With YouTube, Netflix, Hulu etc, I seldom watch TV. All the news I need are available on line. What they broadcast as news in TV channels is opinions and sensationalized propaganda. I get to watch what I want, when I want it and not when they are broadcasting. The only time I go to the TV is during the finals of basketball or football. Sometimes I watch YouTube or Vimeo through Apple TV on the big screen. But it is seldom on like it used to ten years ago. I can definitely see the change. My TVs have lasted beyond their predicted lifetime because they have been off most of the time.

  • seven

    Hi Tim, Thanks for the analysis. As more and more network made their content available via their apps, this definitely would accelerate the declines in demand for TV’s.

  • kongqueror

    The very same thing is happening in my household – one big screen TV for communal media consumption and tablets for the individuals. Curiously though, the experience of watching a movie lazily on the couch with the wife and kid with popcorn and drinks still beats the intimacy provided by a tablet. As long as there are households, the TV will not disappear.

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