Tuesday 18 August 2015

Is The Smart TV Running Out Of Steam?

Is The Smart TV Running Out Of Steam

Mark Pickavance looks at the modern TV, and wonders if the concept has run into a brick wall commercially

As still a regular viewer of TV, I’m happy to accept that I’m part of a shrinking demographic. For example, the notion of a significant portion of the country sitting down at Christmas for a communal TV experience is one of historical interest, but far from a current reality. However much those in the TV industry make Canute-like protestations, the era of classic network TV is dead, buried and unlikely to be participating in a zombie apocalypse.


With viewing habits changing so radically since broadband internet became a staple of homes, there was bound to be an impact on the technology we use to digest the content and, having seen the dramatic conversion from old cathode ray tube technology to LCD, makers of the once-humble TV have since advanced to smart TVs in the hope of keeping sales healthy. The problem is that all their attempts so far have failed, so is the era of the TV coming to an end?

Success... Then Failure


The very first LCD display I saw was one made by Sony. It was owned by a colleague who paid more than £1,000 for a panel that offered a resolution of only 1280 x 1024 and was 11” diagonally. I wondered at the time when they’d be bigger and more affordable; eventually those things happened, but then the real trouble started.

It’s easy to forget now that the early LCD panel days were fraught with production problems for their makers, who ended up binning as many as 95% of the screens that came off their production lines or selling many with a limited number of visible faults. Eventually these issues went away, as manufacturers refined their processes, and found ways to deliver acceptable yields and screens that came without any dead pixels. Once over that hurdle, though, they soon realised that, as all brands had cracked making these things in volume, the price would plummet, and it did. While the market for new flat-screen monitors and TVs blossomed, the margins declined massively, creating huge losses for the likes of Sony – losses from which some are still trying to recover.

Much to the dismay of companies that had long-relied on brand kudos, with relatively little to differentiate between brands in terms of quality, price became almost the sole factor that drove sales. Thus, in a desperate attempt to create a premium market, and the greater profitability that offers, makers started to introduce new features that might make their screens more valuable in the eyes of the buying public.

The first of these pushes came with 3D, but that wasn’t the last. As each new product season brought more functionality (or gimmicks, if you prefer), the prices still dropped, however, as buyers continued to ignore everything but price.

Seemingly ignorant to what the market was telling them, though, TV makers stormed ahead with 3D and other technological gilding, despite there being little or no evidence that the buying public were keen on having these things.

3D


Anyone in the film industry can tell you the long and generally bad history of bringing that extra third dimension to the big screen. The current incarnation is at least the fourth attempt to convert cinema from 2D to 3D. Each time, however, the public has largely rejected it as being a gimmick.

While in recent years the major justification for using it seemed to be to charge more for tickets, even this ploy is now finding people choosing 2D by preference. A dozen reasons could be cited as to why 3D hasn’t become the chosen viewing experience for many, but the critical ones are that few films are really enhanced by seeing them in that format, and for those who don’t have vision that meets the technology’s requirements, it just doesn’t work.

The cumulative effect of these hiked ticket prices, and the converted movies originally shot in 2D but poorly post-processed in an attempt to cash in, was that studios and cinemas found themselves in a situation where the concept got itself a bad name. Indeed, anecdotally, people started to go out of their way to see the film without glasses or the headache they can induce.

Translating this to TV, the technology is much the same, if not slightly better, but the problems are much the same. Those interested in promoting 3D on TV saw it as a means to get the public to pay more for existing services, but for the most part they weren’t prepared to do that.

Pushed initially for sporting and live performance and then for distributing cinema content, the amount of 3D material actually declined as time went by. Unlike HDTV, where the number of channels and amount of content quickly expanded, the number of 3D channels dwindled to almost nothing in the space of a few years.

One of the big supporters of 3D sports broadcasts, ESPN threw in the towel and pulled the plug on its 3D channels as early as 2013. In June, Sky finally closed its last dedicated 3D channel, moving what content it will offer going forward to its on-demand services.

The reaction of those who market TVs was swift. One year 3D was the headline feature in new products, and the very next it wasn’t even mentioned.

These days most TVs that are greater than 40” support some kind of 3D, but we’d wager most of those bundled pairs of 3D glasses are destined to gather dust rather than be used by the owner. Alongside the enthusiasm for the technology, and the content that makes it worth having, the price premium for 3D has vaporised too. I’m sure 3D will be back soon, though, even if it patently doesn’t deserve to be.

Smart TVs


Based loosely on the success of the Apple TV device and hardware like the Roku, TV makers saw an opportunity to ride the wave of a streaming revolution in content viewing. The problem with what they came up was that it embodied the ethos of the TV makers: every man for himself. Because of this, there wasn’t a single platform, and therefore no chance uniformity in the apps or services.

Samsung built its smart TV offering around Tizen OS, whereas LG used webOS and Panasonic used its own ‘Veira Cast’ and even Firefox OS. Users buying a new TV were forced to learn a new interface each time and hope (or research) that the streaming services they used were supported on whatever new platform they opted for.

What transpired was that, while most people realised the value of having these new video services available in their living rooms, they turned to dedicated hardware to deliver them – kit such as the aforemention Roku and Apple TV, Amazon Fire TV, Google’s Chromecast or Android TV boxes. These allowed them to relocate the viewing to any display with a HDMI port in seconds, rather than have to replace all their TVs.

What didn’t help was lots of smart TV reviews that complained about the poor performance of the TV-based systems, and how they would crash mid-episode or forget all their settings at every update. Owning a Samsung smart TV, I can attest that these issues aren’t entirely resolved yet, even if some of the functionality does work acceptably.

What TV makers hadn’t really considered was that not everyone sitting in a lounge wants to see one among them get Facebook updates over the top of a show or other types of social media proliferations. Eventually, the arrival of cheap Android tablets meant that those watching the TV could dip in and out of their social interactions without monopolising the TV or annoying those around them.

These points, coupled with the initial price premiums asked for ‘smart’ variants, largely consigned the idea to the also-ran category. Only now that almost all TVs have these features have the numbers started to increase. It’s also been calculated by researcher NPD In-Stat that more than 50% of the smart TVs in the USA aren’t even connected to the internet.

The fact that, even with no price premium to speak of, that smart TVs are only just crossing the 50% of volume sales says volumes about how poorly this concept has been in connecting to customers.

Curved Displays


Having failed to wow the public with 3D or smart features, a number of brands decided to take on the evil of perspective, as experienced by any creature with an optical sense system. The whole thrust of curved displays seems odd, though. As humans with stereo vision, having things get smaller as they get further away is something we instinctively learn to cope with from early childhood. For the technically minded, there are actually two distortions occurring when we look at things, only one of which is the created by perspective. The other, as researched by Hermann von Helmholtz in 1867, is that the optics of the eye introduces a small amount of what’s called ‘pincushion’. This is caused by image magnification increasing towards the edge of the visual frame, causing the centre to slightly bulge. The problem with addressing that effect is that how much it occurs is specific to each person (and even each of their eyes), so making a curved screen to counter it is practically impossible.

What TV makers did instead was imagine the viewer is sat at a focal apex and then curve their screens so that the edges are the same distance from the viewer as the centre. To experience any benefit of this, however, the viewer or viewers need to be a very precise distance away from the screen, and the number of people who can sit in that sweet-spot is low. Possibly a close couple, neither of whom has been eating garlic recently. What’s more, there is also no vertical curve, because that would be outrageously expensive to make, so the effect is only in a single plane.

The arguments made by TV makers as to why this is better are quite funny if, like me, you tend to apply any great analysis to them. One of them is that it give you more a ‘theatrical experience’, even if the vast majority of cinemas don’t have curved screens and most of the audience isn’t sitting at the vertical or horizontal midpoint of the screen. However, if you live alone, sit three feet from your TV and remember a cinema experience that virtually nobody born in the past 50 years in this country will recall, then the curved TV is definitely for you.

Curved TV were the big product launch of 2014 for many brands, but they still only represent a minority of TV sales. A quick look at the TV section of a high street vendor revealed that of the 160-plus TVs that they sell just 32 were curved; 21 of those were made by Samsung, five by Panasonic, four by LG and just two by Sony.

If Samsung hadn’t convinced itself that eventually people will demand a perspective-free world, this concept would be on the same footing as 3D.

Curved screens seemed ‘high tech’ but deliver very little that those who buy televisions actually want.

4K


I’ve reviewed a few 4K monitors in this magazine, and they can be exceptionally impressive for working on detailed graphics or high resolution images. They also represent the latest push from the TV makers to get people to upgrade perfectly good, working TVs to something new.

Again it’s Samsung leading the charge, with 28 mainstream products followed by about half that number by Panasonic, Sony and LG. However, there are numerous problems with 4K that, in many respects, mimic the early days of HDTV, where the TVs appeared to be a solution in search of the problem.

The major difficulties in this case are the almost complete lack of 4K content with which to show off your new purchase and the bandwidth issues in bringing it to a set through existing pathways. There are some sources for 4K streams, like Amazon, but the selection is very limited and requires a very good broadband connection to maintain a smooth frame-rate.

There are other problems with it from both a technical standpoint, and also in the public perception of the technology: that it is relatively difficult to differentiate from HDTV in many circumstances. The problem that TV and monitor makers are starting to confront is the limits of their customers’ ability to see the difference in a way where it’s obvious if they’re watching 4K and not HDTV.

The best a human eye can generally see is about a 0.5 arc minute (an arc minute being a measurement equivalent to 1/60th of a degree or 1/21,600 of a circle: tinyurl.com/oetjucy) and only really in the centre section of the eye. On a HDTV you need to sit about 1.5 times the diagonal measurement away to get the full effect (very approximately) or 63” from a 42”. With 4K you’d need to be twice as close to see the detail on the same size of screen – or less than three feet away! The answer is obviously much bigger screens. However, the number of homes in the UK where you could reasonably mount a 70” (or bigger) TV, or where the residents could afford to shell out the money for a TV that big, is limited.

It’s worth noting that when HDTV arrived many of people complained they couldn’t see the difference between it and standard definition, so it’s not like there isn’t some precedent here. A friend of mine was one of those people, and I recall that she bought a 42” TV and placed it in room where the seating was at least 15ft from the TV. At that range you wouldn’t be able to tell the difference unless you’re a bird of prey.

Because of all these factors, 4K TVs that are less than 55” are mostly senseless and useless, and until they actually get sufficient content they’re not much use whatever size they are. Other potential pitfalls have emerged in recent months for those who got on the 4K bandwagon early, to do with the frame-rate that these displays can handle.

In an interview that Chris Jones, Sky’s chief engineer of broadcast strategy, did with IBTimes UK, he outlined the reason why these TVs will not have what it takes to accept sports content on 4K streams:

“If you bought a set in 2013 and early 2014, then sorry, it won’t do sport,” he said. “It’ll only go up to 25 frames per second. If you bought a set last year, even a set in the sales this summer, this spring, then I’m sorry, it won’t do High Dynamic Range, which gives you better, brighter pictures.”

It’s Sky’s intention to broadcast sport at 100MHz in 4K, and those early designs that can’t handle that won’t be able to present those shows. However, at this time, it looks like BT will launch its 4K sports service ahead of Sky’s anyway.

Some manufacturers have held out an olive branch to their customers lacking 100MHz frame-rates in their TVs, though mostly in order to beat them a little harder. Samsung has announced the UHD Evolution kit, an enhancement for some of its 2013 designs that will bring the setup to muster, but set you back £400 for your trouble. The real kicker in this, though, is that until Sky and BT release detailed specifications for their services, it’s far from certain that this pricey upgrade will solve sports viewing issues at all.

The 4K debate has become a typical technological chicken-and-egg conundrum: it won’t take off if there isn’t anything to watch, and without many people having the hardware, there’s no desire among broadcasters to bear the cost of providing many streams to see.

4K is already looking like a long term prospect. The truth is, though, that it will probably only move forward with any real momentum when the TV makers stop making 1080p panels for good and people are forced to take up the option.

Sales Or Profit... But Not Both


Having outlined the multiple attempts that TV makers have made to inject some pace into TV sales, it pays to remind ourselves just how disappointing, at best, the results have been. To put it in perspective, the global market for TVs is hovering around 200 million units, and Apple will sell more iPhones than that alone this year.

LG Electronics, a major smart TV brand, posted a massive plunge in profits in the first quarter of 2015. Net income was just $44.91 million – down approximately 59% on the same period in 2014. LG makes lots of electronics, thus the albatross hung around the neck of LG’s home entertainment division, where sales declined 18%. That resulted in a $7m loss for that part of the company where the previous year it made well over $200m in profit. When releasing these hard numbers, LG projected that with sufficient marketing it could improve them, however: “A stronger focus on 4K ultra-HD and OLED TV marketing and increasing demand in Asia and North America for all TV products are expected to improve the outlook for the LG Home Entertainment Company in the second quarter.”

However, logic surely dictates that, spending more money on advertising to sell the same number of TVs next year will lead to a reduction in the profitability of these items, however you rearrange the desk chairs.

LG is Korean, but the Japanese TV makers are having an equally torrid time trying to compete with it and their Chinese rivals. Both Sharp and Panasonic admitted to a steep drop in sales at the end of 2014, and their intention is now to focus on home market sales where they could make profit.

Sharp has already curtailed TV production in Europe and signalled an intention to reduce the range of products it markets in the US. This comes after it lost a whopping $255 million across the year, having previously predicted a similarly large profit. A downturn of over half a billion dollars can’t easily be ignored, but it’s disturbing to consider that compared with Panasonic, Sharp is actually doing rather well.

Falling sales of Panasonic TVs contributed to the seventh straight year that this part of the company posted a loss, causing it to stop making them altogether in China and seriously consider withdrawing from the US market.

Toshiba reported a 8% drop in sales, while Sony confounded expectations by making a small amount of money. More people would be impressed by Sony’s success, though, had it not lost more than $7 billion through its TV manufacturing endeavours over the past decade.

What’s interesting is that global sales of TVs actually went up in 2014, though they’re expected to be flat in 2015 and actually drop in 2016. That suggests that demand is generally weak, could easily be scuppered by any regional economic downturns and, for most of those involved, only borderline profitable.

Final Thoughts


Thinking deeply about TVs in general has made this writer realise that, while we wanted large flat displays for at least 40 years before they became a reality, when they eventually turned up, TV viewing had changed dramatically and the need for them was suddenly in question.

The viewing evolution, alternative personal devices like tablets and phones, the failure of new features to engage the public and too many brands are making TV manufacturing a risky business.

Makers now have very fine margins on even the premium devices, and yet the low pricing of these devices still isn’t driving TV viewing up. Possibly more problematically, the justification for the value added parts that TV makers seem inclined to add appears to have little or no impact on sales. Buyers are generally looking for size and a build quality, but at a price. Enticements like 3D and smart functionality aren’t even secondary considerations.

The elephant in this lounge, though, is VR technology. That will see monitors and displays come in head-mounted solutions, where the apparent scale of the presentation is a configuration choice, not a cost implication. If we start watching streamed shows and live broadcasts through these devices, then the market for TVs, smart or otherwise, might dry up remarkably quickly.

As for the current crop of branded products, they’re just saving you the cost of a Roku or Chromestick, usually with poorer performance and more limited choices. With live channels on interactive catch-up and streamed ones inherently rewatchable, the need for live recording is largely moot.

So, when you look through the feature set of many TVs, the order that they’re given precedence by the makers tells a compelling story. 3D usually isn’t mentioned, smart TV functionality is relegated to the middle of the pack, and (unless the brand is Samsung) curved panels aren’t considered even vaguely mainstream.

What’s usually centre stage is image quality and colour representation. If you wanted those specifically, you’d go for OLED if it wasn’t so relatively expensive as a technology.

Given the billions splashed on the various enhancements and their marketing and how badly most of these have played with the public, you’d not be unreasonable in thinking that the industry would be keen to develop a radical new strategy. Yet, I can’t help conclude that TV makers are small furry creatures caught transfixed in the headlights of a streaming eighteenwheeler, reliant on the continuation of viewing habits formed in the 50s and 60s that probably don’t have a long-term future. 4K isn’t likely to change that, as neither 3D nor curved display did before it.

If those manufacturers can’t change, then they’re likely to suffer the same fate as many fluffy things have in the headlights of fast moving heavy goods vehicles over the years. There is a saturation point for big TVs in the world that we’re probably approaching, and after that point those making them could easily go out of business.