08.09.14

Letter from America: UHD/4K in China Will Drive the Market Worldwide

Michael-Heiss

By Michael Heiss, HiddenWires. Yes, I know, my monthly musings are supposed to be a 'Letter from America', but in service to transpare...

Michael HeissBy Michael Heiss, HiddenWires. Yes, I know, my monthly musings are supposed to be a 'Letter from America', but in service to transparency, this month's letter was written in China. Or, to be more precise, somewhere at about 10,000 meters above China and the Pacific Ocean, as I return home from a business trip to the Middle Kingdom. You may well ask what the relevance is, particularly with regard to UHD/4K, or, with CEDIA EXPO also a week ahead, whether this should instead be a Letter from Denver. When you look closely, the reality is that all of these things are more intertwined than one might think. As we approach EXPO, and soon thereafter, the start of what we will politically correctly call the 'selling season', 4K will be a hot topic in many minds. Be it the popular or business media, the enthusiast online forums, manufacturer/supplied pitches and even within your own staff, the questions are inevitable: "Is 4K/UHD really going to make it or will it be 'another 3D'?' 'Why should people buy a 4K set when there is no software to speak of now, and still not even that much over the horizon?' 'What is the real benefit to the end user?' Nothing really new here, as these questions have been swirling around 4K since the first sets went on sale. Call it a 'busman's holiday' if you will, but whenever I travel, I try to check out the local electronics retailers to see if there is anything that might help me spot or explain a trend. During a trip to China back in May, as well as on this most recent journey, I definitely saw some things that might help answer some parts of the UHD/4K puzzle in the UK, EMEA and the Americas. Not to put the cart before the horse, but confirming what I have heard some pundits say, I will lay it out right up front: if UHD succeeds, it may in large part be due to the Chinese market. [caption id="attachment_6486" align="aligncenter" width="600"]In China, sales of 4K are '4King' amazing! In most major stores, each brand has its own separate display area such as this one from TCL. In China, sales of 4K are '4King' amazing! In most major stores, each brand has its own separate display area such as this one from TCL.[/caption] China Leads the Way Huh? Is your humble author a bit jet-lagged? Yes, there is a fair amount of theatrical movies and television programming in the US and elsewhere being shot in 4K. Yes, the distribution systems are making creaky starts with the likes of Netflix and YouTube on the streaming side, and Sony's servers and similar products being available in the US and elsewhere. Yet, while steady, UHD display sales are still slow. Compare that to China. There is little or nothing in the way of 4K content available in China. Even if content creation and distribution in China were on pace with what is being seen elsewhere in the world, there is no way to get it to market. Netflix in China? I don't think so! House of Cards or The Blacklist in 4K in China? Political issues aside, there would likely be little impact in the PRC due to language and content transferability issues. Yet, in spite of that, I haven't gone off the deep end. In a strange way, China will, and IS leading the charge to 4K in a way that will have global impact. Think back to what was reported at CES in January. As one might expect, all of the legacy Japanese and Korean brands such as Sony, Sharp, Toshiba, Panasonic, Samsung, LG, etc, had UHD sets on display. Yet on closer examination, the real 4K action was coming from, yes, Chinese brands: TCL, Hisense, Haier, Konka, Skyworth and Changhong, who, among a host of others, took the leap to show that they were not only in the game, they were going to do what it takes to win it. [caption id="attachment_6491" align="aligncenter" width="600"]Virtually all of the Chinese domestic brands such as Haier and Konka, now selling worldwide, are deeply committed to 4K as shown in these displays. They haven't forgotten about 3D, either. Virtually all of the Chinese domestic brands such as Haier and Konka, now selling worldwide, are deeply committed to 4K as shown in these displays. They haven't forgotten about 3D, either.[/caption] At least here in the US, the main Chinese brands offering UHD sets since CES have been TCL and Seiki, with the former being a major Chinese prime manufacturer of televisions, Blu-ray players and other products that you may already be buying from major global brands. Seiki is a more traditional OEM/ODM-based brand play. Both have used price, as much as anything, to establish their market presence, but price alone cannot carry the day in the long run. Better and Faster Pixels If we are all to be successful in getting our customers and clients to take up 4K, we will have to promote not just more pixels, but 'better' pixels and 'faster' pixels. The latter refers to 60fps content for better motion clarity, and the former is a combination of 'deeper' colour depth such as 10- or 12-bit colour, 4:2:2 or 4:4:4 colour sampling and perhaps even HDR (High Dynamic Range) for a better overall colour presentation. Moving a bit out into the future of UHD, we also have to look for sets that will eventually incorporate some or all of the combination of ingredients that comprise ITU Rec. 2020 which, when implemented, will further enable the delivery of the total package of 'more/better/faster' pixels. [caption id="attachment_6490" align="aligncenter" width="600"]The Chinese brands don't shy away from advanced video technology as evidenced by this 4K OLED from Hisense on display in a store in Shenzhen, China. The Chinese brands don't shy away from advanced video technology as evidenced by this 4K OLED from Hisense on display in a store in Shenzhen, China.[/caption] Oh, if only these things were all available in the flatpanel and projection displays we sell. For the most part, they are not part of either the content being distributed or the sets used to display it. To compound matters, unless you have an AVR or surround processor with the full 600MHz/18Gbps version of HDMI 2.0, anything above 2160/60p/4:2:0/8-bit cannot be passed through anyway. Selling UHD Today So what do we do? Wait for the 'real' version of 4K and hope that consumer demand doesn't disappear out from under us? Perhaps, but not a great idea. Do we sell UHD today on the basis of what is available today, promoting the benefits of 4K resolution and the combination of other attributes provided by advanced local-dimming LCD backlighting and higher IQ, if you will, in our so-called 'smart' TVs? Well, when it works, why not? [caption id="attachment_6487" align="aligncenter" width="600"]It isn't just the local brands that are selling 4K in China, as evidenced by this almost complete display area from Samsung in JiangMen, China. It isn't just the local brands that are selling 4K in China, as evidenced by this almost complete display area from Samsung in JiangMen, China. [/caption] Thinking about what I have seen on two consecutive trips to China along with reports from those who analyse the display industry, the answer is somewhere in between. Indeed, if the sales numbers are any guide, the Chinese brands and retail community will keep the 4K market going while we wait for the UHD holy grail. Sales of 4K in China How is this manifesting itself on the ground in China? The answer is actually rather simple. I visited a number of consumer electronics retail venues in both China and Hong Kong in late August and can clearly report that if you are purchasing anything other than a basic flatpanel set, the merchandising you are presented with would make you think that there really isn't anything else. For those who haven't gone shopping for electronics in China, almost everything in what we would call a 'big box' retailer is arranged by brand. Rather than a 'TV department' with the obligatory wall of sets as I might find here in the local Best Buy, you have what some describe as 'shop-in-shop' venues where each brand has a captive space and often their own salesperson. That makes it hard to do side-by-side comparisons but it does let each brand tell its own story in its own way. When I visited JiangMen in late April, there were 4K sets mixed in with standard HD, but construction was underway. On a return visit at the end of August the brand-specific areas were there, albeit in different locations. What was also different? The fact that in the newly redone venues there was not one HD set in sight. OK, maybe one or two, but unless you looked closely, you would think that 4K was all there was. Were they selling 4K sets? You bet. You might think that the high rate of sales for 4K sets is a function of pricing, but when converted from Chinese RMB or HKD$ to USD$, the differential one way or the other wasn't always that great in most cases. So why all the sales? First, have no doubts - these things are clearly being pushed almost to the exclusion of HD, particularly in larger screen sizes. Second, in most cases, the displays featured explanatory signage for the 4K/UHD concept and frequently touted features essential to UHD such as '60p', HDMI 2.0 and HEVC. Have you seen that in your local stores? Do YOU provide such explanations as to how these things are meaningful to the potential buyer? [caption id="attachment_6489" align="aligncenter" width="600"]Note that LG (left) and Sony (right) promote not only 4K/UHD, but also the signage promoting enabling technologies in their sets such as HEVC decoding and HDMI 2.0/60p. Note that LG (left) and Sony (right) promote not only 4K/UHD, but also the signage promoting enabling technologies in their sets such as HEVC decoding and HDMI 2.0/60p.[/caption] Thus, it is not any one thing that is making 4K a sales success in China, but a combination of ingredients helped, to no small extent, by what is clearly a desire on the part of the brands to push 4K/UHD regardless of whether or not there is any 4K software available. Conclusion At the end of the day, here is the reason why all of this is important to those of us outside of China: the high sales rate for these displays in the Chinese market will keep the factories going. High volume of sets for China will eventually lower the prices for the chips and panels; the same ones that go into the sets we buy and sell. Lower prices for all means more sales of 4K and fewer sales of HD. More sales of 4K/UHD displays will create demand for native 4K content both in terms of movies/TV shows and live events/sports. During the World Cup this summer, there were many 4K demos but no real public broadcasts. The combination of the high demand from China leading to lower prices everywhere and then a pull demand for content has me thinking that by the time the sports world focuses on Rio in 2016 for the Olympics, there will be considerably more 4K broadcasts, at least via cable and satellite, than we saw on both sides of the pond in 3D from the London games in 2012. Do you follow the lead of China and blindly sell UHD to the exclusion of HD? No, certainly not yet. However, if you effectively explain what UHD is, demo it correctly and be careful to detail the limitations of today's sets and '4K capable' audio products without scaring people away, you'd be surprised what you can do. [caption id="attachment_6488" align="aligncenter" width="600"]If you are going to CEDIA EXPO, look for the guy in the 'test pattern jacket' and use the not-so-secret password 'I read your Letters in HiddenWires'. That odd looking chap will be yours truly, and I would love to say hello! If you are going to CEDIA EXPO, look for the guy in the 'test pattern jacket' and use the not-so-secret password 'I read your Letters in HiddenWires'. That odd looking chap will be yours truly, and I would love to say hello![/caption] To those who think that 4K is going to be a flop like 3D was, after this trip to China I say think again. It is here and it is not going away. There is no better sounding board for the 4K/UHD scene than CEDIA EXPO, and I will be back with my Letter from America next month with my report. Michael Heiss is a technology consultant and journalist, CEDIA Fellow, CEDIA ESC 2 Certified, and US correspondent for HiddenWires. You can contact Michael by leaving a message below or via the HiddenWires LinkedIn group, and follow him on Twitter @captnvid. Comments on this article are welcome. See below.