• Global TV Shipments Down 6% in 2013 As Streaming Sticks Raise New Challenges

    These are highly uncertain times for global TV manufacturers. As IHS reported last week, sales of TVs declined by 6% in 2013 to 225.1 million units, following a 7% contraction in 2012, creating first ever back-to-back down years for the global TV industry. IHS pinned the blame for the declines mainly on market saturation and difficult economic times.

    To rebound from the doldrums, TV manufacturers are betting heavily on consumers upgrading to 4K TV and Smart TVs. 4K, or Ultra-High Definition TV, has significant challenges with content availability, price and picture quality differentiation it must overcome to go mainstream. Meanwhile, although the price premium for Smart TVs has shrunk, bringing them closer to conventional HDTVs, their value proposition is still not widely understood by consumers and access to online content is still very limited.

    In this already difficult climate, another challenge for TV manufacturers is now taking shape from a whole new category of devices: low cost streaming sticks.

    Google kicked the category off last summer with the introduction of the $35 Chromecast, a well-received device that Google executives have said has sold "in the millions." Then, earlier this month, Roku launched its own $50 Roku Stick, bringing along the 1,200+ channels of content already available to prior Roku devices. Now, if yesterday's report from TechCrunch is accurate, Amazon is on the cusp of releasing its own stick, that will almost certainly cost $50 or less. A key differentiator of the Amazon stick could be the capability to stream PC games, potentially putting it into competition with Xbox and PlayStation.

    Taken together, Google, Roku and Amazon are going to raise a huge amount of awareness for the streaming stick category.  As this happens, TV manufacturers are going to come under even more pressure because the incentive to buy a new set will be further suppressed. If you already own an HDTV, with just a small outlay for a stick, the utility of the TV increases dramatically - a whole world of online content becomes instantly accessible, plus games and quite possibly apps as well.

    Streaming sticks have a lot going for them, and Google's early success with Chromecast could well bring others beyond Roku and Amazon to the stick party (think Apple, Logitech, etc.). As this happens, TV manufacturers will be hard-pressed to differentiate and justify to consumers why they should spend hundreds or thousands of dollars for an upgraded set. In fact, the opposite may well happen: consumers could come to perceive the intelligence is in the stick, and the TV is just a big display. In short, a very challenging time lies ahead for TV manufacturers.