3D has been a challenge, but Smart TVs can change dynamics

3D has been a challenge, but Smart TVs can change dynamics

South Korean consumer electronics giant Samsung Electronics recently launched Smart TVs in India, a category it expects to make up for 10-15% of its flat-panel TV sales by the next year and grab a 60% market share. As CRT TVs de-grow in the country and consumers upgrade to flat-panel ones, the company is aiming to bolster its position in LED TV segment to 40% this year, from 34% in 2011. Raj Kumar Rishi, vice-president – audio visual business, Samsung Electronics India, in an interview with Shailaja Sharma says the flat-panel TV category is set to grow at a very fast pace for the next three years. Edited excerpts: How do you see the television category evolving over the next 5-10 years now that we have Smart TVs, 3D TVs in the works? The panel TV category itself is growing and set to move at a fast pace for the next three years. If you look at the current year’s sales, 40% constitute panel TVs and 60% CRT (flat CRT, not curved). Two years ago, almost 90% of the market was CRT and only 10% panel TVs. And in 2-3 years from now, we expect panel TVs to take 100% of the market. It’s a huge growth as the penetration is very low, and that is one key factor that will help it grow. Another factor is internet penetration, which in the country today is only 10%. This is a key driving factor because people are using internet extensively on their PCs or smart phones. They spend a lot of time watching video content, too. So, if you can have televisions where you can watch YouTube, for example, you will not necessarily need a separate PC for the same. With a wider internet reach and our innovations on the Smart TV, consumers will be able to view a lot of content on the TV. Currently, Smart TV contributes around 5% of panel TV sales. That should grow higher. By the next year, it should be as high as 10-15% of the category. In developed markets, it’s a significant category as internet penetration is at 80-90%. We are also looking at attaining a 60% market share in Smart TV category in India. How successful will this innovation be? 3D didn’t take off. 3D is very niche. 3D content has been a challenge, but with Smart TVs, there is a huge set of applications on the TV itself. With smart TVs, consumers can view the same content as they watch on the internet. Have prices for panel televisions come down? As far as panel TVs are concerned, price erosion was happening till last year. The same features which were available in high-end TVs are now being given even in a 32-inch television, so in that sense, prices have come down or new price points have emerged. For example, today consumers can have a Smart TV at `37, 000 as well as `2,73,000, but the products have not become cheaper, and price cuts do not seem possible in the current environment. Are you investing more in R&D for the television category? We invest a sizeable portion of our revenue in R&D. Globally, we spend 7-8% of our revenues in R&D every year. Our India R&D team also works on global projects. For example, a lot of software, application work for flat panel TVs happens at our India centres. Can the Smart technology be replicated for other product categories? We have a feature called AllShare that is basically for sharing content over various devices – the content from TV can be shared with our android phones, laptops, cameras, and tablets. In our digital appliances too, there are developments happening, which are too early to talk about. Then the AllShare Play feature pushes content manually to the cloud or pull the content directly from the TV or other mobile devices. How do you see consumer sentiment? Are they cautious about spends? Obviously, consumers are evaluating their purchases more closely. So, you have to provide new value to the consumer. This has always been that way. When they buy a television, they do go through good amount of evaluation as the category is a high value purchase. How is the overall TV category growing? The TV category is growing in single digits for the industry. Within that, the panel category is growing at 50% whereas CRT is de-growing at 20%. CRT is seeing negative growth year-on-year. But the category still accounts for 60% of the market and is being bought in rural pockets.