The Strategic Impact of 4K on the Entertainment Value Chain - December 2012 - WikiLeaks
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The Strategic Impact of 4K on the
Entertainment Value Chain
December 2012
© 2012 Futuresource Consulting Ltd, all rights reserved
Reproduction, transfer, distribution or storage of part or all of the contents in this document in
any form without the prior written permission of Futuresource Consulting is prohibited.
Company Registration No: 2293034
For legal limitations, please refer to the rear cover of this report
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© 2012 Futuresource Consulting Ltd
Contents
Section Page
1. Introduction: Defining 4K 4
2. Executive Summary 6
3. 4K in Digital Cinema 9
4. 4K in Broadcast 12
5. 4K Standards and Delivery to the Consumer 20
a) Pay TV 24
b) Blu-ray 25
c) OTT 26
6. Consumer Electronics: 4K Issues and Forecasts 27
a) USA 31
b) Western Europe 33
c) UK, Germany, France, Italy and Spain 35
7. 4K in Professional Displays Markets 37
8. Appendix – Company Overview 48
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© 2012 Futuresource Consulting Ltd
Introduction: Defining 4K
4K is the latest resolution to be hailed as the next standard for the video and displays industries. There
are a variety of resolutions that are claimed to be 4K, but in general 4K offers four times the
resolution of standard 1080p HD video.
A number of names or acronyms for 4K are being used across the industry including Quad Full HD
(QFHD), Ultra HD or UHD and 4K2K. For the purposes of this report, the term 4K will be used.
● These terms all refer to the same resolution: 3,840 by 2,160.
● The EBU has defined 3,840 by 2,160 as UHD-1.
Within the consumer TV market, the Consumer Electronics Association (CEA) has officially designated
4K as Ultra HD and defines it as one that displays at least 8 million active pixels, with a lower
resolution boundary of 3,840 by 2,160.
In Digital Cinema there are multiple variations of 4K in existence including 4096 x 2304, 4096 x 2160
and 4096 x 2048.
Photo credit: HDMI.com
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© 2012 Futuresource Consulting Ltd
2. Executive Summary
Executive Summary (i)
4K is seen by many in the industry as a major new opportunity, but serious obstacles will need to be
overcome to enable development of the market. Most notable of these are the very limited supply of 4K
content, lack of distribution standards and the need for an installed base of 4K TV sets to create an
addressable audience.
As many elements of the broadcast equipment market become increasingly commoditised, manufacturers
continue to explore technological advancements that will capture the imagination and allow price points to
be stabilised. In addition, as global demand for TV displays starts to soften, LCD TV panel and set makers are
looking for the next value-add feature to kick-start a wave of consumer flat panel replacement. 3D in the
home was an attempt to achieve this and, while the technology hasn’t died away, it has yet to become the
solid success that many had hoped for. 4K represents a more natural progression for the industry, but one
that brings its own problems.
For the panel makers, the issues of producing 4K panels at higher yield rates are many, while prices for
commercialized sets are expected to remain out of the reach of mass market consumers for several years.
Furthermore, TV makers face the task of persuading consumers to upgrade to a higher resolution set at a
time when most consumers are just starting to recognize and enjoy the benefits of full HD. Despite these
barriers, Asian panel makers are moving forwards with the production of large screen 4K TVs and most major
TV brands will likely launch models over the next 12 months.
Looking to the broadcast industry and pay TV, the primary challenge is the increased bandwidth required to
transmit 4K. Providing four times the resolution of 1080p HD, 4K demands four times the data rate. In
addition, due to motion-blur being more visible at higher resolution, the frame rate should ideally be
doubled to counter this. This would mean the data rate would then also be doubled, hence the
uncompressed data rate of 4K would be eight times that of 1080p and 16 that of 1080i.
Clearly this has implications for the compression industry and while the new High Efficiency Video Codec
(HEVC) is due to be ratified in January, hardware-based, real-time encoding required for live transmission is
realistically at least two years away.
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© 2012 Futuresource Consulting Ltd
Executive Summary (ii)
As with HD and more recently 3D, 4K consumer technology is ahead of the rest of the content chain and,
while 4K equipment is starting to emerge, there is currently no cross-platform 4K video source material
available for the market, meaning the TV or projector has to upscale the incoming signal to 4K resolution.
Sony is, however, bundling a 4K hard drive media player with its 84-inch 4K TV in the USA. The player
comes pre-loaded with 10 4K movies and some short-form content from Red Bull Media House. According
to Sony, the player will periodically be updated with new content.
The consumer electronics industry is showing willing to market 4K capable TVs and create an audience (as it
has previously done with ‘HD ready’ and ‘3D ready’ sets) but a sustained flow of 4K content will be critical to
its long term success.
Hollywood will be a key source of 4K content and will be keen to see the implementation of a Blu-ray 4K
standard in the near future. This will then usher in a new generation of 4K capable disc players.
A number of Pay TV operators have commenced testing of 4K acquisition and are expected to continue
investment in development technologies to enhance existing services and stave off competition.
With the backing of the consumer electronics, television and motion picture industries, Futuresource
believes that there is a positive commercial scenario for consumer 4K, although realistically this is likely to
take at least 5 to 6 years to develop.
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© 2012 Futuresource Consulting Ltd
3. 4K in Digital Cinema
Digital Cinema – the 4K Pioneer (i)
The digital cinema industry has been one of the pioneers of 4K video over the past few years, largely due to
the transition away from film.
Before 2007, there were a number of digital cinema cameras on the market, but the first camera that
made a real impact was the revolutionary Red One from Red Digital Cinema.
The launch of the Red One kick-started the digital revolution in the world of cinema, but also ushered in
the age of 4K.
The Red One can shoot in resolutions of up to 4.5k and so anyone opting to shoot digitally also had the
option to shoot in 4K from this point onwards.
Fast forward to 2012 and there are now a number of 4K digital cinema cameras on the market, at
varying price points and from various brands.
● In addition to the Red One, digital cinema cameras currently available include:
Red Epic
Red Scarlett
Sony F65
Sony F55
Sony F5
With 4K digital cinema equipment now ubiquitous, Hollywood is embracing 4K production. Many studios have
been acquiring movies in 4K for the past 18 months in order to future proof productions for the time when a
format is available for delivery to the consumer.
4K digital cinema productions are heavily centred on Hollywood or Hollywood-affiliated productions
currently. Other major film industries such as Bollywood have yet to make the transition to 4K,
although the move to digital is starting to gather pace.
In addition to this, existing titles are being scanned at 4K resolution to add to the 4K back catalogue.
● Titles so far given this treatment include Lawrence of Arabia, Jaws and Taxi Driver.
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© 2012 Futuresource Consulting Ltd
Digital Cinema – the 4K Pioneer (ii)
Despite the extensive amount of 4K production taking
place, the number of titles making it to the cinema
in 4K is limited.
So far only around 50 have done so.
4K digital cinema projectors have been
available for several years but only represent a
small but growing proportion of the installed
base. The limited number of 4K-equipped
screens means that the demand for 4K content
is currently limited, but will grow considerably
over the coming years.
One of the factors holding back investment in 4K
is that many movie theatres purchased digital
cinema projectors over the past five years in
order to show 3D content. After making such a
significant capital outlay, many will be looking
to recoup some of the investment before
upgrading to 4K.
As many movie theatres are unable to show 4K,
content acquired in 4K is downscaled to 2k or
transferred to film for cinema distribution.
Movies released in 4K
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© 2012 Futuresource Consulting Ltd4. 4K in Broadcast
4K in Broadcast - Situation Report (i)
4K within professional video production is currently largely limited to digital cinema productions and
experimentation by broadcasters.
High profile broadcasters such as BSkyB and ESPN have confirmed that they have 4K cameras and are
experimenting with production techniques, while some broadcasters are already using 4K for high-end
production genres such as drama, but are downscaling to HD in post-production.
One of the key reasons behind the lack of television production is the dearth of 4K equipment currently on
the market.
With the exception of products targeting the digital
cinema market, there are very few products available for
mainstream 4K television production.
Products, including JVC’s low-end GY-HMQ10 4K
camcorder and Sony’s PMW-X300 4K production monitor,
are slowly being released to aid mainstream production,
but 4K products remain extremely rare. The Sony PMW-X300 4K Production Monitor
Even in the world of digital cinema, certain aspects of the
production chain are far from ideal.
● For example, in order to grade 4K films at full resolution,
expensive 4K digital cinema projectors are used as there
are no 4K reference monitors available on the market.
● There are a number of 4K professional broadcast video
monitors available today, but so far sales have been far
from significant.
In EMEA, a grand total of just three 4K monitors The JVC GY-HMQ10 4K Camcorder
aimed at the broadcast market were shipped in
2011. 12
© 2012 Futuresource Consulting Ltd4K in Broadcast - Situation Report (ii)
When looking at the current state of 4K production in broadcast
it is important to put it in context of the market overall. Real-time Multi-screen
4K is coming along when the transition to HD is still very Transcoder Market Value
80
much in full swing, even in the regions with the most
advanced broadcast industries. 70
Market Value ($m)
● For example, at the end of 2011 42% of US 60
households still do not receive HD programming and,
50
in parts of Europe, production is still migrating from
analogue to digital. 40
4K is also up against a more pressing technological 30
advance for the industry: multi-screen delivery.
20
● Multiscreen programming is becoming expected of
operators and is one of the areas of the industry 10
showing real growth. 0
The global real-time multi-screen transcoder 2010 2011 2012 2013 2014 2015 2016
market is expected to grow to $187m by 2016. North America Europe
● Investment in multi-screen programming and delivery APAC Rest of World
is therefore taking budget away from potential
The explosion in the number of smartphones and
investment in 4K, especially for publicly funded tablets owned by consumers has meant that
broadcasters. demand for content for mobile devices is increasing
Publicly-funded broadcasters’ revenues are rapidly. This has resulted in significant growth in
dependent on licence fees or government the transcoding market as content needs to be
repurposed for use on these devices
grants, sometimes enhanced by advertising
revenues, and remain relatively stable at best,
irrespective of investment needed in new
technology. 13
© 2012 Futuresource Consulting Ltd4K in Broadcast - Situation Report (iii)
4K is also being introduced to an arguably more cynical
market after 3D failed to live up to its over-inflated hype.
3D was promoted as revolutionising the broadcast EMEA Professional Monitor
industry but after a few years the hype has died away Shipments
to reveal that 3D is, at the moment at least, a niche 100% 0.4% 3.1% 1.9% 0.7%
requirement within broadcast.
There is a considerable risk that 4K will be associated
80%
with 3D in terms of being a similar attempt by the 60%
broadcast equipment industry to find the “next big 99.6% 96.9% 98.1% 99.3%
thing”. 40%
● Certainly demand is currently very much being 20%
pushed from the manufacturer side rather than
generated by the end users themselves. 0%
● 4K does have advantages over 3D, though. 2009 2010 2011 2012*
The main advantage is that production 2D 3D
techniques can remain the same. 3D
*2012 – Jan to Sept
required content to be shot differently and
for different expertise to be hired.
After initial investment by production
Another advantage is that 4K content could companies and broadcasters looking into 3D
be described as giving the same viewing production, 3D pro monitor sales dropped off
experience as HD just enhanced, whereas in EMEA
3D is a completely different experience and
one that requires glasses.
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© 2012 Futuresource Consulting Ltd4K in Broadcast - Situation Report (iv)
4K is one of the most widely discussed topics in the
Pro Camcorder ASP ($) - USA broadcast industry at the moment and one of the key
7,000 reasons behind this is that many hardware manufacturers
5,846 need 4K to maintain revenues.
6,000 5,592
5,154 5,073 At the lower end of the market, technology is
5,000 improving to the point where low-end equipment
ASP (US$)
can often do a good enough job and so is replacing
4,000 higher-end equipment. This is forcing down the
price points of professional video equipment, in
3,000 some cases commoditising the markets.
2,000 A good example is the professional camcorder
market. In the US, price points have fallen 13%
1,000 ($773) over a four year period.
0 ● Over the same time period, volume is up by
12%, whilst value is down by 2%. (Based on Q1-
2009 2010 2011 2012*
3 2009 vs Q1-3 2012).
*2012 – Jan to Sept New technology drivers are needed to bolster price
points and since 3D has failed to live up to the
The pro camcorder market is just one example of hype, vendors are now starting to look at 4K.
a market where professional video equipment is
becoming commoditised and is in need of a new
technology to help maintain price points
15
© 2012 Futuresource Consulting LtdBarriers to 4K in Broadcast (i)
Upgrade Fatigue
The broadcast and professional video industries have been through over 20 years of upheaval brought
about by continual innovation.
Past Future
Tapeless
Digital 16:9 1080i 1080p 3D Multiscreen 4K
Workflow
Some of the many technological advancements over the past 20 years
The pace of change in the industry and the constant need to upgrade to the technologies listed above
have left many in the industry fatigued.
● Often, products have an effective lifespan far in excess of the length of time they are actually
used for in the first instance.
The majority of these upgrades have come at a time of relative economic prosperity, however.
● The economic situation in some of the countries that tend to lead the way technologically is
certainly not as bad as it has been, but the economic downturn has significantly changed
attitudes.
● In the past, engineering teams took centre stage in the purchase decision, but the financial
pressures that arose during the economic downturn forced a change towards an operations or
finance team led decision-making process.
● End users are now much more concerned with reducing CAPEX and OPEX, with a focus on
equipment that is “good enough”, not “best in class” as once was the case.
It is against this backdrop that 4K needs to gain traction but at the same time competing for budget
with other new technologies such as multi-screen.
16
© 2012 Futuresource Consulting LtdBarriers to 4K in Broadcast (ii)
Lack of Interfaces
There are currently no interfaces capable of coping with the extreme bandwidth demanded by
uncompressed 4K. There are a number of solutions available, though.
● 3G-SDI is the fastest real-time link available for the broadcast environment at the moment and so
the use of a quad 3G-SDI solution (four individual 3G-SDI interfaces used concurrently) is one
option.
● The second option is to use a fibre optic-based link that exists – 10GSDI, although this still may not
be enough to handle 4K unless a degree of compression is applied.
For 4K to be embraced throughout the production chain, an industry standard interface is essential.
Motion Blur
The paradox of 4K video is that whereas when static or
slow moving images are shown the picture quality is
noticeably better, when fast moving images are
introduced motion blur is also more noticeable.
This is a significant problem as historically sports has
been the genre that has encouraged uptake of new
technologies and fast-moving action or rapid moves of
the camera are endemic to sports coverage.
The way to counter motion blur is to increase the
frame rate, but this brings its own problems in that it
also increases the bit rate, which for 4K is already
significant.
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© 2012 Futuresource Consulting LtdBarriers to 4K in Broadcast (iii)
Camera Technology
Most 4K cameras and camcorders on the
market today feature large sensors and are
largely targeted at the digital cinema and
high-end drama markets. For 4K to succeed
in broadcast, it needs to be possible to shoot
4K using cameras with sensors sized from 1/3"
to 2/3".
Unfortunately, this means that investment in
sensor development needs to be made,
specifically in the area of light sensitivity.
● This is due to the need to make the
pixels smaller in order to fit them onto a
smaller sensor. Smaller pixels means
that less light is picked up by each pixel.
● Increasing gain is one way around this,
but this renders the encoding process
less efficient, which is far from ideal
due to the need to compress 4K as much
as possible.
● In addition to this, if frame rate is
doubled to counter motion blur, half the
amount of light will reach the sensor, Some of the large sensor cameras currently available
which again furthers the need for much
more sensitive sensors. 18
© 2012 Futuresource Consulting Ltd5. 4K Standards and Delivery to the Consumer
4K and the HEVC Standard
HEVC (High Efficiency Video Codec) is the next generation compression standard that is due to be ratified in
January 2013.
It offers between 33% and 50% greater encoding efficiency when compared to H.264 (dependent on
vendor).
The high bandwidth required for 4K means that for many 4K and HEVC are intrinsically linked. When
bandwidth is tight, using HEVC brings the bit rate of 4K down to manageable levels.
● In tests, a bandwidth of 18 to 20Mbps for HEVC 4K is achievable, which is similar to the bit rate of
MPEG-2 HD, making 4K commercially viable.
● Luckily the higher resolution of 4K means that the encoding process can be completed a lot more
efficiently than with HD. Whilst uncompressed 4K requires four times the bandwidth of 1080p, this
does not equate to four times the compressed bandwidth.
HEVC is going to be particularly important for contribution and distribution over satellite as transponder
space is already at a premium. A sound business case will have to be built, though, as many will
question the economics of carrying one 4K channel in place of multiple SD channels.
Contribution and distribution of live content requires low-latency encoders but arguably the only way to
achieve this in real-time is to use hardware-based encoders and decoders.
Unfortunately, the dedicated silicon needed for such products is not yet available.
Expectations are that the first HEVC silicon will be available by the end of 2013 at the earliest,
indicating a likely launch of the first generation real-time HEVC encoders around NAB 2014, if not a little
earlier.
There is an argument that 4K does not depend on HEVC. Where bandwidth isn’t at a premium; where a cable
operator has invested heavily in a fibre optic network for example, then 4K can be distributed using H.264.
This would mean that 4K services would theoretically be viable much earlier than previously thought.
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© 2012 Futuresource Consulting LtdDelivering 4K to the Consumer (i)
Despite much of the current hype in content being the ability to
Broadcast/Pay-TV
view video on portable devices, content owners are still keen to
maintain viewership on the primary device for which the content 65m+ HD Households (WEU)
was created and in the highest quality. The main TV-set and 4K 80m+ HD Households (NA)
represents the natural evolution of continued improvement in Consumers Still Want High
image resolution. Quality Content
It is evident through the continued rise in pay-TV penetration,
growth in new CE hardware adoption and popularity of new OTT
services (e.g. LoveFilm and Netflix) that consumers still have a Blu-Ray
keen interest in the consumption of high quality premium
34m BD HH (WEU)
content.
52m BD HH (NA)
However, securing the public’s viewing time and in turn
Large Installed Base of
generating revenues is more challenging than ever as consumers
are presented with more options for consuming media, with Compatible Hardware
several platforms across multiple devices now offering services
and content.
Online (OTT)
As content owners look to differentiate and add value to their
140m Broadband Homes (WEU)
product proposition, improvement in image quality will be a key
consideration. The success of HD, particularly in broadcast, 130m Broadband Homes (NA)
indicates consumer’s willingness to pay for higher quality video New Platform Driven by Rising
content. However, the relative failure of 3D indicates that not all Speeds Penetration
new features prove successful.
21
© 2012 Futuresource Consulting LtdDelivering 4K to the Consumer (ii)
Several pay-TV operators have already begun to undertake evaluation and testing of 4K acquisition,
particularly on live events (predominantly sports). As operators are likely to apply premium pricing to 4K
channels/content, they can justify the financial outlay in light of the potential revenue stream.
Although no standard has yet been ratified by the Blu-ray Disc Association (BDA), Blu-ray is also expected to
become a distribution platform for 4K content. The uptake of hardware, although lower than anticipated,
has still secured a significant footprint, present in 86m households (inc. PS3) across North America and
Western Europe. Hollywood is expected to be keen to support 4K through Blu-ray in an effort to improve disc
sales, which to date have been relatively disappointing.
Improved broadband speeds are allowing the distribution of broadcast quality video content over IP, as a
result of which OTT video services now represent an alternative delivery platform for content owners to
deliver high quality video content to consumers.
With several significant players present in this space, including Amazon, Apple, Google and Microsoft all of
which are keen to exploit their respective video services, the launch of 4K content offers a new level of
quality and value to the customer base.
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© 2012 Futuresource Consulting LtdDelivering 4K to the Consumer: Pay-TV
Pay-TV operators continue to be on the Key Operator Activity
cutting edge of new service development,
enhancing and evolving their platforms in • Early adopters of many new technologies
order to attract and retain subscribers, in • Announced head-end upgrade roadmap incorporating
4K compatibility
addition to seeking to create new revenue
• Possible test channel launch in 2013
streams through the roll-out of new services
and the enhancement of existing ones. • Demo of test broadcast with NBC Universal
• NBC link likely to drive 4K roll-out & monetisation
This continual development is driven by through cable platform.
competition between operators and a need to • No announced 4K channel roll-out yet
stave off competition from traditional free-to-
• In Oct’ 12 commenced test 4K broadcasts
air broadcast services and newer OTT • Initial test have been on Football
operators that are vying for a share of the • No definitive plans to roll out 4K, currently evaluating
premium content space by securing premium ahead of TV-set roll-out
content deals across movies and TV content. • Sky Deutschland also announced 4K tests.
Particularly in Western Europe and North • Currently evaluating 4K production.
America, where subscriber numbers are • Understood to be planning dedicated 4K channel.
saturated, the requirement to drive up • Sports & movie content will be key genres
revenues through upsell of existing subscribers • In advance of forthcoming Football World Cup &
through the sale of 4K content, for example, Olympics, currently testing 4K acquisition with
is of paramount importance. intention to air 4K broadcasts of both events.
Although some services such as 3D have • SES planning to launch 4K showcase channel in 2013.
failed, operators will continue to invest in • Several demonstrations of 4K transmission tests,
including live content at IBC in conjunction with Sony.
order to satisfy subscribers’ needs through the
continual enhancement of their services.
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© 2012 Futuresource Consulting LtdDelivering 4K to the Consumer: Blu-ray
As margins continues to be pushed down on CE
products, vendors are continually seeking new Blu-ray Hardware Installed Base
opportunities to offer value-add features and 70
improvements on existing technologies to increase
the price point and attractiveness of the product. 60
Furthermore, as the video industry seeks out new
50
revenue streams to compensate for the erosion of
DVD, it too is looking to promote and entice 40
consumers to new products, namely Blu-ray which
traditionally commands a premium price point. 30
In both instances, 4K is likely to be key to each
industry's’ strategy moving forward. At launch 20
BDA Ratification of 4K &
[should Blu-ray push 4K], it is certain to attract a 10 Product Launch Expected
premium price point. 2013
To date, Blu-ray has seen disappointing uptake and 0
industry feedback indicates scepticism as to how 2012 2013 2014 2015 2016
much of a positive impact 4K will have on the Western Europe USA
overall Blu-ray trend.
Finally, 2013 is also expected to see the launch of
Key Concerns for 4K Blu-ray
additional 4K up-scaling Blu-ray players, reducing
the requirement to purchase dedicated 4K Blu-ray • Consumer confusion about 4K & 3D Blu-ray
software. • Threat from Over-the-Top Services e.g. Netflix, LoveFilm
24
© 2012 Futuresource Consulting LtdDelivering 4K to the Consumer: OTT
4K signifies new opportunities for OTT video platforms such as Netflix, LoveFilm and Apple, strengthening
their service proposition to include premium content, delivered in a comparable quality to that on offer from
traditional pay-TV platforms.
Furthermore, OTT platforms are expected to look to 4K in the future in order to create higher value
offerings and higher-priced subscription tiers, which will support continued revenue growth from increasingly
saturated subscriber bases.
4K is certain to place increased pressures on the IP infrastructure (which in many places is still struggling to
deliver HD). Therefore, in order to guarantee bandwidth and ensure no contention on the network, tie ups
between ISPs and video service providers are likely to ensure subscribers obtain a high quality of service.
The roll-out of Smart 4K TV-sets also presents an opportunity for OTT services to be delivered direct to the
TV-set and possible partnerships between CE manufacturers and content owners to promote 4K – particularly
in the early days.
25
© 2012 Futuresource Consulting Ltd6. Consumer Electronics: 4K Issues and Forecasts
4K in the Consumer TV Market (i)
The consumer TV market has been in a state of flux during the last few years. The traditional powerhouse
brands in Japan are struggling amid weak demand in developed markets and slowing growth rates in
emerging regions. Meanwhile, recent technology innovations such as 3D are not proving compelling enough to
consumers to warrant upgrading existing flat panels.
TV vendors are now looking to new display technologies and improvements to existing LED set designs to
drive replacement moving forwards. The two technologies that have been getting the most attention over
the past 12 months are OLED and 4K.
OLED is seen as a technology that will ultimately replace existing flat-panel display solutions, offering
significantly better picture quality, thinner form factors and perhaps most importantly much lower energy
consumption levels than today’s TVs.
However, despite the announcement of large-size OLED TVs from Samsung and LG in early 2012,
commercialization timescales of these sets have been put back to 2013 at the earliest following
difficulties in improving manufacturing yield.
Initially, OLED displays will have a resolution of 1080p although 4K versions will inevitably emerge as
production techniques improve.
4K, under its official consumer label of Ultra HD, is already beginning to be implemented into the home-
theatre environment via home-theatre receivers with either 4K pass-through and/or 4K video upscaling
capability, 4K home projectors, Blu-ray players with 4K video upscaling and 4K-capable TV displays.
4K LED TVs have rapidly emerged in 2012 thanks to the far simpler production process than for OLED
and most major TV brands are prioritising 4K over OLED in at least the short to mid-term.
There are currently no commercialized 4K Plasma TVs although it is technically possible to produce them
(Panasonic showed a 152” 4K Plasma set at CES 2010). However, producing 4K plasma panels at sizes under
60” will mean halving the cell size.
Plasma R&D is likely to start winding down moving forwards so it is likely that only extra large (100”+)
4K plasma panels will come to market.
27
© 2012 Futuresource Consulting Ltd4K TV Products and Pricing
Brand Screen Size Panel Supplier Price
Launched in 2012
Toshiba (55ZL2) 55 AUO $10,000
Sony (XBR-84X900) 84 LG Display $25,000
LG (84LM9600) 84 LG Display $20,000
Announced for 2013
Toshiba 50, 60, 84 AUO, LG Display (84) n/a
Samsung 85 Samsung Display n/a
Sharp 60 Sharp n/a
Hisense 50, 58, 65 CMI n/a
*Models expected for launch in the USA and/or W Europe. Several Chinese vendors including Changhong, Konka,
Skyworth and TCL are expected to launch 4K TVs into their domestic market soon.
28
© 2012 Futuresource Consulting Ltd4K in the Consumer TV Market (ii):
Key Drivers and Inhibitors
The large screen 50”+ TV market is set for strong growth. At today’s best resolution of 1080p, individual pixels
can become noticeable at large screen sizes (particularly those upwards of 60”). 4K resolution provides such a
high level of visual data that pixels on large screen displays are virtually unnoticeable.
The higher resolution of 4K will also benefit current 3D solutions. Passive 3D cuts the horizontal resolution in
half to create a 3D image and so a 1080p 3D movie seen with passive glasses is actually viewed at 540p. By
doubling the horizontal resolution, a Full HD 3D image delivered to each eye is achieved. Most first generation
4K sets are expected to include Passive 3D technology.
4K is also expected to be a key enabler of auto-stereoscopic (glasses-free) 3D technology as 4K will allow
resolution to be regained on multiview lenticular displays.
4K resolution can produce a level of reality that surpasses 3D.
Good 4K up-scaling can provide noticeable picture quality improvements in the absence of true 4K source
material. All 4K TVs are expected to include up-conversion engines, enabling the TV to deliver higher detail
from current SD and HD sources.
Native 4K content is virtually non-existent today. There is no 4K standard for Blu-ray yet. Broadcasters are still
in very early trial phases while delivery over the Internet is dependent upon significant improvements in
average broadband speeds within the home.
The benefits of 4K only start to become visible on very large displays (60”+) under common viewing distance
conditions. In order to benefit from 4K on smaller screen sizes, viewing distance would have to be closer than
typical consumers are used to.
The rapid shift to 720p and 1080p resolutions was driven by the unprecedented boom in TV sales over the last
10 years – a result of dramatically shortened replacement cycles during the transition from CRT to Digital HD
Flat Panel displays. TV upgrade cycles are extending out to previous levels of 8-9 years while most markets are
contracting to more natural sales levels.
29
© 2012 Futuresource Consulting Ltd4K in the Consumer TV Market (iii)
The 4K TV forecasts for the USA and Western Europe set out on the following pages assume that a steady
flow of native 4K content will emerge over the next 2-3 years. Despite this, Futuresource expects 4K TV sales
to remain relatively low for at least the next 4-5 years.
4K is not expected to penetrate the TV market as rapidly as the 720p and 1080p high definition resolutions
did, as many TV viewers will struggle to justify paying a premium for a set on which they may find it difficult
to see a noticeable difference in picture quality.
The rapid growth in demand for 720p and 1080p coincided with the transition from CRT to flat panel as
well as the shift in broadcasting standards to digital and HD and there do not appear to be any similar
upgrade drivers on the horizon that could facilitate a more rapid build up.
Many TV viewers actually struggle to see a difference between 720p and 1080p on 40” or 50” sets and
so TV vendors may find it difficult to convince consumers of the benefits of upgrading to 4K.
With this in mind, Futuresource expects 4K to be restricted to large screen displays (50” and upwards) for
the next 2-3 years with demand coming from wealthy home-cinema enthusiasts.
In the USA, 4K is expected to reach just 4% of all TV sales by 2017 (13% of 50” and larger TVs). After this
time, price points for 4K will fall to more affordable levels and a wider range of models will emerge
including smaller screen sizes below 50”. By 2020 4K will account for 13% of total TV sales (31% of 50”+
sets).
Europe will lag behind the USA due to European customers favouring smaller screens. However, large
screen TV sales will experience strong growth across the region moving forwards making it a market
with high potential for 4K equipment and content.
30
© 2012 Futuresource Consulting LtdScreen Resolution Migration: USA
Annual Sales (000s) Annual Sales (000s)
40000 Total TV Market 12000 Large Screen 50”+ TV Market
35000
10000
30000
8000
25000
20000 6000
15000
4000
10000
2000
5000
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Standard Definition 720p/1080i 1080p 4k Standard Definition 720p/1080i 1080p 4k
31
© 2012 Futuresource Consulting LtdLong Range 4K TV Forecasts: USA
2012 2013 2014 2015 2016 2017 2018 2019 2020
Sales (m)
Total TV Sales (m) 33.9 32.4 31.6 31.2 31.9 32.7 33.4 33.8 33.9
% 4K 0% 0% 0% 1% 2% 4% 6% 9% 13%
4K TV Sales (m) 0.0 0.0 0.1 0.3 0.7 1.4 2.1 3.1 4.4
< 49” 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.7 1.1
% ofScreen Resolution Migration: W Europe
Annual Sales (000s) Annual Sales (000s)
50000 Total TV Market 8000 Large Screen 50”+ TV Market
45000
7000
40000
6000
35000
30000 5000
25000 4000
20000
3000
15000
2000
10000
5000 1000
0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Standard Definition 720p/1080i 1080p 4k Standard Definition 720p/1080i 1080p 4k
33
© 2012 Futuresource Consulting LtdLong Range 4K TV Forecasts: W Europe
2012 2013 2014 2015 2016 2017 2018 2019 2020
Sales (m)
Total TV Sales (m) 43.1 40.0 38.7 38.4 39.1 39.6 40.1 40.7 41.0
% 4K 0% 0% 0% 0% 1% 2% 4% 7% 11%
4K TV Sales (m) 0.0 0.0 0.0 0.1 0.4 0.9 1.7 2.9 4.5
< 49” 0.0 0.0 0.0 0.0 0.1 0.3 0.8 1.5 2.4
% of4K TV Display Forecast: W Europe
Annual 4K TV Display Forecast: W Europe 4K TV Ownership
Sales (Units 000s) % of homes owning
5000
9%
4500
4000 8%
3500 7%
3000
6%
2500
2000 5%
1500 4%
1000
3%
500
0 2%
2012 2013 2014 2015 2016 2017 2018 2019 2020
Rest of W Europe 0 1 6 28 86 181 367 615 916 1%
Spain 0 0 2 9 30 68 136 243 385 0%
Italy 0 0 3 13 44 101 194 328 507 2012 2013 2014 2015 2016 2017 2018 2019 2020
France 0 1 5 21 67 143 261 429 621
Germany 0 1 9 36 112 234 434 718 1071
UK Germany France Italy Spain
UK 0 1 5 25 81 187 356 616 956
35
© 2012 Futuresource Consulting Ltd7. 4K in Professional Displays Markets
4K in Professional Display Markets - Situation Report (i)
4K displays are gradually entering the professional market, but with sales limited to very specific niche markets where
ultra high definition is specifically required.
Most of these markets have very specific requirements and often need dedicated sku’s in order to ensure suitability.
These high-end commercial markets are likely to act as product innovators for 4K solutions (and effective markets to drive
R&D) as the usage requirements are extremely demanding.
Vendors such as Sony, Christie and Barco have leveraged their digital cinema platforms to offer high-end 4K
projection-based solutions. Many of these 4K models are also 3D and are used in verticals seeking advanced graphics
such as simulation, visualisation, planetariums etc.
While the transition to high resolution displays has happened rapidly in the consumer sector, the projector market has
seen an extremely slow uptake.
The majority of projector sales (over 95%) are into corporate meeting rooms or the education sector where the main
usage is for presentation purposes.
With PowerPoint/Excel still the main content shown on presentation devices, the sales argument for high definition
projectors has not been compelling for ‘mainstream’ market verticals.
The use of high definition video however is becoming more common within corporates, especially as large corporates
develop their own internal communication channels.
Large format flat panels have transitioned at a much faster rate, in part driven by developments at factory level (where
the consumer market is rapidly driving the transition towards high definition).
Panel vendors are developing 4K solutions and beginning to seek opportunities for 4K in commercial markets.
37
© 2012 Futuresource Consulting LtdThe Projector Market Is Only Gradually Transitioning To
Higher Definition Resolutions
The projector market is seeing declining or flat sales in developed countries, with emerging markets
providing the overall volume growth opportunities. Most volume in emerging markets is coming from
the education sector, purchasing entry-level solutions.
WXGA is gradually gaining traction (18% in 2012), but adoption has not been as high as anticipated.
Price premiums are reducing but there are still price premiums due to chipset considerations.
WUXGA resolutions and above (1080p, 2k,4K) only account for 1.8% of market volume in 2012 YTD
(96k) highlighting the fact these resolutions are only selling into niche markets.
Global Business-to-Business Projector Market (Excluding Digital Cinema)
%’s Refer to HD % of Total Market
8,000,000
24.0%
7,000,000 17.7%
6,000,000 4.1% 8.4% 20.8%
1% HD
5,000,000
4,000,000 SD
3,000,000
2,000,000
1,000,000
0
2007 2008 2009 2010 2011 2012 YTD
HD 49,618 200,673 416,288 874,482 1,184,772 1,029,114
SD 4,889,764 5,233,228 4,801,897 5,686,209 5,750,889 4,243,923
* HD refers to the following resolutions – WXGA, 720p, WUXGA, QXGA, 1080p, 2k, 4K
38
© 2012 Futuresource Consulting LtdOpportunities Exist for 4K Solutions At The High End Of
The Market
Global Business-to-Business Projector Market (Excluding Digital Cinema) –
High End Resolutions Only
1,400,000
1,200,000
1,000,000 4k
800,000 2k
1080p
600,000
WUXGA
400,000 720p
WXGA
200,000
0
2009 2010 2011 2012 YTD
4k 762 1166 428 799
2k 563 2021 2995 1695
1080p 15879 35807 52247 53197
WUXGA 5709 12675 39297 40023
720p 6057 2108 798 1915
WXGA 387318 820705 1089007 931485
39
© 2012 Futuresource Consulting LtdThe Large Format Flat Panel Market Has Transitioned
Rapidly Towards 1080p
Driven by developments at factory level, many vendors have transitioned the majority of their
commercial ranges across to 1080p.
Corporate and Digital Signage are the two largest markets for flat panels, so high definition content
tends to be shown on flat panels more frequently than projectors.
Global Business-to-Business Large Format Flat Panel Market
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
811,422 1,209,440
1,000,000
1,071,679 1080p
800,000 294,335
600,000 720-768p
400,000 737,121
689,662 480p
534,082
200,000 387,338
0
2009 2010 2011 2012 YTD
* Data refers to flat panels designed for ‘commercial’ use only, not TV’s sold into commercial markets
40
© 2012 Futuresource Consulting LtdExisting Product Developments
LG – 84” ‘UD’ IWB
LG has announced an 84” ‘Ultra Definition’ interactive whiteboard targeting
the K-12 Education Sector.
The Interactive Whiteboard and Flat Panel market is expected to reach
890k units in 2012, flat on previous years due to the impact of the
economic slowdown but additionally the fact that the leading markets
of the US and UK are now heavily penetrated and in decline.
LG’s solution appears to be significantly ‘over-specified’ for market
requirements (the requirement for 4K resolution within education is
unclear), with price points rumoured to be starting at over $5000.
Flat panel vendors have to compete with leading market providers’
(SMART and Promethean) turnkey offerings that include
hardware/software and content designed specifically for education. Sharp – 32” ‘4K’ Monitor
Sharp has announced a 32” monitor targeting specific niche markets such as
medical and CAD/CAM.
High-end projector vendors Barco, Christie Digital, JVC and Sony all have
numerous 4K projectors on the market targeting specialist market niches.
41
© 2012 Futuresource Consulting LtdBusiness to Business Markets - Vertical Market Segmentation
Initial Demand for 4K Solutions Likely To Come From Niche
Markets
Leisure / Niche Rental and
Corporate Transport Retail Education Healthcare Hospitality
Pleasure Verticals Staging
Meeting Shopping Pubs & Nursery Control
Airport Doctors Concerts
Room Centre Clubs Education Hotels Rooms
Surgery
(Opportunities for 4K in Niche Markets (i)
The Medical Sector
The Medical sector is likely to be a key consumer of 4K products. The digitisation of the Medical sector
(patient records) is driving the requirement for high definition displays. Patient diagnosis specifically
requires ultra high definition displays.
Market entry to the medical sector is difficult, however, with stringent product compliance regulations (that
often differ by country) and a relatively specialist route to market and, as a result, quick volume wins are
unlikely. Dedicated sku’s are typically required in order to penetrate this market.
Patient Diagnosis/Monitoring Operating Theatres Medical Schools
Operating theatres use high definition displays to support complex procedures, especially camera-based
surgical procedures such as endoscopy.
43
© 2012 Futuresource Consulting LtdOpportunities for 4K in Niche Markets (ii)
CAD/CAM & Visualisation
Advanced visualisation markets require extremely high resolution displays. At present projectors are
often blended to develop high resolution large screen displays. This can, however, lead to loss in screen
size and shifts in brightness/colour. It is also costly and time consuming to run/align/maintain multiple
displays.
High resolution, immersive displays (often using 3D and where 4K has the benefit of allowing full 1080p
per eye) can be used in the product design phase to speed up time-to-market of a concept product.
Visualisation is also used heavily in the science industry (especially by oil and gas providers).
CAD/CAM & Visualisation
44
© 2012 Futuresource Consulting LtdOpportunities for 4K in Niche Markets (iii)
Simulation Simulation
The military, police, army and aviation industry all use
high-end simulators to train their staff.
4K displays increase the immersive nature of the display
and, as with visualisation, have obvious benefits when
utilised in conjunction with 3D.
Displays are sold as part of a very advanced solution and a
very small number of specialist channel providers per
country control access to the end user.
Broadcast Post Production
4K projectors are typically used within post
production applications such as colour grading and in
pre-release screenings.
Control Room Control Rooms
Video wall cube technology remains the dominant
technology in control rooms due to reliability and
colour reproduction needs.
Super narrow bezel flat panel displays gradually gaining
traction, however, and 4K displays both projector and flat
panel-based could penetrate the control room market.
The majority of growth in the control room sector is
coming from emerging markets and significant investments
into the monitoring of their natural resources (oil and gas
industries etc).
45
© 2012 Futuresource Consulting LtdOpportunities for 4K in Niche Markets (iv)
Museums and Theme Parks
Museums and Theme Parks use high resolution displays
(often blended and /or warped) to create immersive
and impactful entertainment environments.
Museums and Theme Parks have to continue to
innovate in order to attract visitors.
Many Museums are using 3D solutions to create high
impact displays.
Casinos - Sports Book Casinos – Sports Book
Sports broadcasting is increasingly transitioning to
HD. Split-screen 4K solutions could be a cost-
effective way of showing multiple feeds in high
definition.
46
© 2012 Futuresource Consulting Ltd4K in Professional Display Markets Summary
4K flat panels are expected to significantly outsell projectors. Vendors are likely to launch 4K panels in the
60”+ ranges from 2013 onwards targeting niche markets and rental channels.
Developments in the consumer TV market are then likely to result in a supply-side push of 4K into
commercial markets from 2015 onwards with vendors beginning to offer 4K solutions in the more
mainstream 40”/55” screen size segments.
For 4K to significantly penetrate ‘mainstream’ commercial verticals such as corporate presentations,
education and digital signage, major developments in the content/software drivers for these markets
will be needed. While viewing high definition content in commercial markets is gradually becoming
more commonplace, the number of users regularly utilising multiple content sources (video, graphics,
presentation, videoconferencing) will need to grow rapidly for 4K to be required.
Global Business-to-Business Projector Global Business-to-Business Flat Panel
Market - 4K Sales (Excluding Digital Market – 4K Sales in Thousands
Cinema) in Thousands
10 600 12.4%
Thousands
9
8 0.05% 500
0.05%
7 0.05% 400
6 7.6%
5 0.04% 300
4
563.9
0.03% 3.6%
3 5.6 6.3 6.6 200 0.7% 314.1
2 0.01% 4.4 100 0.3%
1 2.8 135.9
0 1.2 0.4 0.8 0 9.1 22.5
2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017
47
© 2012 Futuresource Consulting Ltd8. Appendix
Company Overview
49
© 2012 Futuresource Consulting Ltdtalk to us…
Futuresource Consulting
+44 (0)1582 500 100
info@futuresource-hq.com
www.futuresource-consulting.com
While every effort is made by Futuresource Consulting Ltd to provide accurately researched information and
carefully supported conclusions and recommendations to its client, in no event will the company or its
professionals be liable for information, analysis, advice or recommendations provided to the client at any stage
of the project, or be liable for actions and decisions taken©as2012
a result
50
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