Orange-based Westinghouse Digital LLC is going upscale in a bid to reverse a slide in its market share for high-definition TVs.
The company has little market share to start with—the Business Journal estimates Westinghouse Digital’s annual revenue at about $250 million. That’s well behind industry leader Samsung Group, not to mention Irvine-based Vizio Inc., which gets the bulk of its $3 billion or so in annual revenue from flat TVs.
The recent erosion of Westinghouse Digital’s share in North America—now less than 1%—has come amid stiff competition from other low-cost competitors.
Westinghouse is pegging its hopes for a sales boost on HD TV’s latest frontier: ultra high-definition TV, commonly referred to as 4K. The company is set to announce its debut lineup of 4K TVs in late June at CESWeek in New York, an offshoot of the annual International Consumer Electronics Show, the major trade event for the industry.
Competition
Westinghouse Digital’s new models will put the company firmly in the fray with other early entrants, including LG Electronics Inc. and Sony Corp.
Samsung, Vizio and Toshiba Corp.’s Digital Products Division—a unit of Irvine-based Toshiba America Information Systems Inc.—are expected to release 4K models later this year.
Westinghouse is touting the quality of its 4K models as it gets set to hit the market.
“We’ve taken our time in research and development with chip set partnerships that will process 4K throughout the Westinghouse system,” said Rey Roque, the company’s senior vice president of marketing. “We felt we could do it better.”
It’s also planning to bring them to retail at about half the price of bigger competitors. Its 50-inch model will cost about $3,000, according to the company. An 84-inch version will go for around $12,000.
Sony’s recently announced 55-inch model is shipping at $5,000, while its 84-inch jumbo version was priced at $25,000.
LG’s 84-incher had a suggested retail price of $20,000 when it debuted late last year.
There are some challenges that go beyond quality or price. 4K has four times higher resolution than the current standard, with richer colors and crisper surface images, but there’s very limited content available to show on new models.
It’s similar to the advent of HD TV, when producers lagged on generating content that matched the new technology.
Westinghouse Digital relied on its small OC team of about a dozen engineers, who work in a lab near its headquarters, to meet the 4K standards. It has set out to clear the hurdle on content through a partnership with Northern California-based Roku Inc., which will provide streaming 4K content.
Change
Westinghouse also plans to change up its retail distribution for the 4K models.
Most of its TVs now are sold through big-box retailers, including Best Buy, Costco Wholesale and Target.
The company, which struck a licensing deal years ago with New York-based CBS Corp. to use the Westinghouse name, will target independent dealers and specialty retailers. The goal is to reach well-heeled consumers and educate the public on the new technology more directly, according to Roque.
Plans also call for Westinghouse Digital to continue sponsorships of sporting events and radio talk shows and promotions such as product giveaways.
Adoption
High costs for 4K TVs are expected to temper initial sales, according to analyst Veronica Gonzalez-Thayer.
“We are expecting the adoption of ultra high-definition TVs to be somewhat slower than what we saw for high-definition TVs,” said Gonzalez-Thayer, who covers the industry in the Austin office of Englewood, Colo.-based market tracker IHS Inc. “Eventually it will be the predominant resolution format, but it’s going to take some time.”
Forecast
IHS forecasts only a few hundred thousand 4K TVs will be shipped this year. It expects that number to grow to more than 1 million units by 2016 and to 2 million by 2017.
The current generation of HD TVs saw global sales of 203 million units in 2012, according to DisplaySearch, a unit of NPD Group Inc. of Port Washington, N.Y.
Last year also saw the first annual decline in HD TV sales—a 1% drop—since their debut more than a decade ago.
The sales dip signals a market that has matured quickly as consumers have made the switch to HD TV, heralding 4K as the next growth market.
