Dong Min: Current status and development trend forecast of the large-screen display industry in 2016

And China Smart Display Annual Ceremony was held in Beijing

Good afternoon everyone, in the next 20 minutes, our Aowei Cloud Network will give an introduction to the current situation and future development of large-screen displays. From January to April, the retail sales of color TVs reached 16.19 million units, a year-on-year increase of 7.4%. The sales from January to April were 49.9 billion yuan, down year-on-year. With a decrease of 1.2%, you will find two details. The first detail is that the capacity of the entire market is booming and rising. In fact, many friends from manufacturers sitting in the audience have not felt the warmth of our market or have not enjoyed this warmth. Some brands that we have not paid attention to before are quietly growing. The second detail is that the average price in this industry is declining rapidly, as can be seen from the differences in sales volume and sales trends. Except for the decline in February, sales from January to April increased by more than 10 points year-on-year in January, March and April.

We believe that there are four forces that are revitalizing this market. The first force is that loose policies have released the demand for real estate and also driven the demand for home appliances. From January to April, the sales area of China's real estate increased by 35.9% year-on-year, and sales increased by 56% year-on-year. The second force is that various brands are releasing new products frequently. I have a personal statistics. There were about 11 press conferences in the TV industry in March. If mobile phones are included, there will be more than 30. press conference; the third force is that the price of panels continues to decline, especially for large sizes. In last year, almost all size panels showed a unilateral decline. From January to April this year, our large or super large sizes continued the previous inertial decline, basically falling by more than 10%; the fourth force is the uninterrupted and continuous promotion war. Although manufacturers are very tired, they still have to follow up. These continuous promotion wars have played some incremental effects on this market.

Regarding the judgment of the market structure, we at Ovi tend to believe that the future large-scale growth of the color TV market is diverging into competitive growth. We take Internet brands as an example. From January to April, they have surpassed foreign brands and reached 13.8% of the market share. The three-way battle between China, Japan and South Korea that we talked about before will gradually be replaced by a battle between traditional brands and Internet brands. We believe that a reshuffle of the brand landscape this year will be a high probability event. The leading brands of Skyworth and Hisense are big and strong, while small second-tier brands may give up their resistance and leave the market with dignity.

In terms of channels, online sales grew by 64% from January to April this year. This is a year-on-year figure. All types of offline stores have shown varying degrees of decline. Among them, large chains, due to their scale advantages and rapid response, only fell by 4%, while department stores, supermarkets and other stores saw declines of more than 10%. In absolute terms, from January to April, online sales were 5.19 million units, accounting for 32% of all channels. It is expected that the online proportion will reach 34% this year, which is also a very good number. Such an online proportion mainly depends on the growth of some brand official websites, while the growth of public e-commerce platforms is slowing down. In other words, e-commerce on public platforms is forming a balance with offline. We can see from the trend of e-commerce companies such as JD.com, Gome Online, Alibaba, etc. in expanding offline that the demographic dividend of our e-commerce companies is being exhausted. E-commerce companies or some Internet manufacturers are also very eager to occupy offline resources. On the one hand, they occupy various offline consumption scenarios. On the other hand, On the one hand, there is an urgent desire for offline supply chain capabilities. In the future, online + offline consumption scenarios + offline goods and offline logistics and distribution, such an O2O closed-loop scenario will become the standard prototype of the color TV industry.

This is an offline city-level structure, showing a situation of big at the two ends and small in the middle. The T1 market has a 21% market share and a 47% share in the rural market. China has more than 200 million CRT TVs, most of which are in the rural market. With the advancement of new urbanization, we can also see that the consumption needs of the mass population in rural areas are gradually converging with those of urban residents. From some of our previous reports, we can see that in terms of 4K, smart TVs, and large screens, rural areas and cities are almost the same. With the implementation of strategies such as rural e-commerce and mobile e-commerce, it will definitely drive the rural market and activate the increase in rural areas.

Let's take a look at the current mainstream trends through some segmented products. From January to April, the market share of 55-inch color TVs reached 21.4%, a year-on-year increase of 9.1 percentage points. In the 55-inch color TV market, our domestic Hisense ranks first, accounting for 16.3% of the market share; 65-inch TVs accounted for 3.3% of the market share from January to April, which doubled compared to last year. In the 65-inch color TV market, foreign brand Samsung also takes the lead. We also believe that 65-inch TVs will be the next hot spot.

Looking at the sales area, from January to April this year, our sales area reached 9.69 million square meters, an increase of 39% year-on-year. This 39% area growth is a very large span compared to the 7% sales growth just mentioned. It can be seen that mainland China is moving faster and faster on the road to large-scale.

Ultra HD 4K’s share was 43% from January to April this year, a full 20 percentage point increase from 2015. We all know that in terms of content, transmission, broadband, including routers, the conditions for 4K are not fully mature. We attribute the promotion of UHD mainly to upstream and brand manufacturers’ education for consumers and this market. We can also see from the picture on the right that in terms of global panel supply in 2016, UHD accounted for more than 70% of basically every size above 49 inches. So the UHD we are talking about is an unstoppable trend.

In the past two years, the "curvy and thin debate" has been recognized as a hot topic in the color TV industry. Today, this topic is actually cooling down. There are two reasons. First, the current mainstream brands place curved surfaces and ultra-thin products in the mid-to-high end, but the market response is not as violent as previously expected, with penetration rates reaching 5.3% and 2.6%. Secondly, judging from the final choice of brands, the ultra-thin and curved camps will become increasingly blurred in the future.

The most popular technology at the moment is HDR technology. The coordinated cooperation of all links from shooting, transmission, reception, decoding, and display allows us to obtain higher contrast and restore true image quality details. When many of us people are still asking about HDR on Baidu, this HDR TV has hit us like a spring breeze overnight. In the May Day market that just passed, HDR accounted for 5.2% of the market penetration. This picture shows each brand’s product layout for HDR TVs. It can be seen that HDR has been widely promoted and has been covered in all brands and sizes. In the future, whether HDR can become the icing on the cake for our industry, I think we may also need to pay attention to the specifications of our HDR industry. I just chatted with the leaders of the association. In July, at the quarterly color TV conference hosted by the association, we will also release the HDR TV standards for this industry. Please pay more attention to it.

Regarding next-generation displays, we are happy to see many directions. OLED led by Skyworth and LG performed very well this year, with sales increasing by 164% year-on-year. Laser TVs led by Hisense have achieved a very big breakthrough this year. Ovi predicts that the sales of laser TVs this year may have a big breakthrough and exceed 20,000 units. We also believe that with the expansion of the two major technology camps, these prices will become more and more affordable. Some time ago we learned that Samsung, the display leader, is making efforts and spending a lot of energy on QLED. QLED is not a quantum dot diode display technology as traditionally understood. I am a panel engineer, and I am very excited and looking forward to racing in different directions.

China's color TV and smart TV penetration rate from January to April this year is 78%, and it is expected to reach 84% for the whole year. The development of smart TV has also ushered in the era of entertainment in the living room. In the first quarter of this year, people in mainland China are increasingly dependent on TV, and the daily boot time has reached 3.7 hours. We also conducted a market survey. This is a very important consumer group, the middle class. We know that in the past year or two, it is China's middle class that has driven our consumption upgrade. For such a survey report, we see that 82% of the content is distributed in film and television. The second tier is news, sports, education and games. These four major aspects of content basically account for 40% to 30% and 10%. Such as shopping, health, local life, etc., they are all in the long tail position. This report conducted a large-scale survey from January to April this year. This is also the first large-scale survey report on the middle class conducted by our local institution in mainland China. We will also report to the following meetings Everyone makes a report.

Finally, I would like to share with you Ovi’s thoughts on the color TV industry.

I just mentioned in the first article that the size of the color TV industry grew by 7% from January to April this year. Such growth cannot cover up the embarrassing current situation of this industry. The first is that the market structure is changing and profits are thinning. In 2015, two of China's top 6 key enterprises increased, two stayed the same, and two declined. We estimate that the net profit of the entire color TV industry in 2016 will be below 1.5%, which is already very meager. The second is overcapacity. China's color TV production capacity accounts for 80% of the world's. Just now Caibai Bureau also mentioned that inefficient models account for 60% of the market, and huge production capacity and product resources are passively waiting for consumers to choose; thirdly, there is a mismatch in purchasing demand. This is also the consumer survey we conducted. In the survey, we saw that most of the people enter the store to consume or consume online. The purchase intention is distributed in the range of 2000 to 9000. Of course, the proportion of 2000 to 7000 will be more, but when they leave the market, we find that most of their purchases occur in the price range of 2000 to 5000. This It means that our consumers’ purchase intention has not been completely converted, and there is a mismatch between consumers’ purchase demand and our supply; fourth, regarding promotions, in 2016, we simply counted 18 large-scale promotions. The manufacturers were very tired, but they had to follow.

We have summarized the current embarrassing industry status quo. Now we have found that the era of single channel is king has passed. We have also found that the era of low-price harvesting has also passed. The era of hunger marketing has also passed. The era of timed and fixed-point promotions has also passed. In the future, our color TV industry will only be able to enter a benign upward channel through a building-block combination of various innovative elements.

Next, I will share with you three important elements. First, channel innovation. Let’s look at the development direction of channels from the perspective of supply-side reform. From the perspective of supply locations, we all know that e-commerce is developing rapidly. In fact, for the current development of e-commerce, we believe that it is just moving offline business online, which only expands the radiation range of stores and makes the transaction level electronic. For the future, we call for research on e-commerce channels to be used for user analysis, operation, and research. In addition, in terms of places, there will be an accelerated sinking and expansion into third- and fourth-level channels. In terms of supply methods, whether it is a hypermarket or a small store, it is now only a choice for consumers to choose products in the retail supply system. Place, in the future, we believe that the channel system must become the central hub for creating and meeting demand, completely transforming the mission from product selection to creation. What is ultimately to be achieved is omni-channel touch points to achieve effective supply, thereby solving such a precise match between supply and retail to achieve zero distance.

Second, look at marketing innovation from the perspective of user operations. Regarding marketing innovation, I have communicated with many industry friends in many previous forums or salons. We have made a comprehensive and systematic dissemination from product release, business leaders and overall corporate strategic thinking, innovated marketing through the collaborative release of various hardware products, and gained user stickiness through various ecological software products. Here, let’s take a special look at user operations today. In fact, whether it is to save the current embarrassing dilemma or to prepare for the future, more and more companies have begun to realize the importance and feasibility of user operations. There are four points here. The first point is to break through at a single point, gather opinion leaders, and achieve rapid dissemination through the radiation range of leaders and community experts; the second point is to use high-profile communication and social marketing to add some impetus to user operations through the blessing of topics; the third point is to put the masses first, activate high-frequency interactions, and gain user stickiness through long-term and high-frequency interactions with users; the fourth point is to have an open mind and strengthen user management, through Maintaining and attracting new customers enables users to recognize our corporate culture and makes the users' full culture become our corporate culture.

Third, look at product innovation from the attributes of color TVs. Recently, we can see a lot of publicity about content on some Internet or in some social media. In fact, we at Ovi believe that TV is not only a carrier of content, but content is just an amplification of the functional attributes of TV. In the future development direction of TV, first, it does not exist in a fixed form. It has its technological attributes. Home attributes; second, future TVs will be infinitely close to real scenes, with increasingly clear picture quality, purer sound, and more and more emphasis on presence and a sense of entry. Recently, we have seen the combination of VR and TV to solve this sense of immersion; third, high-tech humanistic care, through product interaction design to achieve emotional interaction and communication between people and TV.

These three aspects are how we organize innovation. In fact, it is not only these three links, but more importantly, it is necessary to realize three-dimensional and building-block combination innovation through these three links and more links.

Finally, as usual, we will make a forecast for the whole year. In 2016, we believe that the sales volume of China's color TV market will increase by five percentage points year-on-year. We have just made an update on the performance of the first five months. Product upgrades are still the main theme. Ultra-high-definition TVs will account for 47% of the market share in the future, curved TVs will account for 6.2%, ultra-thin and light TVs will account for 5.1%, HDR will account for 8.5%, and TVs above 55 inches will account for 8.5%.