By Sandhya Malhotra
India is fast emerging as the key driver in the global television market—both as a manufacturer as well as consumer. The television market in India is changing rapidly from the conventional CRT technology to flat panel display televisions (FPTVs), in common parlance called the liquid crystal display (LCD) and plasma televisions. Currently, the split between CRT and FPTV is around 97 per cent and 3 per cent, respectively.
Plasma TV has been with us for some time now and is preferred by many consumers. However, with industry experts surmising that LCD TVs will be more widespread in the future due to their better energy efficiency than plasma TVs, the time is ripe for consumers to decide—plasma or LCD, which makes the better choice?
Why less demand for plasma
As per ORG-GFK data for 2009, shipments of LCD TVs with LED backlights are predicted to reach 4.5 million units, up by more than a factor of 10 from 438,000 in 2008. By 2013, shipments will rise to 98.8 million, accounting for 42.5 per cent of the global LCD TV market. Currently, LCD and plasma TV markets contribute 1.8 per cent to the overall colour TV (CTV) market. With the Commonwealth Games in Delhi in October 2010, branded consumer electronics manufacturers expect higher growth of LCD and plasma TVs compared to CRT TV sets.
However, major Korean brands like Samsung and LG, Japanese brands like Sony and Panasonic, and Indian brands like Videocon and Onida are heavily focusing on promotional efforts around LCD TVs alone.
This clearly indicates that customers prefer LCD TVs to plasma. Both models look almost identical—flat, elegant and offering sharp and clear picture—but besides price, there are fundamental differences between the two technologies.
Over the last couple of years, LCD prices have dropped by around 30 per cent annually, which is giving a tough competition to plasma TVs. “Some of the important factors that boosted this growth include the increasing awareness of the advantages of LCD TVs, growing availability of the product across dealer counters and attractive finance schemes being offered by the manufacturers,” says R Zutshi, deputy managing, Samsung India.
Currently, there is a price gap of 10-20 per cent between LCD and plasma TV. Samsung has 23 LCD TVs models in the 55.88cm (22 inches) and 139.7cm (55 inches) screen size, which are priced between Rs 17,000 and Rs 1,75,000. In comparison, four models of plasma TVs in 106.68cm (42 inches) to 160.02cm (63 inches) screen size are in the price range of Rs 52,000 to Rs 3,30,000.
Moreover, retailers are also sceptical about the future of plasma. Vikas Pathak, proprietor, Salasar Enterprises, says, “About 90 per cent of our stock consists of LCD TVs and the remaining plasma TVs. We don’t want to keep a stock that doesn’t sell fast. Consumer electronic firms have invested so much in promoting LCD that in the mind of an ordinary consumer, LCD TV has become synonymous with flat panels.”
However, shares Rohit Pandit, business head, home entertainment, LG India, “While the growth of plasma TVs is slowing down due to tough competition from LCD models, the market for plasma TVs with more than 127cm screen size is expected to grow by 15 per cent this year. Hence, plasma TVs in large screen sizes will see a moderate growth.”
Why LCD is gaining ground?
On an average, LCD TVs are growing year on year in the range of 80 to 100 per cent. In terms of demand, LCD market is likely to generate a demand of 28-32 million units in 2010, according to ORG-GFK data. Moreover, the slim form factor, technological innovations, energy efficiency of LCDs coupled with growing awareness and affordability are fueling the demand for LCD TVs.
Even companies like LG, which has 46.2 per cent market share in the plasma TV business, is now aiming to tap the LCD TV market. “We had a market share of 27.6 per cent in LCD TV business last year. We are aiming to gain the maximum market share by 2010 with a targeted share of 35 per cent in LCD TV,” says Pandit. Samsung had 34.5 per cent market share in LCD TV and 25.4 per cent share in plasma TV market in 2009.
Commenting on the growing choice of customers for LCD, Takakiyo Fujita, general manager, marketing, Sony India, which stopped selling plasma TVs in India, says, “A new generation of Indian consumer has emerged who desires aspirational and high end quality products. Value enhanced features, quality and convenient lifestyle are important to him. It is great to see Indian consumers become increasingly receptive to advanced technologies and because of this the demand for LCDs is expected to grow.”
Zutshi adds, “We feel there are various economic factors and changes in consumers’ behaviour and lifestyle that has increased the demand for LCD TVs.”
Key drivers of growth
The trends in the market indicate that high end or technology led products are doing better in India, so we expect better acceptance of LCD TVs in the country. If we look at the global projections for LCD TVs and map them against the Indian market, it can be said that the LCD market will double every year for the next couple of years.
This robust LCD TV market is driven by the changed mindset of the consumer, who now uses TV as a commodity and not as a luxury item. With fierce competition among players to capture market shares, survival of manufacturers has no doubt become challenging and most manufacturers have, therefore, resorted to drastic price cuts. They are also adopting various marketing strategies, shifting their focus from dealers to consumers.
“LCD TV is doing excellent in metropolitan cities and tier II cities. In the next six to eight years, there will be a huge boom in the LCD TV market. All three, four and five star hotels are buying LCD TVs in bulk,” states Parmeet Singh, marketing manager, Beltek India. A survey predicts that more than 23 million Indians will own LCD TVs in the next five years.
Demand leads to manufacturing
A bigger boost in LCD TV market and a smaller one in the plasma TV market, have, in turn, impacted the overall electronics industry positively. To gain economies of scale is very important in the present scenario, as it gives manufacturers an advantage over the material cost, which constitutes about 80 per cent of the total cost of the TV set.
The Indian LCD TV market has also witnessed entry of a number of multinational companies (MNCs) in the country. This has helped India to emerge as a TV manufacturing hub, with many domestic and MNC companies opening their production bases on the Indian soils. Samsung already has LCD manufacturing facilities in India. “But due to the new standards and trends set up by the MNCs for the industry, local players, particularly small and medium ones, have to struggle,” says Ajay Gupta, proprietor, Nath Electronics.
The stiff competition in the LCD and plasma market sees companies resorting to various sales and marketing tactics to attract consumers. Besides brands, there are innumerable local manufacturers who are either manufacturing locals brands or assembling for international brands. This competition, no doubt, has drastically increased the sale of LCD TVs in India.
Industry analysts opine that although MNCs are not making large profits, they are here to stay. Also, with large financial resources and technological superiority, they are not only posing challenge to small and medium players but also the domestic brands like BPL, Videocon and Onida. However, the multinationals have helped increase the overall growth of the industry. Not to mention, domestic brands have always matched their strengths and their competitive pricing strategy, and amidst this fierce competition, the LCD TV industry grew and made space for even small and medium players.
Growth leading to opportunity
This growth story of the TV industry, particularly LCD TV, holds a lot of promise for the suppliers of SMT equipment, components as well as leading players in this segment. Future players can also plan their investment in this sector and adopt sales strategy for generating more demand. Growth of SMT equipment and components market is bound to increase in India along with the growth of LCD and plasma TV market. Therefore, irrespective of all hindrances, manufacturing of components should happen in India, which is likely to flourish, predict industry analysts. But unfortunately, the present component base is very weak.
However, manufacturing of electronic components in India being less, manufacturers and assemblers of TV face problems in sourcing components from local manufacturers. Most TV makers are, therefore, importing components or complete component kit from countries like China.
“Many factors serve as hindrance to manufacturing of components for power devices in India,” says Pradeep Khadilkar, director, Cermet Resistronics, manufacturers of resistors. “The qualitatively better raw materials imported from other countries are much cheaper than the domestic ones and that is restricting the growth of manufacturing components in India. Many local manufacturers are hesitating to enter this sector as the situation here is not conducive for manufacturing components,” he adds.
The component manufacturers are concerned that TV makers are increasingly importing components or kits. “Although we do not source any component from the Indian market, 60 per cent of the TV market is captured by unbranded products with their components being sourced from local manufacturers. So, I don’t think that local component manufacturers will suffer in any way,” says Khalif Siddiqui, AGM, marketing, Prolonies System India Pvt Ltd.
Amit Agarwal, proprietor, Advance Technologies, points out, “As the demand for LCD TV is growing, it becomes even more essential that domestic players as well as MNCs to source components from the domestic market. But presently, almost 70 per cent of components are being imported and thus the advantage of low labour costs in India gets nullified by duty charges for importing components. We also have to do a lot of catching up when it comes to domestic component manufacturing for CTVs in terms of technology and infrastructure.”
While the quality of Indian components is on par with international ones, they remain costlier than the international ones as they are produced in less quantity. Manufacturers of CTVs are, therefore, forced to import. A broader range of components should be produced within the country, feel CTV manufacturers. But with the demand rising, the Indian component market is also growing with time.
Indian manufacturers need to be aware that it is a great time to be in the components business. Despite all hindrances, they need to take risks and manufacture more number of variety so that TV manufacturers don’t feel the need to import. Also, the buyers of components for CTVs should be aware that some of the Indian components are better in design and quality. Most importantly, the Indian components can be customised as per requirements. So, if the manufacturers and buyers of components understand each others’ needs, there is no stopping for the Indian LCD and plasma market to take a great leap.
