Why TV sales present a blurred picture this fiscal

Nandana James Mumbai | Updated on January 03, 2020

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High penetration of smartphones, OTT platforms and high GST among factors; sales may bounce back with innovations

Bearing the brunt of a slew of events, television sales growth has been flat this fiscal.

Frequent technology upgrades, changes in content consumption patterns, with a greater focus on flexibility and personalisation, changes in customers’ need hierarchy for appliances, as well as policy issues have affected demand, according to experts.

“The television segment lagged (this year) owing to policy issues, frequent technology changes, competition from new players and the fight for eyeballs with mobile screens,” Kamal Nandi, President - Consumer Electronics and Appliances Manufacturers Association (CEAMA), and Business Head and EVP, Godrej Appliances, told BusinessLine.

TVs account for 40 per cent of the consumer durables market, he added. According to Manish Sharma, President and CEO, Panasonic India, while the number of units sold may have grown, in terms of value, the fiscal will end with flat growth or even some contraction.

After witnessing a compound annual growth rate (CAGR) of almost 20 per cent between 2012 and 2016, the TV category has since seen subdued growth, he added.

GST rates

The GST rates — 28 per cent on TVs above 32 inches and 18 per cent on those below 32 inches — have been among the sales dampeners, said Nandi. A GST rate cut will help, he added.

Hetal Gandhi, Director, CRISIL Research, attributed the flat growth in the year-to-date (April to October) to the economic slowdown. “In this scenario, we have seen consumers defer TV purchases, as they are discretionary in nature,” she said. However, new entrants Xiaomi and Thomson TV, which started selling TVs in 2018, have posted significant growth. Raghu Reddy, Head-Categories and Online Sales, Xiaomi India, citing IDC’s smart home tracker, said its TVs have recorded 46 per cent growth quarter-on-quarter and 69 per cent growth year-on-year.

Avneet Singh Marwah, CEO of Super Plastronics Pvt Ltd, the official brand licensee for Thomson TVs in India, said the brand has grown 100 per cent in volume terms and 75 per cent in revenue terms.

TV sales started tapering in 2016, and what is happening currently is a rub-off of the changes that have emerged over the last couple of years, said Panasonic’s Sharma.

For one, TVs have slipped down the customer’s need hierarchy for appliances. Around eight years ago, refrigerators used to top the hierarchy, followed by TVs, ACs and washing machines. Today, smartphones occupy the top position, followed by refrigerators, ACs and TVs, he added.

Smartphone challenge

Content consumption is increasingly taking place on smartphones or other personal devices, observed Sharma. Mobile phones have become the substitute for TV thanks to the availability of low-cost data, reasonable subscription rates of over-the-top (OTT) platforms and the rising affordability of smartphones,” CEAMA’s Nandi agreed. The rapid growth of OTT platforms such as Hotstar, Netflix and Amazon Prime has resulted in changing consumer behaviours — especially among buyers of entry-level TVs, who now prefer smartphones to small-size televisions, Nandi added.

The increased availability of consumer finance options, which constitute 60-65 per cent of sales now, against 30-35 per cent five or six years ago, is another factor, said Sharma. These allow consumers to make purchases as and when they need it, and not necessarily when discounts and offers are available, he explained. This also explains the dampened sales during the Cricket World Cup in July and during Diwali, he added.

Innovation-led growth

Meanwhile, there is a lot of innovation happening in TVs, which could soon become more than just entertainment providers, said Sharma. While today’s smartphones facilitate multi-tasking better, the user interface of TVs is catching up.

TVs could potentially take on the role of a smart hub in homes, with multiple devices being connected to them. Smart TVs already constitute around 70 per cent of the overall TV industry, and this is set to increase going forward, said Sharma.

The increasing prevalence of 4K content on TV, coupled with falling prices of large-screen TVs, could help the category bounce back, he further said.

From calendar year 2020, TVs could register 20 per cent growth over the previous year, Sharma added.

The duty reduction on open cell LED panels used in televisions, from 5 per cent to 0 per cent, was also a positive for sales, said Nandi. “This has given a push to consumer sentiment; however, the price cut will probably reflect when fresh inventories hit the market,” he said.


Published on January 03, 2020

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