Global Television Industry Comes to Grips with COVID-19

International measures to contain the COVID-19 virus pandemic are wreaking havoc for television manufacturers, retailers and market watchers trying to gauge demand for the 2020 television buying period.

Forced and voluntary stay-at-home directives around the world have resulted in temporary factory shutdowns at display panel and knock down TV factories in China, South Korea and other Asian areas. This after the region’s factories were mostly back up and running. But a delayed effect is now hitting final assembly plants in Europe, Slovakia and India (the latter representing a 10 million unit per year market) at the time of this writing.

In the U.S., social distancing directives have resulted in millions of layoffs and job furloughs, while key sports seasons and entertainment events that typically generate a boost in demand have been canceled or postponed. This will likely result in a further hit to global unit sales growth compared to a year ago.

As with almost every other commercial and industrial sector, the full impact of the disruption is difficult to calculate. This is a virtually unprecedented situation in modern times, and TV shipment market forecasters have plotted everything from small single-digit percentage unit sales gains for the full year, to a global shortfall of 20% or more by January. It all depends on how effective each region is at containing the COVID-19 spread.

In many territories around the world, social distancing has forced the temporary closure of brick-and-mortar retail stores, which are important for consumers in making a final purchase decision. On the other hand, the global marketplace—led by Asian populations—is becoming more comfortable purchasing television sets via e-commerce platforms, keeping a significantly large portion of the business churning ahead.

E-commerce has become an increasingly attractive distribution channel for stay-at-home shut-ins engaged in the “nesting” or “cocooning” phenomenon. Manufacturers had hoped to boost demand with some households looking to make the best of a bad situation by adding new and more screens on which to watch news reports and streamed video entertainment.

However, at the time of this writing, key market research outlets had altered forecasts by more than 20 million units to show a decline in global TV shipments for the year. This would, by some accounts, place unit projections down nearly 20% from original forecasts of around 225 million shipments.

Many industry watchers expect the biggest downward impact to show up in the North American and European markets, which beyond China, are some of the largest regions of TV demand. Some revised forecasts for 2020 North American TV suggest a similar near 20% reduction.

In those sectors, non-essential store closures are expected to result in a huge negative sales impairment in the short term. Under ideal circumstances, conditions will improve toward the end of the year, allowing for a gradual progression back to normal conditions.

This will likely help move mid- to higher-tier SKUs that typically attract customers with discretionary income. However, declines will likely be seen most significantly in mid- to low-end “mainstream market” models as job interruptions and other effects of a recessionary economy keep non-essential purchasing to a minimum.

We’ve received anecdotal evidence from U.S. high-end A/V specialty dealers who say they have seen an uptick in demand for some high-end 4K and 8K TV models as well-heeled customers adjust to home restrictions by upgrading their entertainment centers. On the downside, this is hampering profitable custom installations that bring installers into contact with residents. However, some of these dealers are seeing an increase in the level of e-commerce sales around the country to partially offset the hardship.

The impact should be less harsh in China, Taiwan, South Korea and other countries that took the most forceful actions to curb the virus’s spread weeks after the initial outbreaks. The postponement to 2021 of the Tokyo Olympic games, however, will likely hurt demand. The event is a traditionally strong TV sales driver.

Some analysts say the Olympic games and Euro Cup football tournament typically account for a 3-5 million unit increase for worldwide TV demand, which will now be offset by a year. Ditto for Copa América, the South American football championship.

As for the longer-range impact of the virus, some market observers believe the big winner will be e-commerce as a retail distribution channel for TV sets. The sector may well see a radical spike in popularity, especially in North America and Europe where brick-and-mortar stores have been the dominant outlet. Once conditions return to normal, traditional retail channels will have to step up in-store and online customer service, outreach and added-value incentives to encourage their customers to start shopping again.