UltraHD Jumpstart from Japan?

February 12, 2013 | By More

The UltraHD industry is in need of market champions to develop the ecosystem as uncertain market take-up and revenue potential has led to hesitation in investments to promote the platform. The market push for UltraHD is expected to be led by three key regions of the globe, notably North America, Western Europe and East Asia, home to the wealthiest in terms of household disposable income levels and pay-TV households.

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Indeed, on the heels of Eutelsat’s initiative late last year in deploying the first  4K TV channel for experimental and demonstration purposes, Reuters reported in January 2013 that the Japanese government is set to launch the world’s first 4K TV broadcast in July 2014, roughly two years ahead of schedule, to help stir demand for UltraHD TV sets. The service will begin from communications satellites, followed by satellite broadcasting and ground digital broadcasting. Japan is likewise looking to develop super high-definition 8K TVs where the Ministry of Internal Affairs and Communications plans to launch the test 8K TV broadcast in 2016.

The announcement is worth noting:

  • First, the Japanese initiatives are government-led, aimed at boosting the country’s consumer electronics sector, which accounts for a relatively large share of the country’s GNP;
  • Second and more importantly, the initiatives being government-backed may not necessarily address or be in sync with pure market dynamics such that their impact may or may not work in boosting the UltraHD proposition.

Key questions are the following – Will the government initiatives lead to the envisioned faster or earlier development of the market cycle as well as improve UltraHD take-up rates? Or will the take-up rates remain the same even without the government initiatives thus following a “normal or natural” market cycle?

Developments in next-generation compression standards should proceed at a faster rate.

In NSR’s view, the government initiatives on the supply side will have some positive effect on the ecosystem.  Developments in next-generation compression standards, which in NSR’s view is one of the most important to truly jumpstart the market, should proceed at a faster rate.

nsr2However, the level of impact will likely be relatively minimal as the market economics or “free market” economics affecting the demand side cannot be changed dramatically by these initiatives. Unless the government directly provides incentives such as direct subsidies towards the purchase of UltraHD TV sets that lowers the price of UltraHD TVs (which incidentally could lead to “anti-dumping” measures when applied to the export sector) the abovementioned supply-side measures will have little overall impact on demand.

As such, UltraHD will remain a niche proposition accounting for a relatively small share of the globe’s total channel count, which should continue to be dominated by SD and HD channels. UltraHD due to expected high costs associated with bandwidth requirements as well as outlays from customers in the form of highly expensive UltraHD TV sets and added service costs for content bouquets, are longstanding issues that should continue to restrain investments in UltraHD from content providers as well as service providers in the cable TV, DTH and IPTV camps.

Bottom Line

Industrial policy-type measures where government’s influence to boost industries and sectors have worked well in the past, particularly in the case of Japan. Strategies by Japan’s Ministry of Internal Affairs and Communications, as well as that of Eutelsat, are certainly valuable. However, in the latest UltraHD market initiatives where stimuli affect the supply side and not the consumer, the impact in NSR’s view is likely to be minimal.  Demand-related initiatives need to be developed to truly impact the overall UltraHD proposition. Yet, measures when exported outside of Japan could potentially lead to violations in international trade laws and regulations, limiting the use and impact of demand-side initiatives.

UltraHD will likely follow the traditional course of the product life cycle. Although government-led stimulus will certainly help hasten market development, the measures forwarded thus far will unlikely highly affect the strategic investment decision-making of the most important players, namely content providers and service providers.

Information for this article was extracted from NSR’s report UltraHD via Satellite.

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Category: NSR

Jose Del Rosario

About the Author ()

Mr. Del Rosario is a senior member of the consulting team where he focuses his research on quantitative modeling, data verification, and market forecasting for the commercial and government satellite communications sectors. He conducts ongoing research with specialization in policy analysis, economic indicators, regulatory initiatives and end user demand trends. In addition to authoring numerous syndicated reports in his areas of focus, Mr. Del Rosario has been involved in a wide range of strategic consulting projects. He has advised clients on market trends, implications, and strategies on such diverse topics as high throughput satellites (HTS), hosted payloads, wireless backhaul, SCADA/M2M/LDR and multi-mission satellite programs. Prior to joining NSR, Mr. del Rosario worked with Frost & Sullivan as Program Leader of the Mobile Communications Group, as Senior Analyst & Program Leader of the Satellite Communications Group, and most recently as Country Manager for the Philippines. Other experience includes being the Development, Outreach & Communications Specialist at the U.S. Agency for International Development (USAID) in the Philippines where he contributed to USAID/Philippines’ various programs in energy, environment, health, education, economic development and governance. He was also the Public Affairs Officer of the European Commission’s Delegation in the Philippines, co-managing the Commission’s programs on economic cooperation and development assistance. He performed economic and political risk assessment of the Philippines and ASEAN, for use by Delegation officials in the Philippines and in the Commission’s headquarters in Brussels. Jose also worked as a congressional aide for the Malaysian Embassy and as a telecommunications legal researcher for Irwin & Lesse in Washington, D.C. Mr. del Rosario holds a Master of Arts degree in Applied Economics from The American University, and a Bachelor of Science degree in Political Science/International Relations from the University of Santa Clara.

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