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Consumers increasingly move to SmartTVs as new manufacturers undercut regular pricing

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During the October-December quarter of 2019, Xiaomi overtook Samsung as India’s no. 1 handset brand, after years of snapping at the heels of the dominant Korean brand. In 2019, the Chinese player shipped 43.6 million units, the largest ever by a handset maker, garnering a 28.3% share of the local market.The interesting part about Xiaomi’s market grab was that it happened with the shift of the handset market itself from feature phones to smartphones. Xiaomi started small and only sold smartphones. But as the market shifted, it sold more smartphones than the combined number of smartphones and feature phones rivals managed to sell.A similar shift is underway in the television market, and Xiaomi is looking well poised to similarly grab marketshare in India’s Rs 79,000 crore television market (according to data compiled by Statista). When Mi TVs (Xiaomi’s consumer brand in India is Mi) were launched in India in February 2018, smart TVs accounted for 12–15% of the total market. It is now 50%, according to industry estimates.“I believe by this Diwali 90% of the TVs sold will be smart. Demand is coming back stronger than in the pre-lockdown days,” says Eshwar Nilakantan, category lead, Mi TVs.The shutting of cinema halls and ban on popular apps such as TikTok and PUBG have helped drive people towards a large television screen at home. Smart TVs come with preloaded streaming apps and allows users to watch videos on YouTube and surf the internet.In 2017, the top three — Samsung, LG and Sony — together had about 65% of the market. Smart TVs were less than 20% of the business. TVs were bought in large-format retail outlets such as Croma, Reliance Retail and Vijay Sales or at large white goods outlets. And for the buyers, smart TVs were too dear, out of reach with a price tag of at least Rs 30,000 for entry level models. Non-smart TVs were around Rs 15,000. 77951904Xiaomi changed every rule in the book. In 2018, it launched a Mi Smart TV for Rs 12,999, with access to Netflix, Amazon Prime Videos, Disney Hotstar and other apps via Wi-Fi routers or mobile hotspots. Suddenly buying a non-smart TV didn’t make sense and was also more expensive. By end 2018, smart TV share in the overall TV market jumped to 40%, according to Counterpoint, which tracks the business. In two years since launch in February 2018, Xiaomi had sold 4 million smart TVs.For the fourth quarter of 2019–20, Xiaomi had a 32% share of the smartphone market, followed by both Samsung and LG at 14% and Sony at 11%, according to tracking data from International Data Corporation. 77951915Debashish Jana, research associate, Counterpoint research, says: “Xiaomi established itself as a value for money brand in smartphones and now have made smart TVs affordable for the masses. Besides, smart TV is a new technology, so past experience of making TVs (flat panels etc) is not a great advantage.”Xiaomi launched TVs in his home market China in 2016 and launched here in 2018 as “our phone users wanted us to bring smart TVs,” says Manu Kumar Jain, MD, Mi India. Jio’s aggressive data pricing, offering the world’s cheapest data rates ($0.26 per GB against global average of $8 per GB) helped accelerate the transition to smart TVs. Besides, OTT providers were upping their game around the time with free trial periods and subscription offers at under Rs 200 a month, and the package worked well for consumers — affordable smart TV, low data rates and plenty of premium content to binge on. Gaurav Gandhi, director & country GM, Amazon Prime Video India, says Prime Video comes preloaded with all new smart TVs. Users can sign up for a free 30-day trial and continue streaming thereafter at Rs 999 a year or Rs 129 a month.While content made it attractive to switch to smart TVs, low TV prices meant that large format retail won’t get attractive margins (15–20%) to carry the inventory. Instead of spreading the distribution thin, Mi went with one pan-India large retailer — Vijay Sales — and developed its own distribution channel, disrupted selling as well. It started selling TVs at the small kiosk mobile phone outlets, where there’s barely standing room for two people. Online channels, including its own site, comprise two-thirds of its sales. 77951986In 2019, India’s TV market for the first time touched 15 million units a year in sales, with half of the market being smart TVs. Samsung was still the leader in the overall TV market with a 15% share and Mi had 14%. In the smart TV space, Mi ruled with 24% share, against Samsung’s 12%, Sony’s 11% and LG’s 13% for the full calendar year, according to Counterpoint’s shipment data.Xiaomi’s success has created a rush of other players into the market, too. OnePlus launched in September 2019, and realme came in May 2020. Another Chinese brand TCL launched smart TVs in India in 2018. Jaina group, which makes the Karbonn-branded mobile phones, licensed the Japanese Sansui brand for 25 years and launched its smart TVs in 2019. There are also competing offerings from brands such as Vu, Kodak and Thomson. Older players, including Sony, declined to comment.A 43-inch television is now available from several brands at about Rs 25,000 and a 55-inch television at Rs 32,000. These represent a 40–50% discount over prices offered by traditional brands and also a sharp drop compered with prevailing prices a year ago.“Demand for TV is being driven by rising consumer preference for in-built smart functions in personal devices,” says Vikas Agarwal, general manager of OnePlus India. The company offers models in 55 inch, 43 inch and 32 inch sizes. Rival TCL offers a spectrum of products including smart Android TVs and 4K UHD including features like pop camera TV — which enables video conferencing on a large screen. It has invested Rs 2,400 crore in a TV panel factory, which is likely to start operations in Q1 2021 at Tirupati in Andhra Pradesh.Realme forayed into TV business in the peak of the Covid 19 pandemic in May 2020, with 32-inch and 43-inch products priced at Rs 12,999 and Rs 21,999, respectively. It is manufacturing smart TVs at its factory in Greater Noida.For smartphone makers, smart TV was a natural transition as it involved use of smart panels, chipsets, partnerships with OTT content providers and so on. It was a new product from ground up, involving a smart panel, chip sets, semiconductors, partnerships with OTT platforms and so on. Besides, for smartphone makers, it was a natural transition. 77951997Price + SmartsXiaomi, among the leading TV makers in China, was able to drop prices mainly due to its global scale. It claims its bill of materials is lower than that of competition. About 65% of the cost of the TV is a smart panel, which it makes in China, though the final product is made by Dixon at factories at Tirupati. It partly checked the distribution price by avoiding large-format retailers. As for the product, Xiaomi focussed only on the essentials. Mi TVs don’t come with wall mounts as it found 60% of buyers keep the TV on a table. If a buyer needs it, she pays an extra Rs 399.While that helped the consumer, the Chinese brands are able to offer products at such low prices due to three reasons, says Abhishek Garg, executive director Jaina Group. First, says Garg, is cheaper money. “The government directly invests in private companies in China, which is not there in India. So, their cost of capital is very low. Second is large volumes, which help them keep costs low due to economies of scale. China makes for the world. And the third is ability to respond quickly to market shifts.” Reacting to market shifts is vital to survive as companies like Nokia have seen it in the past — its market share disappeared as the market moved from feature phones to smartphones. “Older companies (like Samsung, LG etc) risk this if they don’t react to market changes,” says Garg.This is just the beginning of the market shifts in the market. Smart TVs are growing but the market penetration is low. Now, India has 250 million households and just 160 million installed TV base. And in this, flat TVs are just 50 million and rest are still the bulky CRT TVs, which are no longer made. “110 million consumers could move to smart TVs in the next few years. Next 5–10 years are exciting times to be in the TV business,” says Nilakantan.A niggle in this potential could be lack of broadband availability. India has less than 20 million broadband households (those with Wi-Fi) and many first-time buyers are using smartphones as hotspots to view content on TV. This stops after 60 minutes as daily data limits typical in most plans these days are breached (approximately 1GB), forcing users to switch to cable TV.Hari G Kumar, senior director, large appliances, Flipkart, says, “Buyers are transitioning from brand-driven to specsdriven.” 92% of all TVs sold on Flipkart are smart TVs.Some of the traditional players in TV now have lower visibility. “They could not understand why TV has to be smart. Earlier they held the IP to TV making and it was a dumb gadget. Now to make a TV you need an ecosystem of partners — panel, chip makers, OTT content providers and so on. Consumers are no longer brand loyal. Of Course barriers to entry have also been lowered,” says Harminder Sahni, managing director, Wazir Advisors (a consulting firm). 77952007Tech upgrades on television sets are a constant, just like mobile phones. Chipmakers are helping give that tech edge. For example, Taiwanese MediaTek is a supplier of semiconductors to the TV industry. Anku Jain, MD of MediaTek India, says, “Smart TV is no longer a visualisation device, but a central hub of smart homes. We expect 7-8 MediaTek-powered smart TVs by the last quarter of this year.” Its chips are being used by Mi, OnePlus, Motorola, Samsung and others. Chips come with built in features like voice controls and AI-SR (artificial intelligence-super resolution) which help in improving image clarity — resolving resolution mismatch between broadcast content (say in Ultra HD) and the TV panel (which might be just HD).The alphabet soup denoting newer technologies have progressed from CRT to QLED via LED, LCD and OLED. Soon there will be transparent screens, foldable screens and even wallpaperlike displays. Even as engineers make all the clever tweaks, companies will have to live with the fact that the competitive advantage is no longer in the labs or the hardware, but services they provide and in gaining mindshare of buyers. And the consumer is beginning to see TVs as a product to be changed as often as a mobile phone.

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