Sony has provided more information about the release of its PS VR2 through its official blog. According to its latest blog post about this product, the new VR headset, which is the main part of a PS VR2 bundle or package, will hit the market on February 22, 2023. The retail price of the entire bundle is now set at US$549. The bundle comprises the PS VR headset, two Sense controllers, and a set of stereo headphones. While the price of the PS VR2 is higher than that of the PS5 (i.e., US$499 for the standard PS5 and US$399 for the Digital Edition of the console), it is worth noting that the previous generation of the PS VR headset—the PS VR—priced the same as the PS4 Pro (i.e., US$399). Also, if we include two previous-generation PS VR controllers (i.e., the Move controllers) that cost US$49 each, then consumers would pay a total of US$497. Hence, the price difference between the older PS VR bundle and the PS VR2 bundle is almost US$50; and this is actually a fairly reasonable reflection of the cost of the new hardware. After all, the PS VR2 and the Sense controller incorporate quite a few new features and components such as eye-tracking and haptic feedback.
Generally speaking, Sony’s plan is not about making the PS VR2 more expensive than the latest PS console, per se, but rather about following a pricing strategy that is specific to its VR devices. It should be pointed out that for the previous generation, Sony sold the headset separately from the supporting controller. There was no bundle back then. Now, the company only sells the PS VR2 in a package deal that includes the headset and two motion controllers. Because of this change in sales strategy, consumers feel a price hike. As for the possibility of Sony selling standalone PS VR2 headsets in the future, TrendForce believes such move will be unlikely mainly because Sony is focusing on gaming experience rather than instinctively trying to raise the market penetration rate of the PS VR2.
When the PS VR was launched, the gaming experience that it provided was affected by the low market penetration rate of the PS4 Pro. Learning from this lesson, Sony has removed forward compatibility from the hardware and software designs of the PS VR2. Therefore, the combination of the PS VR2 bundle and the PS5 console is now the only way to get the most ideal VR gaming experience from Sony. And with this approach, Sony hopes to raise the market penetration rate of the PS VR as a whole. Moreover, the gaming experience for users of the PS VR2 will be mainly immersive. So, in addition to the specially designed video and audio content, the PS VR2 will also feature a wider range of operations and a greater variety of feedback mechanisms. Additionally, the game content for the PS VR2 will be designed specifically for the Sense controller. All these details again reveal a strategy that insists on a total package for consumers.
PS VR2 Shipments Are Forecasted to Reach 1.6 Million Units for 2023
While pricing will definitely affect the sales volume of the PS VR2, it is also important to remember that the game console market targets a just few particular subsections of consumers. VR gaming is thus a narrow segment within this niche market, and VR gaming devices are never going to reach the same scale in sales when compared with the more typical consumer electronic devices. Furthermore, game console users as a group tend to be willing to spend more than do most other consumers. Hence, providing a proper gaming experience is a much more effective way to grow the VR gaming market as opposed to trying to keep hardware prices down.
And for the reasons described above, we can also anticipate that the cumulative sales volume of the PS VR2 will unlikely be comparable to that of Meta’s Quest 2, which has reached the level of tens of millions. However, the PS VR2 should have no problem reaching the 5~10% market penetration rate that is already attained by the PS5. TrendForce projects that the cumulative total sales volume of the PS5 console will surpass 30 million units by the end of 2022. Considering the impact of the weakening economy on consumer spending and the lack of VR games in the initial period of adoption, some gamers will put off purchasing the PS VR2 until they believe the time is right. Still, shipments of this device are forecasted to reach 1.6 million units for 2023. The key factor that could push sales of the PS VR2 even higher is whether its games have the content that complements its hardware and thus provide an exceptionally immersive experience.
Sony stated in an earnings call that PS5 shipments totaled only 11.5 million units in the last fiscal year (2Q21 to 1Q22), missing the target of 14.8 million units. Increasing PS5 game console production will be the company’s main task for now and sales are expected to rise to 18 million units this fiscal year. In addition, Sony also stated that it will strengthen live broadcast services and extend game services to other devices, as well as step up its VR business.
PS5 sales will continue to grow in 2022 but market instability remains
Although Sony had high expectations going into the launch of the PS5 and market reception was good, the PS5’s final sales volume was stifled by production hamstrung as a result of component shortages. Therefore, Sony specifically mentioned in the Business Segment Briefings, comparing US retailer events sold PS4 to the PS5, the PS4 sold an average of 6 units per minute, while the PS5 now sells approximately 1,000 units per minute, demonstrating the strong market demand for PS5.
At the beginning of the PS5 release, there were reports of an insufficient supply of components. When the PS5 was released at the end of 2020, it had been in production for several months and accumulated a certain amount of inventory. Even if production capacity was in short supply when the console was released, Sony could still meet some market demand in the first year with its inventory and then increase production capacity in 2021 to make up the difference. However, in 2021, semiconductor production capacity was also in short supply. Not only game console products, but numerous other products experienced a shortage of components. Naturally, Sony was unable to further increase the supply of PS5 consoles, resulting in PS5 sales coming in lower than originally expected. Sales even declined in 1Q22. As the imbalance between supply and demand of semiconductors gradually eases in 2022, Sony predicts that PS5 production will begin to increase to fulfill market demand and announced a sales target for this fiscal year of 18 million units.
Even so, there remain many uncertainties in 2022. First of all, although pandemic lockdowns in China have yet to directly affect the assembly and production of game consoles in Shandong, the risk of potential fallout still exists given the uncertainty of pandemic development. Secondly, demand from the overall consumer market may be exhausted in 2022. This is due to unfavorable factors such as inflation, wars, pandemics, and rising energy prices. Disposable income in 2022 is forecast to shrink as a result and force consumers to give up some non-essentials or delay purchases. So this may cause consumers to delay replacing their current console with a PS5. A combination of the original dearth of PS5 supply and the impact of the scalper market seriously depleted the stock of products on the market. Some consumers who were eager to enjoy new console games may have switched over to buying an Xbox Series X/S first which may contribute to PS5’s 2022 annual sales volume falling short of Sony’s estimate. TrendForce expects that volume will only reach 14.34 million units. Even if this forecast references the range of Sony’s fiscal year (2Q22 to 1Q23), estimated sales volume will only increase to 16 million units.
The shipment performance of TV brands in 1H21 benefited from COVID-19 economic relief funds in the U.S., driving a continuing boom in North American shipments, according to TrendForce’s investigations. At the same time, TV brands continued to replenish panel inventories, pushing up panel prices. As the pandemic slowed down in Europe and the United States in 2H21, life returned to normal and pandemic stimulus no longer applied, challenging demand levels. In addition, rising raw material and freight prices pushed up whole device cost, forcing TV brands to pass costs onto retail pricing. Even though TV brands staked their hopes on the two major annual yearend sales promotion events of Singles Day in China (the biggest shopping day of the year globally, online and IRL) and Black Friday, sales performance was poor due to high costs leading to a slump in end-user demand and eventually causing TV shipments to decline by 3.2% annually to 210 million units in 2021.
TrendForce further indicates that panel supply and overall production capacity will be ample in 2022, dispelling severe TV panel price fluctuations while ushering in steady and moderate fluctuations as a replacement. After a sharp revision in TV panel prices in the 2H21, this year’s panel pricing is more advantageous to the planning of TV brands. In addition, the severe impact of the pandemic in Southeast Asia and emerging markets and high panel prices last year caused TV brands to reduce the scale of small-sized 23.6-inch, 32-inch, and 43-inch products, forcing a deferral of demand. In 2022, the pricing of small-sized panels will be close to panel manufacturers’ cash cost which will help TV brands recapture a larger proportion of small-sized panel shipments. The proportion of shipments below 39-inch will remain at 25%, medium-sized 40~59-inch panels will remain at 55%, and large-sized panels above 60-inch will remain the focus of international brands with market share expected to rise to 20%. Benefiting from the deferral of small-sized panel demand, TV shipments in 2022 will grow by 3.4% to 217 million units.
OLED TV growth to slow down in 2022, annual growth rate to settle at 27%
In 2021, OLED TVs benefited from soaring LCD prices in the previous two years. This was also the case with 55-inch 4K O/C products. The price difference between the two has narrowed from a multiple of 4.7 in early 2020 to 1.8 in mid-2021, thereby incentivizing more TV brands to switch to producing OLED TVs when LCD panel supply is limited and driving OLED TV shipments to 6.7 million units in 2021, or 70% growth YoY. Although Samsung Electronics intends to join the white OLED camp and simultaneously launch QD OLED TVs this year, the continuing falling pricing of LCD panels and the price of OLED TV panels (subject to LG Display’s strategy of increasing pricing as opposed to dropping them) may disrupt Samsung Electronics’ rollout of OLED TVs. If Samsung Electronics fails to launch spring OLED TV models, its original shipment target of 1.5 million units will inevitably be affected. However, whether it launches OLED TV models in spring or summer, Samsung Electronics will take advantage of its brand and channel advantages irrespective of other considerations to take the OLED TV market by storm and aim for a market share of 15%.
Annual growth rate of Mini LED TVs doubled, shipments push towards 4.5 million units
TCL has opened up new horizons for TV products after releasing its first Mini LED TV in 2020. In 2021, Samsung Electronics launched a series of 50-85-inch mid/high-end 4K and flagship 55-85-inch 8K Mini LED models, with shipments exceeding one million units in the first year, reaching 1.5 million units, and boosting overall Mini LED TV shipments in 2021 to 2.1 million units. In addition to Samsung Electronics and TCL continuing to utilize Mini LED in 2022, more TV brands will also join the fray. Overall Mini LED TV shipments will race towards 4.5 million units. SONY showed its 8K 85-inch and 75-inch TVs for the first time at CES at the beginning of the year. Sony’s flagship 4K 85-inch, 75-inch, and 65-inch models were the most notable at CES and Sony will join Samsung and LG Electronics as another international brand marketing OLED and Mini LED TVs, intensifying competition in the high-end TV market.
Quarterly TV shipment for 3Q21 reached 52.51 million units, representing an 8.3% QoQ increase but a 14.7% YoY decrease, according to TrendForce’s latest investigations. Demand for TVs was constrained during the quarter by the increase in various country’s vaccination rates as well as the rising retail prices of TV sets, resulting in a YoY shipment decline despite the arrival of the peak season. It should be noted that prices of TV panels began to plummet in August, and this price drop enabled Chinese TV brands to both expand sales during the Singles’ Day (November 11) shopping festival and in turn make up for deficits in their yearly sales targets. Global brands, on the other hand, will be unable to capitalize on the price drop of TV panels by reflecting this cost-savings on their TV sets’ retail prices until 1Q22 due to factors such as production, transportation, and inventory adjustments. These brands are therefore having a difficult time increasing their TV shipment for 4Q21. Quarterly TV shipment for 4Q21 is expected to reach 59.13 million units, representing a 12.6% QoQ increase but an 10.3% YoY decrease. TV shipment for 2H21 will therefore likely be among the lowest compared to shipment volumes for second halves of previous years historically.
TrendForce further indicates that TV manufacturers’ shipment performances have been weakening this year as the market approaches the year’s end. Stimulus checks issued in the US resulted in persistently high TV shipment in North America in 1H21, with brands maintaining their procurement of TV panels, thereby driving up the prices of TV panels as a result. As the COVID-19 pandemic is gradually brought under control, and everyday life returns to normalcy in Europe and North America in 2H21, the pandemic-generated upswing in TV sales subsequently lost momentum. Furthermore, while prices of raw materials and transportation/logistics services remained sky-high, manufacturing costs of whole TV sets also underwent a sharp climb and were then transferred to consumers. Taken together, these factors quickly wiped out market demand for TVs. TrendForce therefore expects annual TV shipment for 2021 to reach 210 million units, a 3.2% YoY decline.
With a forecasted annual shipment of 6.8 million units for 2021, OLED TVs have become favored by various brands amidst rising manufacturing costs of TV sets
TV brands face various manufacturing-related challenges this year. Not only have panel costs, which account for the largest share of TV sets’ manufacturing costs, undergone an increase, but port congestions have also led to rising shipping costs and an extended lead time before TV sets can be delivered for retail sale. In addition to an uneven availability of various components, these aforementioned obstacles all exacerbate the risks involved with TV brands’ shipment. In a bid to maximize profits, however, brands have been making a concentrated effort to ensure that the production of OLED TVs remained free from disruptions in an effort to maximize profits.
As brands shift the focus of their sales efforts to OLED TVs, OLED TV shipment for 2021 is expected to reach 6.8 million units, a 72.8% YoY increase. This growth can primarily be attributed to an increase in OLED TV supply due to the expanded production capacity of LGD’s production line in Guangzhou, as well as the narrowing difference between LCD panel prices and OLED panel prices due to the sharp rise in the former in 1H21. In particular, LGE is set to take leadership position with an over 60% market share and a 91% YoY growth in its OLED TV shipment. Trailing behind in second place is Sony, which has been sourcing OLED panels from LGD. The Japanese company is expected to register a 53% YoY increase in shipment and possess a 20% market share. Panasonic, on the other hand, comfortably took third place with a 7% market share. Notably, Xiaomi and Sharp are the two dark horses with regards to OLED TV shipment this year with explosive YoY growths of 900% and 140%, respectively.
Major brands will concentrate on the high-end and large-sized segments, while smaller brands will continue to steadily develop mainstream products
While demand in the TV market recovers as the pandemic runs its course, TrendForce expects 45% and 55% of the total annual TV shipment for 2022 to take place in 1H22 and 2H22, respectively. TV shipment for 2022 will likely reach 217 million units, a 3.3% YoY increase, as brands are able to aggressively ramp up their TV shipments thanks to not only an undisrupted supply of panels, but also gradually stabilizing prices. For major brands, their focus will be on medium-sized and large-sized products and on products with substantial added values. Hence, the market share of large-sized TVs (including 65-inch and above models) will for the first time ever surpass 20%, with medium-sized (40-inch to 59-inch models) TVs remaining at a 55% market share. Although major brands are gradually exiting the small-sized segment, and smaller brands will have an easier time expanding their presence in emerging markets owing to gradually stabilizing prices, small-sized (39-inch and below models) TVs will see their market share drop by 1.8% next year to 25%. In any case, the primary target markets for major brands and smaller brands will not overlap next year.
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Continued price hikes of TV panels, as well as a simultaneous shortage and price hike of semiconductor components required for manufacturing TV sets have forced TV brands in 2021 to reduce the shipment of their mid- and small-sized TVs in favor of the more profitable large-sized, mid- to high-end TVs instead, according to TrendForce’s latest investigations. This shift is expected to propel the annual shipment of QLED TV for 2021 to 11.02 million units, a 22.4% YoY increase. On the other hand, OLED TV shipment for 2021 is expected to reach 7.1 million units, an 80% increase YoY. As such, both product categories are expected to break records in terms of shipment this year.
It should be pointed out that, as increased vaccinations in Europe and the US bring about an imminent easing of border restrictions, TV demand generated by the stay-at-home economy is likely to slow down. In addition, TV panel costs have remained sky-high and shown no signs of downward movement. Hence, TV brands are moving towards larger product sizes and better specifications in order to maximize profits and minimize the financial losses incurred by selling mid- and small-sized TVs, which have relatively low margins. Given the downscaling of these less profitable models, TV brands’ annual shipments will likely suffer a corresponding drop. TrendForce therefore expects total TV shipment this year to reach 220 million units, a 1.4% YoY increase.
Samsung’s Neo QLED series will help propel annual shipment of Mini LED backlight TV to three million units in 2021
There has been a sharp drop in the profitability of mid- to small-sized TVs this year. In response, during the replacement period between old and new models, market leader Samsung Electronics has not only lowered the retail prices of its QLED products to attract consumers, but also released its new Neo QLED lineup, which features Mini LED backlights and resolutions ranging from UHD to 8K. Samsung’s QLED TV shipment is expected to undergo a 17% YoY increase to 9.1 million units this year, the highest annual shipment in history. In particular, Samsung’s lineup includes about 1.5 million Mini LED backlight TVs, mostly with 65-inch and 55-inch displays, and these sizes account for 33% and 30% of the company’s total Mini LED backlight TV shipment, respectively, while the ultra-large, 75-inch model will account for 17%.
TCL, on the other hand, released a relatively affordable 75-inch Mini LED backlight TV in 2020, with a 65-inch model released this year. TCL’s annual shipment of Mini LED backlight TV for 2021 will likely reach 800,000 units. Apart from the aforementioned two brands, Xiaomi and LG are also eager to enter the Mini LED backlight TV market. As such, TrendForce forecasts a total annual Mini LED backlight TV shipment of three million units for 2021.
While brands expand their production lines for OLED TVs, LG and Sony are expected to seize nearly 80% of OLED market share
At the moment, OLED TVs have been attracting consumer attention in the high-end TV market primarily due to their excellent image quality through high color saturation and contrast. As LG Display installs additional OLED capacity via its Gen 8.5 production line in Guangzhou this year, there will likely be a corresponding increase in OLED TV supply as well as a diversification of OLED TV sizes. Also, annual OLED TV shipment is expected to break records once again this year, as brands are willing to expand their OLED TV product lineups because strategic reductions in OLED panel costs have now significantly narrowed the gap between the cost of OLED panels and that of equivalent LCD panels, thereby giving OLED panels a cost advantage that allows TV brands to reap increased profitability. With regards to TV brands, LG Electronics remains the industry leader in terms of OLED TV shipment this year with a market share of more than 50%, while Sony takes second place with a 20% market share. Other Japanese brands (Panasonic, Sharp, etc.) and Chinese brands (Skyworth, Hisense, Xiaomi, etc.) are likewise expected to experience shipment growths going forward.
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