Consumer Electronics Show: Televisions are getting smarter and smarter

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Posted: Tuesday, January 7, 2014 12:00 am

SAN FRANCISCO — Big, bright, sharp and sophisticated, television sets have never looked better. But that is a problem. The TV industry has innovated itself into a corner.

Crisp, high-definition TVs as big as 50 diagonal inches can be had for a few hundred dollars. Why bother upgrading or paying more for a fancy new one? Many people do not. And if you spend much of your time watching streaming video on a tablet or phone, paying for a better TV seems even more pointless. So for several years now, TV sales have been lackluster.

Electronics manufacturers, though, are not losing hope. And at the 47th International Consumer Electronics Show in Las Vegas, which opened Monday, they are showing how they intend to attract more customers. In many cases, it will be by offering so-called smart TVs that can connect to the Internet and run apps.

“Consumers are telling us they're more interested in connected” televisions, said Benjamin Arnold, an analyst at the NPD Group, the research firm.

For example, at the show, Roku, the manufacturer known for making set-top boxes that include Netflix streaming, is announcing designs for integrating its streaming media service directly into television sets. Two Chinese manufacturers, Hisense and TCL, will make the first products based on the designs.

Roku, which is based in Saratoga, Calif., will show six television set models at the show with its service built in, said Anthony Wood, the company's chief executive.

Wood said Roku is in a position to make a smarter television than others in the industry. He said most TV set makers do not have the resources to make smart televisions with a broad selection of content, partly because many media companies do not want to create versions of their apps for all the smart TVs on the market. There are already more than 1,200 apps available for Roku, including HBO Go, Netflix, Vudu and others, he said.

“Our strategy is to be the dominant platform on the big screen,” Wood said.

At least two other software systems for Internet-connected televisions were announced at the electronics show Monday:

>> Mozilla, the nonprofit organization behind the Firefox Web browser, said it is putting its Firefox OS software on smart TVs, starting with Panasonic's.

>> LG Corp. announced plans to power 70 percent of its smart TVs this year with the webOS mobile system it bought from Hewlett-Packard Co. last March.

Meanwhile, Samsung, the No. 1 television manufacturer in the world, is also bullish about Internet-connected TVs. This year more than 75 percent of Samsung TVs will be smart TVs, said Joe Stinziano, an executive vice president for home entertainment at Samsung Electronics America.

But Samsung, like other television makers, is covering its bases by also trying to grab consumers' attention with flashy new features for the old-fashioned set. The manufacturers have been introducing these kinds of features for a while now to little avail; last year's crop of sets offered the ability to watch content in 3-D and included screens with quadruple the pixels.

Yet shipments of sets last year were down, and with little content to watch, 3-D TVs are a failure so far.

In the United States, sales of Ultra HD TVs in the 12 months that ended in November accounted for less than 1 percent of overall sales of televisions 40 inches or larger. Nonetheless, this year, Samsung is emphasizing curved high-definition TVs, including a high-end 105-inch Ultra HD TV with a curved display.

The slightly concave screen cuts down on reflections from ambient lighting, like the ceiling lights in a living room, for example. It also allows people who are sitting off to the sides, away from the central sweet spot, to get a better viewing experience, Stinziano said.

“Your eye is curved and this TV is also curved,” he said. “It's a much more natural feeling.”

Other TV makers like LG, Panasonic, Sharp, Toshiba and Sony will also showcase their big-screen Ultra HD TVs at the electronics show this week.

Out of all the TV makers' tricks, smart TVs appear to be gaining some traction. In the year that ended in November, 22 percent of televisions sold in the U.S. were Internet-connected televisions, compared with 11 percent in the previous year, according to NPD.

And an NPD survey found that 38 percent of people who bought smart TVs found the Internet connectivity and apps to be important; two years ago, 33 percent of respondents said the feature was important.

To James L. McQuivey, an analyst at Forrester Research, the wide interest in streaming demonstrates that manufacturers of ultrahigh-resolution TVs seem to have misread the market when they fiddled with sets to create even better, more immersive pictures.

“A lot of these TV manufacturers grew up thinking they understand why people watch TV,” McQuivey said. “They came to the wrong conclusion. All of these TV makers were trying to outdo each other with this thing called quality.”

McQuivey pointed to the huge growth in mobile video consumption and video services like YouTube to show how consumers are gravitating to services with lower-quality pictures than conventional television.

“They were wrong,” he said. “Turns out the reason people watch video is much more emotional and psychological.”

Overall, in the year that ended in November, TV-makers sold $15.5 billion worth of sets in the U.S. in 2013, down about 4 percent from the same period in 2012, according to NPD. Worldwide, manufacturers shipped 155.4 million television sets in the first three quarters of 2013, down about 3.6 percent from the same period in 2012, according to NPD DisplaySearch.

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