Hampered by various industry factors, China’s Blu-ray Disc (BD) player market will grow at a lowerthan-expected rate in 2011, according to a new IHS iSuppli China Research report from information and analysis provider IHS.
Although shipments will rise by 33 percent to 13.1 million units this year, industry players had anticipated 59 percent growth. Unit expansion is expected to slow in the coming years, with shipments peaking at 18.95 million in 2013. Shipments then will begin to decline, falling to 15.8 million in 2015, as presented in Figure 6.
Revenue will follow a similar path, increasing to $1.3 billion by 2013, up from $1.1 billion in 2010, and then retreating to $885 million by 2015.
The lower-than-expected growth for BD players in 2011 is the result of a number of factors, including higher barriers to entry that are limiting the addition of new players into the market. Furthermore, high royalty fees and green industrial-chain issues are driving up production costs. Conservative strategies among major industrial players likewise have stunted the development of their own companies.
Perhaps a more fundamental concern for the long-term prospects of the BD player market is the changing viewing habits of consumers. Increasingly, viewers are turning to online and on-demand sources for their video entertainment needs—and turning away from physical media like Blu-ray and DVD.
However, one segment of the BD market expected to enjoy above-average growth during the next few years will be the Blu-ray 3D Disc player market.
Broadcom Exiting BD Business
Earlier this year, U.S. firm Broadcom Corp. announced plans to close its digital television (DTV) and BD business unit in China at the end of 2011. Despite its dominant position—the company holds more than 70 percent share in the BD player space—Broadcom has chosen to exit the market because of lower profit margins, reduced market growth ratios, intense competition and the need to maintain larger service teams. Given the lack of experience and core technology among China’s major consumer electronics makers, they must fend off numerous rivals and struggle to obtain every purchase order available in the BD player business. Their key challenge is to accelerate time-to-market of new products to earn higher profi t margin.
In response, core semiconductor suppliers will have to establish internal support teams as well as externally extensive service networks in order to satisfy the flexible requirements of manufacturers.
Qualified service can support suppliers to strengthen relationships with key manufacturers as well as to expand market coverage. Some technology-oriented suppliers also are well-advised to exit the market, being unable to provide qualified service within the country’s intensely competitive consumer electronics sectors.
Following Broadcom’s exit, Taiwan-based MediaTek will become leader in China’s core semiconductor chip market for BD players beginning in 2012. However, MediaTek will find it necessary to expand product sectors and improve chip performance in order to maintain long-term success.
On the domestic Chinese front, TCL Technology Electronics Co. Ltd. will become the country’s top local manufacturer in 2011, with several established important advantages compared to its rivals.
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