Live From CES: The Hype Machine Shifts Into Overdrive

CTA sees growth in nascent technologies, especially VR and UHD

CES 2016 doesn’t officially begin until tomorrow, but the parade of press events and reports on consumer trends has already begun, with a presentation by Shawn DuBravac, chief economist, and Steve Koenig, senior director of market research, Consumer Technology Association (CTA), yesterday at the Mandalay Bay Convention Center in Las Vegas.

“There is a greater focus on what is technologically meaningful and less on what is technologically possible,” DuBravac said. “How does the use scenario fit into what the consumer is already doing?”

He laid out five key drivers of consumer technologies today: computing power is now ubiquitous; digital storage is now seen as an unlimited resource; connectivity is also much more reliable; the proliferation of digital devices; and the “sensorization” of tech. Over the past decade, those five drivers have matured to get us on the doorstep of the second digital decade.

CES 2016 ramps up to Opening Day in Las Vegas.

DuBravac also sees the industry at an inflection point, because nascent categories are increasingly showing growth and will continue to gain market share.

“What is helping maintain growth are some of the nascent categories,” he explained, noting the 500 exhibitors in the Eureka Park Marketplace, double the number at last year’s show.

“Clearly, CES is home to some of the largest multinational companies in the world but also to startups,” he added.

One nascent area that will undoubtedly garner plenty of media attention is virtual reality.

“It’s a big area, and there was a taste of it last year with Google cardboard,” said DuBravac. “We see the potential for it as an immersive experience for kids and adults.” The CTA is predicting 1.2 million VR devices sold, accounting for more than $500 million in revenue.

“Oculus will be launched in the first half of the year, and Sony will be heard at CES showing what they are doing with PlayStation VR,” he said. “There are more than 100 companies doing something in VR or AR environments here, so it is a growth area.”

One area that promises to give the VR market even more traction will be the increasing availability of 360-degree VR cameras.

“Consumers will be able to upload and share content,” DuBravac noting, adding, “That is one of the key pieces in any environment: that all of the components needed come together.”

Go Big or Go Home
Another consumer area where the components appear to be coming together is 4K and UHD. In 2014, 1.4 million 4K sets were sold. Last year, that number jumped to 7 million (a 400% gain), and 13 million units are expected to be sold this year.

“Sales continue to expand, and the ecosystem is coming together,” DuBravac pointed out. “There will be 4K UHD Blu-ray introduced here at the show, and Warner Bros says it will release 35 4K Blu-ray movies.”

Koenig added that sizes of TV sets are trending up and are forecast to average 42.1 in. this year (up from 40.4 in. last year).

“UHD sets will be at 21% of sales globally in 2016,” he said. “The vast majority of those will be 50 in. and above. And, as set makers move to 1080p for sets smaller than 50 in. and 4K for sets larger than 50 in., the demise of 720p seems inevitable.

“One big trend we are watching is that video viewing is more diversified across many different screens,” he continued. “Consumers in the U.S. still say that TV is number one for viewing, and that is true in other places as well. But, in emerging markets, where the priority is a smartphone, they may not buy a TV as they will have a smartphone and a laptop and can stream video to their heart’s content.”

The Technology Triumvirate
The CTA forecast for LCD-set sales this year calls for sales overall to remain flat (plasma TVs, meanwhile, will tumble 78% for a second consecutive year).

“It really is a mobile world now as [mobile devices] account for 47% of consumer-electronics spending,” Koenig explained. Smartphones account for about 40% of that spending, and, with tablets added in, the estimate climbs to 46%. Including mobile PCs raises the number to 48%, creating a “technologies triumvirate” of smartphones, tablets, and mobile PCs.

“It is a very mobile-driven global consumer-tech marketplace,” he added, “and those devices are responsible for the industry growth and helping underpin other innovations like Lyft and Uber.”

The question is, how long will the triumvirate last? “How long will it be before the tablet technology is squeezed out by larger smartphones and convertible PCs?” asked Koenig.

The future of tablets may be a concern, but, for the next few days, expect concerns to take a backseat to hype. Watch for SVG’s continuing coverage live from CES.