GfK UK Digital Home update

Wednesday, May 20th, 2009

GfK Retail and Technology – United Kingdom, Consumer Electronics

May 2009 represents the first anniversary of the reality check that came in May 2008 with the first monthly decline in Consumer Electronics turnover (compared to the equivalent month of the previous year) for many years. The 6.8% decline in mainstream Audio Video products provoked an orgy of soul searching, as manufacturers and retailers faced up (quite accurately as it turned out) to the prospect of there being more of the same in the months that followed.

One of CE’s enduring strengths in the many years’ unrelenting growth that preceded the current situation has been the advance of digital technology in most product groups. Even twenty years ago we were marvelling at the relatively new CD market, and admiring the Liquid Crystal Display on our remote control handsets.

The real breakthroughs, however, occurred at the end of the 1990s, with the introduction of Digital Video and Audio Broadcasting. As it became clear that our analogue products were facing extinction, manufacturers, retailers and broadcasters set about converting us all. Taken at a superficial level, we appear to have reached a respectable level of ownership of digital TVs, with estimates approaching 90%.

However that still leaves 3 million households which are still only able to watch analogue broadcasts, for a maximum of four more years until switchover is completed at the end of 2012. The potential problem will most likely be found in the multi-set homes, where GfK’s ConsumerScope panel shows that between a third and one half of households owning more than one TV have at least one analogue TV. We should therefore be able to look forward to significant sales of smaller screen digital TVs over the next few years.

Not for the first time, attention needs to be paid to the recording element of digital broadcasting. Nearly 50 million Video Recorders have been acquired in the last twenty years, and even though sales have dwindled to negligible volumes, a viable alternative is required.

At the moment this need is being catered for in four and a half million households, but sales of non-subscription digital recorders do not appear to be sufficient to cater for the significant demand that can be expected as more areas switch over by the end of 2009. The 100,000 sales in the first two months of 2009 are just the start of a concerted effort to sell these products over the next few years, not forgetting the 185,000 DVD Recorders with a Digital Tuner sold in the same period. Average prices for both products also held up in the early part of this year at £108 and £195 respectively.