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3D format could see much better consumer response later this year

Tuesday, Feb 15, 2011

Gulf News

Sales impacted by software which is lagging behind, says Eros CEO

Dubai: It’s a fact: sales of 3D televisions in the local market have not exactly been jumping off the screen. Now, manufacturers and local electronics retailers alike are hoping that with a few tweaks here and there and more software titles being available, the format could have a better consumer response starting from later this year.

“While the initial pick up on the format’s launch [during summer last year and coinciding with the football World Cup in South Africa] locally was good, even at the premium prices, I would agree current sales are no where near expectations,” said Deepak Babani, CEO of Eros Group , which is the distributor for Samsung. That consumer interest waned was not entirely borne of reasons to do with the local marketplace.

“At the end of 2009, all the leading studios in the US were planning to move to 3D and allied software. Consequently, the hardware industry was expecting a lot of software — i.e., film titles on 3D — to be available by end 2010, which didn’t happen.

“On a parallel track, hardware was getting introduced such as Blu-ray DVD players from April followed by 3D televisions in June. But software was seriously lagging and this had its impact on sales. On the gaming side, enough titles are available, but not enough to drive hardware sales.”

Tweaks required

At the recent Consumer Electronics Show in the US, manufacturers confirmed they were planning to go back to the drawing board and iron out the chinks in 3D format and how it was viewed. Needless to say local electronics distributors and retailers such as Eros have a lot riding on these tweaks.

“Some of the feedback from consumers had to do with the glasses (for 3D viewing) being heavy and those with prescription glasses had to wear both,” said Babani. “These issues are being addressed by manufacturers and in the upcoming launches from April to June, we should be seeing the results.”

According to him, the higher mark-up 3D panels carry is not much of an issue for the consumer, but, going forward, connectivity will be. “Until now a feature that wasn’t emphasized by manufacturers had to do with connectivity — how your television panel can be used to surf the web and a lot of other things.

“Now, mid to high-end LCDs and LEDs are coming with connectivity. The number of widgets on panels used to be five or six and now are on the rise and probably by the middle of the year will be around 100. My TV will automatically connect to my favoured websites.

“The next stage will come with built-in Internet connectivity and wireless when you can use the TV to surf without a laptop. It’s not complicated at all, I would even say it’s dummy-proof.

Transition soon

“And that transition should happen from the middle of the year.”

Away from 3D panels, there’s a lot of movement on the LCD and LED side. Babani contends LCD monitors could well be phased out by year end or limited to the entry models.

“Last year, the LCD to LED price differential was something like 15/20 to 85/80. This year, it would be 40:60 and even 50:50. But the visual quality is markedly superior on LED and the proof of that is in the viewing.

“Until now, prices ensured that LED panels were slightly out of the reach of a wider customer base. This year, that will not be the case any more.”

With LED panels fetching the volumes and 3D televisions the higher margins, the fortunes of the local consumer electronics marketplace would be truly two-dimensional.

Dubai With volumes growing at about 20 per cent, the local consumer electronics marketplace was a good place to be in last year. “For us it was even better as Eros grew 47 per cent, and while there was a slight erosion on margins, that was in line with the industry average,” said Babani. “The volumes more than took care of that.”

Obviously, the exclusivity on the Samsung electronics and mobile solution range offers Eros a great deal of leverage. The brand currently makes up 65 per cent of the local firm’s topline numbers. “We need to tie our growth to meet Samsung’s aspirations,” said Babani.

“There’s a certain deliverance on which they would have based their forecasts, and with Samsung these are quite aggressive. If we didn’t meet them, we wouldn’t have justified our status.” At the same time, Eros , which also represents Hitachi, recently acquired local rights to TCL, a Chinese brand with an extensive product line-up own but at lower prices.

On plans for its retail presence, “We do not get into a mode where the business at one showroom gets eaten by another because proximity,” said Babani.

“There will be always be overlaps, but will not have big ones.

“Having said that, there’s still areas that we can cover over and above the 30 stores we have now.” On a more immediate basis, plans have been finalised for a ground plus ten-storey corporate headquarters building in Dubai Investments Park.

By Manoj Nair, Associate Editor

© Gulf News 2011. All rights reserved.