The Indian TV market seems to be having a Jio moment. After smartphones, the price war is coming to televisions. Reliance Jio and China’s LeEco, two players with deep pockets, entered the Indian television market with an aggressive pricing strategy and bundled content, which they expect will pose a serious challenge to the three top brands Samsung, LG and Sony. Chinese brand LeEco triggered a price war in the large-screen, flat-panel television market by selling a 4K set at Rs 60,000, about a third cheaper than some comparable models.
A senior executive with a Korean consumer electronics maker said both Reliance and LeEco could become serious competitors if they start a price war. “These companies are on a spending spree at the moment and would surely drum up big marketing spend for TVs which may require some counter campaign,” he said, requesting anonymity.
Mainstream brands such as Videocon and BPL are working on plans to counter the move, which is akin to what Chinese phone brands like Xiaomi, OnePlus and LeEco itself did to capture market share—selling high-spec devices at a lower price to compete with Samsung and Apple. Sony, Samsung, LG and Panasonic, which control three-fourths of the Indian flat-panel market, will continue their existing pricing strategy while assessing the scenario, executives said.
Videocon slashed price of 55-inch model
LeEco flagged flash sales of the 55-inch set and, going by past experience, it’s likely to be a sellout. Videocon a well cut the price of its new 55-inch model by almost Rs 20,000 to bring it closer to the LeEco price besides building a portfolio to fight the Chinese brand.
BPL is planning a launch with similar specifications around Diwali in October while Micromax is evaluating how to expand its price-warrior strategy in the large-screen segment, three industry executives said. 4K denotes a high-resolution panel of 4,000 x 2,000 pixels and while programming in the format is sparse, it’s a big draw for early adopters with wall space to spare at the LeEco price, analysts said.
But the price drops come at a bad time. There’s been a 10 per cent increase in LED television panel prices in China, which will push up costs. Videocon said it has an advantage over the online-only model of the Chinese company. “We have launched a 55-inch 4K television model at a special price of Rs 69,999 with a longer warranty of three years and consumers can touch and feel it in the stores, which is a bigger advantage than LeEco,” said Videocon Chief Operating Officer CM Singh. LeEco offers a two-year warranty, extendable by another two for the panel.
Least profit on TV sets’
The Chinese company launched three 4K models, one of 55 inches and two of 65 inches, a month back and said it has already sold 3,000 units. The 55-inch model costs Rs 59,790, while the bigger ones are priced at Rs 99,790 and Rs 1.49 lakh. The company currently sells them through Flipkart and its own e-store but they will be available in brick-and-mortar stores by the year-end. It also has plans to enter the 40, 43 and 50-inch segments with disruptive pricing.
The 65-inch models are sold out, said Atul Jain, LeEco India chief operating officer, smart electronics business. “We want to be the number one online television brand in the large screen segment by Diwali and (among the) top three television maker in India by 2018 across online and offline sales,” he said. “We will not make any profit on television sets, with revenue and profit being driven by our content.” LeEco has already tasted success in India with similar disruptive pricing in smartphones, selling one million units since February. The 4K sets come with a two-year LeEco membership that provides access to a library with movies, channels and television apps. “It will be a lot of pressure for competition to match up to our price and content library,” Jain said.
32-inch dominates market
BPL chairman Ajit Nambiar said almost 80 per cent of television sets sold online in India are in the 32 and 40-inch sizes and it is still a challenge to sell large screens online. “We will ensure we match up to LeEco’s price or even lower for our models. A 55-inch 4K model is also in the works and will be launched at a competitive price around Diwali,” he said. The brand confines itself to online sales. Micromax said the LED TV segment is on the edge of a big leap.
“Micromax has a portfolio of LED and smart LED TVs ranging from 20-to-55 inches under the Rs 45,000 price segment and has been instrumental in growing the mass LED segment in the market,” said Shubhajit Sen, chief marketing officer. The sub-40 inches television market in India contributes almost 80 per cent of sales by volume and 70 per cent by value. While Indian customers are upgrading to larger screens, the 32-inch TV is still dominant. Industry executives said LeEco’s disruptive pricing strategy may help it gain market share but it needs to ramp up the product line and expand in the offline channel since more than 90 per cent of television sales takes place through brick-and-mortar stores.
Price war in LED TV market space
Indian LED TV market is estimated at US$3.5 billion and is anticipated to cross US$9 billion by the end of 2021. Indian LED television sets market stares at a price war as both global big players and smaller domestic companies have lined up cheaper television sets given the large consumer appetite in the Rs 22,000 crore segment. International brands like LG, Samsung and Sony have already started to feel the pinch and started to act to propel tough competition from domestic players in the segment. LG, Samsung and Sony have reduced prices of their products by up to 15 per cent. All three are dominant players in India’s Rs 22,000 crore LED television sets market. Despite that, local manufacturers have not lost their business in the segment.
According to a report, smaller brands like Micromax, Intex, TCL, BPL and Sansui are selling their LED television sets at substantially lower prices given the tough competition from cheaper sets in the market. On top of that local LED television manufacturers like Micromax, BPL and other brands like TCL are selling these TVs at lower prices and are offering a discount in the range of Rs 2,000 and Rs 10,000 on identified TV sets.
Consumers who buy these LED sets are also enamored by different brands foraying into the segment with attractive and affordable prices as they change and buy a new LED set every six months on an average. The advancement of technology and the changing preferences of the consumers in India have been the major reasons for the gradual shift of the manufacturers towards OLED technology in televisions. The OLED television market is an emerging market in India and is still at a very nascent stage. The LED and OLED market is expected to register a burgeoning growth in the future years but this growth is less likely to be sustained owing to the emergence of new upgraded technology over LED and OLED in the market. “Globally, there has been no decrease in prices of LED televisions, but the big brands are under pressure to reduce prices in India due to sales taking a hit with several brands entering the market and playing on price,” head of a leading television maker said. At the centre of the price war lies the 32-42 inch television displays that account for 55 per cent market share of the segment. At present there are around 25 brands that are playing in the segment and many others are eying the market.