The advent of fine pixel pitch technology has opened up new opportunities in Indoor Applications for LED Video, making it a viable competitor to Rear Projection and LCD. This was evident in 2015 where there was an interesting trend of traditional Rear Projection and LCD manufacturers like Samsung, Delta, Panasonic, Planar, Philips, Eyevis, Vtron, GQY, Triolion, Christie, Barco and NEC launching LED Video products to complement their digital signage portfolio.
Due to mounting interest from display manufacturers, IHS has introduced a new category split of <=1.9mm pixel pitch in the Digital Signage & Professional Displays Intelligence Service to define Fine Pixel Pitch LED Video. In 2015, the <=1.99mm pixel pitch category grew by 279% year over year (YoY). However, will 2016 be another good year for Fine Pixel Pitch LED Video? IHS analyzes the 2016 outlook and strategies for the Fine Pixel Pitch LED Video industry.
While prices for Fine Pixel Pitch LED Video have fallen dramatically in the past two years (from approximately $70,000 per sqm to $30,000 per sqm), the price differential remains a strong deterrent. To illustrate this, IHS compared the Average Sell-In Prices (ASP) of different display technologies based on the size of a standard 55” Super Narrow Bezel Width LCD Video Wall.
Source: Q4 2015 Digital Signage & Professional Displays Intelligence Service
To attain better cost efficiency, several LED display manufacturers have entered the LED Lighting industry through backward integration: Ledman purchased Shenzhen Torshare; Leyard acquired LEDavenue; and Aoto merged with Gold Lamp. This move can also be a long-term strategy to ride the Smart Home wave, as smart lighting and interactive displays become less of a “nice-to-have” and more of a “must-have”.
Now that LED Videos with sub-one millimeter pixel pitch resolution are available in the market, the pursuit of higher pixel pitch density is inconsequential. This is because the huge price differential outguns the image quality enhancement of lower sub-one millimeter pixel pitch LED Video. In order to survive the intensifying competition, LED Video brands need to differentiate themselves by evolving from an OEM manufacturer to a total solutions provider, starting from product quality to distribution channel expansion, after-sales service, brand marketing, and cost efficiency. In this aspect, LCD brands that have included LED Video as an alternative digital signage solution are ahead of their Chinese counterparts that focus only on LED Video.
Considering the parallel cost, LED Video, with its superior image quality, longer product lifespan, ruggedness, flexibility/scalability, and ease of maintenance is very much a threat to Rear Projection. Meanwhile the Front Projector and LCD market is still insulated by their considerably lower price points. Hence, the adoption level of LED Video will depend on the rate of cost reduction for LED chips and LED Video modules versus the speed of price reduction in Front Projector, LCD and Rear Projection.
Meanwhile, the LED Video market is shifting favor towards smaller pixel pitch categories. The biggest market shareholder for Outdoor applications in 2013, 15-19.99mm pixel pitch category, was dethroned by 10-14.99mm in 2015. 10-14.99mm is expected to exceed 50% of the Outdoor applications market by 2018. While 16mm pixel pitch LED Video was the prevalent choice for Outdoor Sports, Outdoor Retail, and Public Spaces, customers are now opting for 10mm pixel pitch LED Video.
Based on IHS research, China currently holds almost 50% worldwide market share of <=1.99mm. No brand in China has achieved the same dominance Daktronics possesses in North America. This is because of numerous Tier II Chinese brands and the disparate distribution channels. In 2015, major Chinese brands have sought to increase market share by M&A activity, this trend is expected to continue, if not intensify, in 2016.
At the same time, LED Video brands must expand overseas to gain better profit margins. Western Europe and North America holds great potential for Fine Pixel Pitch LED Video. In September 2015, Absen acquired Century Ding Yuan Science and Development Technology, which was contracted for a national public lighting project in Hungary. This acquisition will open doors to more government projects in Western Europe for Absen. Similarly, Ledman has invested in a Swiss media company, Infront Sports. IHS believes that North America and Western Europe combined market share of <=1.99mm will reach 40% by 2017.
In summary, the Fine Pixel Pitch LED Video industry needs to evolve to sustain its growth. 2016 will be a tough race for LED Video brands; many will falter and be left behind.