Will 4K Ultra HD Televisions Save Sony and Panasonic?

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Less than one year ago, Sony (NYSE: SNE ) experienced an 18 percent decline in the sale of LCD televisions.

Before that announcement, Sony confirmed its plans to layoff 10,000 employees .

At the same time, other Japanese display makers -- including Panasonic (NYSE: PC ) and Sharp -- endured losses that threatened to bankrupt their firms.

Sharp's internal outlook was particularly grim; last fall the company told Bloomberg that it had "material doubt" that it could survive.

While Sony has other sources of income (PlayStation 4 ought to provide a significant boost when it is released this fall), Sharp and Panasonic's businesses are heavily tied to TV production.

This has become a growing problem for the two firms, which have relinquished the top TV sales position to Samsung.

Worse yet, global LCD TV shipments for all manufacturers fell for the first time last year.

TV makers hope that the new 4K Ultra HD panels can change that in 2013. According to DisplaySearch (the TV research arm at NPD Group), TFT LCD panel suppliers expect to ship 2.6 million 4K LCD TV panels in 2013. This represents a 40-fold increase from 2012, at which time a mere 63,000 4K panels were shipped.

Ultra HD is very important to the near-term growth of new television sets. While TV makers had hoped that 3D and Internet connectivity would spur new sales in 2011 and 2012, consumers turned out to be less interested in these additions.

Most consumers have found that they do not need a special TV to get online -- they can simply use a PlayStation, Xbox 360 or an Internet-enabled set-top box. Even Blu-ray players are being designed with online capabilities built right into the device. This makes the cost of a full TV upgrade less appealing.

While 3D movies and games cannot be experienced without a specially designed TV, Fergal Gara (Sony's UK boss) recently admitted that consumers are not too excited about this feature.

"Consumers decide how relevant it is," Gara told Eurogamer . "It's fair to say consumers have decided it's not hugely important at this time. It's a capability we've got. It may have a bigger life a little further down the line."

Ultra HD, however, is the new kid on the block. With a higher resolution (3,840 x 2,160) that promises to deliver the most impressive picture quality ever produced, Sony, Sharp, Panasonic and other TV makers are hoping that consumers will be willing to upgrade.

If they don't, these tech giants could be left with 2.6 million oversized paperweights.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis@benzingapro.com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: PC , SNE

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