Electronics Seller Best Buy Makes a Bet on the Success of 4K TV Sales

by on August 1, 2014

by Stephan Jukic – August 1st, 2014

Major electronics retailer Best Buy is making a bet that 4K Ultra HD television (4K TV) is going to be the next big movement in home entertainment technology just like flat panel and conventional HD TVs before them. And based on this bet, they will be moving heavily into sales of the sets, which offer considerably higher profit margins that the already highly standardized HD TV market does.

While there are some experts who still consider 4K UHD to be a gimmick that’s comparable to the imploding failure of 3DTV a couple of years ago, evidence doesn’t bear this out. For one thing, proponents of the format validly claim that higher than 1080p resolution is inevitable, and 4K is the natural successor to the former format.

Furthermore, unlike 3DTV, 4K has wide support amongst content producers, ISPs, broadcasters and electronics manufacturers with multibillion dollar promotional budgets most of all.

Either way, despite the sometimes steep price tag of 4K TV sets, BestBuy has decided that customers will be awed enough by the exquisite resolution clarity of UHD to buy regardless of a somewhat steeper price when compared to normal HD TV.

The technology retailer has teamed up with Sony Corporation and Samsung to open in-store displays and showrooms with both manufacturer’s TVs on display and being presented by employees who are ready to explain their attractions. Sony and Samsung are the two biggest manufacturers of the TV sets in the world by market share and both have invested millions in promoting 4K technology; Sony in particular with its recent FIFA World Cup coverage in 4K.

The main motivation behind BestBuy’s effort is the still high profit margins afforded by UHD TV sales, given the sets high prices. However, this is rapidly changing since the TVs don’t actually cost that much more than normal HD TVs to manufacture and underdog companies such as Vizio and Seiki are both working on releasing 50 to 55 inch 4K TV sets that cost less than $1000 dollars. Currently, the price for any 50 – 55 inch Samsung or Sony 55 inch TV is still well above $2000.

One of the major potential markets for 4K TV sellers like BestBuy is the powerful and very technology hungry gamers’ market. With their very small pixels and screen resolutions of 3,840 x 2,160 pixels, 4K TVs provide a far more immersive gameplay experience that many games are actually already designed to integrate smoothly with. Unlike film and video content that’s 4K ready, video and PC games are perfectly designed for the resolution format.

The CEO of BestBuy, Hubert Joy will definitely want to make sure that his company’s bet on 4K takes off, given that the company’s revenues are declining and have dropped by 3.3% in just the last quarter of 2014 alone. Accordingly, share prices for BestBuy have also been declining recently.

If 4K takes off as it’s supposed to, BestBuy’s position as one of the first retail chain sellers of the TVs in the U.S will potentially be a major winner.

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