LIPA hosted an informative webinar on 9/29/22. Rosemary Abowd of PMA Research and David Hancock of OMDIA, presented their company data and forecasts for the first half of 2022 (1H22). PMA covered the Global Display market and focused on Professional and Consumer projector segments. OMDIA covered the Global Cinema projector market.
Below are some of the Key Takeaways from the presentations and Q&A exchange with LIPA members.
Overall Projection Market
- Neither Professional + Consumer nor Cinema markets will finish 2022 ahead of 2019 (pre-pandemic) unit sales levels but for different reasons.
- Pro/Con has been supply-constrained for a variety of reasons into 2022, but will accelerate into 1H23 as supply catches up with demand
- Cinema is still content-constrained and will also face additional headwinds in 2023, as disposable income is eaten up by higher energy and other non-discretionary costs
- The percentage of LIPs sold continues to increase in nearly all categories with shares ranging from 50-90+%, depending on a number of factors
- Penetration shares increase with price point, lumen level and resolution; with LIPs now available from 3,000 – 60,000 lumens, and up to 8K resolution
Professional and Consumer (Pro/Con)
- Global Display markets continue to be impacted by Covid and Government policies, past and current and more recently, historic increases in inflation.
- Global unit volumes declined 6%; revenues declined 4% in 1H22 compared with the same period last year.
- Full year revenues for 2022 are expected to finish up 5%, and grow 13% in 2023
- Revenue growth from 2022 to 2026 is forecast to be $8.5B to $12.5B, reversing a 5-year (slight) downtrend
- Laser share is now over 90% by revenue and units for models 6000lm and up; with resolutions of 4K UHD and higher available
- LIP growth opportunities exist in Consumer, Education, Corporate and Immersive Venues, based on improved Image Quality, lamp cost elimination, increased light source lifetime and reduced power consumption
- Global screen count continues to grow – up 3% to 213,000, by the end of 2021 vs. the end of 2020 – with nearly all the growth coming from the Asia/Pacific Region.
- There are now ~7,000 “premium screens”, or roughly 1 in 30. Most of these are laser-illuminated
- Exhibition has lost an estimated ~$60B since the Pandemic began early in 2020, sending many circuits into survival mode. Since then, there have been a number of acquisitions and consolidations, but few outright bankruptcies, as the industry adjusts to the return of patrons and content flow increases
- Nearly all countries are “fully open” with China being an important exception. Regional lockdowns there continue to cause uncertainty in a country that now generates 1/3rd of global box office receipts
- OMDIA reported that the global installed base of LIPs in Cinema is ~16% of the total, equating to ~35,000 worldwide. [Ed. Note: there may be some error in this estimate as some of the data is inferential]
- They also report that 2 of the 3 Cinema projector suppliers are selling >50% LIPs in 2022
- The Pandemic and resulting disruption and uncertainty have destroyed the idea of an orderly “replacement wave”, anticipated as Series 1 and 2 projectors reached the end of their expected life. Instead, exhibitors often “repair rather than replace” and have converted to laser on an “as needed” basis.
- At this point, Cinema revenue is still not back to peak 2019 level. This is largely due to the 18 to 24 month lead-time needed to produce new content. Two “Billion Dollar” titles this summer proved that if the content is compelling the patrons will come out, indicating that for the most part, direct Pandemic impact is over.
- Depending on region, box office is back to 50-90% of pre-pandemic levels with an overall recovery of ~80% vs. 2019.
- Cinema will not return to 2019 (previous peak) level until 2023. Timing will be region dependent
Laser Illumination progress
- Cinema installed base is ~15-20% Laser, with much higher penetration rates for PLF and new multiplexes
- The overwhelming majority of both Cinema and non-cinema LIPs are Laser-Phosphor (or more recently, RGB+Laser-Phosphor Hybrids) with “pure” RGB growing slowly. RGB acceptance is still held back by the perception of speckle
- Rapidly increasing Energy costs will favor LIPs, as they are more efficient and require less cooling than Xenon based projectors
- Highly optimized RGB+Laser-Phosphor hybrid light engines continue to reduce the TCO of LIPs vs Lamps
- In the Professional/Consumer segments, Laser Illumination shares of unit volumes and revenues are forecast to increase in 2023 to 28% and 62% respectively; with RGB attaining ~5% share by revenue
- LIPA member manufacturers LIP shares ranged from 50% to near 100% by revenue in 2Q2022
Question and Answer Session
- The group discussed the likely impact of rapidly increasing Energy costs and concluded that given a desire and ability to purchase, LIP direct and indirect OPEX savings would be higher with higher power costs, but that general inflation might discourage that decision to purchase. This could substantially impact various business models.
- PMA pointed out that in general FPDs are competitive with Projectors, but above 80” diagonal image size, laser projectors begin to have a price advantage for both hardware and installation that increases as image size gets bigger
- DVLEDs were discussed in the context of their threat to LIPs. Although comparable in terms of image quality, they are still more expensive and even more so when construction, installation, and skilled installation-labor shortages are considered.
- However, DVLEDs are making inroads in content production workflows (virtual movie sets) where they have higher prices, unique benefits and custom installation costs are supportable
- Some Cinema DVLED are “HDR-capable” but so far, little content is available that is mastered in HDR (for Cinema or Streaming). This will change over time as DCI has recently ratified a new HDR specification for Cinema exhibition. Note that HDR/WCG will be the topic of the next LIPA Webinar on October 26, 2022. See: www.LIPAinfo.org for details.