Samsung Electronics Co. Ltd. said this week it’s expecting to sell “significantly” less TVs in the coming months than it had originally forecast. The company blamed the expected loss of sales on the coronavirus pandemic that’s wreaked havoc with the world’s economy.
The update serves as a stark warning for the rest of the TV industry, as Samsung is the most world’s dominant brand in terms of sales, and has been for the last 14 years in a row.
Samsung’s warning came in its first quarter 2020 financial results (PDF) this week. As part of that report, it offered guidance for the second quarter relating to its TV business. It said it expects both sales and profits to “decline significantly” as a direct result of the COVID-19-induced shutdown of the world’s major economies.
Reduced sales are probably to be expected, as the coronavirus has left few industries untouched. That’s true even though a television has probably suddenly become an absolute necessity for millions of people across the world who’re forced to stay at home as much as possible to try and contain the spread of the virus.
The problem for Samsung and other TV makers is that most people already own a television, and with finances tight for many consumers due to their being unable to work, buying a new one is probably not on their list of top priorities. Moreover, many stores have been forced to close down due to the pandemic, which means a lot of companies are now dependent on online sales.
Samsung's forecast is in line with that of most industry analysts. For example, the research firm Omdia revised its 2020 forecast for TV sales earlier this month, saying that due to the coronavirus it expects shipments to fall by 8.7% to just 203.5 million units. Previously, it had forecast 225.4 million units to be shipped this year, so the revised forecast represents a downswing of 9.8%.
The contrast between TV hardware suppliers and those that provide video-on-demand services is stark. While fewer people are buying TVs, video services such as Netflix and Amazon Prime are seeing record numbers of users as people struggle to stave off the boredom of being locked indoors.
Samsung didn’t give any indication of when it thinks TV sales might rebound, which means uncertainty is likely to cloud the industry for some time to come. Samsung as an organisation will most likely be fine though, given that it does a lot more than just selling TVs. Indeed, despite the grim forecast for TV sales, the company said its overall profits are expected to “remain robust” this year, as other parts of its business – such as memory chips and semiconductors – are likely to benefit from the coronavirus.
