 So we hear the CS 2018 and who are you? I'm Paul Gray, Research Director at IHS Market. So what's the latest that you are talking about following in the display industry? Yeah, certainly what we're seeing is really people building out more and more of the UHD ecosystem and UHD being more than just resolution, but about colour and frame rate and dynamic range as well as just more pixels. Because now it's nearly impossible to buy a full HD anymore. Like if you buy a 55-inch it's just basically the same price nearly to get a 4K. Yeah, the panel makers have spoken and the panel makers have stopped manufacturing or announced that they will stop manufacturing 4K in larger sizes, so 55-inch and bigger and by the end of the year 50 in cheap. And the content is just Netflix and Amazon? It's coming, it's coming. I think that you have to look at the creation of the content and shooting movie type content offline is relatively easy in 4K. The thing that people really care about is live broadcasts, especially of sports and there you've got to have eight cameras or more all running simultaneously. You've got to have outside broadcast trucks, you've got to have real time editing and production and that takes a lot of time and investment in expertise. And it's very, very expensive. And as a result broadcasters have done a lot of work on developing the production workflows and now we're beginning to see that content appear. So yeah, I just switched my ND filter. Now it looks much better in 4K right now. So there was today, there was HDMI, had something about HDMI 2.1 and they're talking about dynamic HDR. Is that a big difference compared to normal HDR? I think one of the things we've seen is that at first people put in the static metadata that allows accurate reconstruction of the original signal conditions and people then enhance that by saying well you can do better, you can add dynamic data so scene by scene, even frame by frame data. And those are enhancements. I think that in the end what matters most is HDR or no HDR and HDR it is completely obvious when you see it and our kind of monkey brain just looks at that and says this is just really real. So I think the exact nature of the data, how much data, how you package it what format it is is a very secondary in performance. So it's not a huge leap to go into dynamic HDR. They talk about frame by frame, scene by scene. Why is that so important? The reason for doing dynamic is that it allows you to use those bits more efficiently and all the time there's very little redundant information if you do use dynamic HDR. So there's a good reason to do it. I think that it's still of secondary importance to just doing HDR regardless of what the format is. But of course everybody wants to sell IP, everybody wants to make money out of it and therefore we have something that maybe isn't a format war but certainly some healthy competition and lots of new solutions for HDR. I saw something amazing just before I was lucky at the Sony booth. They have an 8K, 10,000 nits. That's a big deal, no? It felt like going outside. I felt like I was walking out. And that I think is the thing that you get with HDR that you suddenly get that moment when you suspend disbelief and it's like looking at a window with a glass out. And suddenly it just looks real. And that's what it does and dynamic range is a critical part of that. So you don't just get an HDR, you don't just get an HDR 10 plus 10, all that stuff. You have to look at nits. Isn't that one of the most important parts of the experience? Certainly you have to have a display that can put out those very bright highlights. And our view is it's somewhere over 550. There are lots of different ways of measuring it. 550? 550 I think is where you start to get that impression of realism or enhanced realism. But do some TVs have two, three, four thousand and stuff like that? Yeah, that's right. And that's about the sparkling highlights. It's probably not the whole display all the time running at two, three, four thousand. Edis I think something that there's a lot of learning to be done because we've all gone through this issue with loudness and noise for commercials where broadcasters have turned the volume up and it becomes painful. And again, you can think of the scenario where there's a soap commercial and it's whiter than white and you get that feeling that it's painful to watch because it's too bright. So, yeah, it totally woke me up. So if I would have that at home, I was just thinking it might not be so good for the brain because you'll be like if you're watching TV late at night, it's like you're in the middle of the day and you can't go to sleep. There are some other interesting ones. I don't know if anybody's really done research, for example, on people who have photosensitive epilepsy. And it's something we have to be careful about. And there's a learning curve about doing it. At first, normally people do the kind of jokes with it if you like and we'll have high dynamic range gags just like we had 3D gags. But in due course, the expertise will settle down and people will know how to create good HDR content. But there's a learning curve to go through. And there's so many other things, right? What do you think about those OLEDs? They're all made by LG and every company is using them, but they have different image engines, right? That's right. So a TV is more than just the panel and that the video processing is of great importance. And people use different video processing solutions. They have their own secret source that they add. And I think that's part of healthy differentiation. And certainly when you look at OLED sets, they're not all the same. Is Sony the best? Buy what you like. Just like audio and cars and wine, then buy what you like. If you can't taste or see the difference, don't pay for the extra. But one thing I'm wondering, because Hisense, TCL, Skyworth, all these companies, why is it so hard for them to get a little chip that is as good as whatever Sony is doing? Isn't it just a little chip? It's a very accessible technology and there are very few IC vendors, but people add other things on to enhance it. So people put that into a special custom IC and a lot of people have different understandings of how perception works. So for example, Panasonic has very deep experience in emissive displays from Plasma and therefore they do some things differently and they drive the panel differently. Sony has huge amounts of broadcast experience and so they use some of that into their TVs. And I think that creates a healthy and diverse market. But a company like Hisense, for example, I think they're pretty cool. Just because I'm looking at the prices sometimes, I see a 65-inch for 799, 4K supposedly HDR and stuff like that. But it might not be a super bright one, I guess. It doesn't have a crazy good HDR. We only had HDR one of them by firmware update. When we sold it, we didn't have it. Later it came out, but it was not quite real. But the peak light output of a panel in that case will be limited and therefore you won't get those super sparkling peak whites. When you look at a scene, the light in an outdoor scene should be in the sky. Yeah, that's where the sun is. That's where the light for the whole scene comes from. The sky and that should be brightest. Those sort of displays will not be able to do that. When you see real HDR content, then the sky is the brightest thing in the image, and you can see that. It looks more real because you can see that illumination in the image off the sky. But I'm thinking about a company like Hisense. As far as I know, they're pretty big. They have a big factory. TCL is huge and stuff like that. So shouldn't they be able to make an image processor that is on par with whatever huge brands are doing? I think that there's still some gap in experience, but broadly the Chinese brands have learned extremely fast. And I think probably the issues that they face now are more ones of marketing and how to specify and market product and do the correct brand and channel management rather than solving the basic engineering problems. Hisense is calling it ULED. Yeah, they've got their own... It's like OLED but half the price or something. It's a quantum dot solution. Quantum dot. Yeah, so they decided not to go in the QLED alliance, which is Samsung and TCL. Instead they said they'd do their own path and call it ULED. What's the QLED alliance and what's the difference with the ULED? So, in terms of technology, nothing. It's a quantum dot LCD display. And it uses quantum dots to give you a broader color gamut. So technically, essentially it's the same solution, but their marketing choice is about what do you call it QLED, ULED, and how you go to market with that. And is Quantum Dot totally awesome? I think that a well-executed quantum dot LCD with high dynamic range with a full array local dimming gets very, very close to OLED performance. So, what is this quantum dot? So, a quantum dot is... How to describe it? It is a light conversion material. And you put light of one color in. It excites the dot and out pops light of another color. What is fascinating, amazing about this technology is that light that comes out is very, very pure. It's really effectively close to a single frequency. And that gives much stronger excitation in the eye. And therefore you perceive it as a very, very rich, saturated color. And it allows you to do colors that currently existing backlights can't resolve. So, for example, the really rich bluey greens, really, really deep reds, the sort of, you know, burgundy red wine reds that current LCDs can't do. And most conventional LCDs, the red is a rather rusty orange color, actually. So, quantum dots will enable you to have these super pure colors. And it's amazing that LCDs always find some kind of way to stay ahead, right? Or to not be totally overtaken by anything? Absolutely, Nikola. I mean, you know my joke about LCDs, which is they're like seagulls. So they're not good at anything, but they're extremely smart and very adaptable. And the genius of LCD as a technology is that it's a system. It's an optical stack of separate components. So you have a light switching engine. You have a light emission engine. And as a result, you can change one of those components without affecting the others. So with an LCD, want to double the amount of light coming out? Put in a bigger backlight. And job done. It's crude, but it works. You want to double the resolution? Change the shuttering part of the LCD. Does it affect everything else? No. Then you compare it, for example, to OLED, where every time you want to do that, you have to go back and fundamentally redesign the device. OLED is very, very simple. But as a result, if you want to change one thing, you have to change the whole device. And so it takes more time. There's probably a whole bunch of other potential... I mean, it seems that the OLED guys are quite happy right now, confident. It's taken 20, 30, 40 years. There was an anniversary recently. I forgot how much the number was. But it seems that they are feeling they might be taking off in a whole bunch of areas. If you look in high-end markets, then very clearly consumers have decided that OLED is something distinct, different, unique and special. So in Western Europe, we see OLED really carving out a strong position for itself. And all other features being equal, then OLED seems to be the same in consumers' value as another 10 inches of LCD. So 55-inch OLED goes for the same price and consumers are prepared to pay the same amount of money as a 65-inch LCD. All other featuring being the same. In Japan, OLED is now outshipping LCD in 55-inch. Really? Outshipping. So more OLEDs ship in 55-inch and bigger than LCDs. Wow. Now, Japan is slightly different. That means LG has been able to get their price down a little bit? No, it's not really about pricing. This is about marketing it and the choice of brands. And Sony has done a fantastic job in Japan. And consumers are very receptive to that message. Now, 55-inch in Japan is a big TV and it's a much more premium proposition than it is in Europe or especially the US or China, where it's a mainstream size. But even so, very clearly in some markets, consumers have taken to heart this message that OLED is something distinct, different and special. I'm waiting for today that somehow LG can drop their prices. Yeah, it'd be nice, wouldn't it? I think there's something happening already after this Christmas. I think everything, I was just in fries and electronics. There's a whole bunch of LG 55-inch stacks and it said discount something. But it'd be great. Somehow, I'll have to price again. I think obviously with our consumer hats on as ordinary consumers, then we'd always like to pay less. The reality for OLED is that the rate of expansion of manufacturing capacity means that for the next three years at least, then OLED is going to be in shortage. And so there is very little commercial need to drastically cut prices. Why would it be in shortage? They can't ramp up? It's about the amount of money you have to spend on building fabs. Didn't they spend already tens of billions or something? Yes, they've spent billions. And at that stage it's a race to build capacity and have brave you up. And I think in LG Display, then they're very mindful that if they overinvest in capacity, they could break the company. These are serious sums of money that people are talking about. If your projections aren't right and you owe $5 billion to the bank, then you've got a problem. Even if you're LG? Even if you're LG? Yeah, and in all these businesses, these are subsidized by the government. No, no, no. These are stupendous amounts of money for these companies to borrow and to finance. And they are being cautious. And I can't blame them for that. I haven't tried to live with an OLED TV at home. I'm wondering if every time you turn on the TV, you're like, whoa, you just feel like, oh, it's so beautiful. Do you just forget about it? That's an interesting question. Do you just get used to it? Like French wine and German cars, that once you've tried it, you don't go back. I think that the difference is many consumers find that noticeable. And it's a richer and more rewarding experience. But the last couple of years, I think that the product decisions on the LCD TV side have been about following OLED in terms of thinness. And this year, it's very interesting that the industry seems to be going back to fighting OLED in terms of contrast performance so using full array local dimming. And I think that 2018 is going to see the Empire fights back and that we will see LCD products that look very, very good and very, very close to OLED. And the question is how close do you have to go knowing that LCD is a cheaper, more mature technology and does that start creating more competitive pressure on OLED? One thing that, I don't know if it disappoints me, but when I look at the bit rates that Netflix is streaming 4K at, many people are only getting 11 megabits and the maximum they crank out, I saw it was 15. And I'm thinking, how can that be okay because isn't that a little bit sad? They spend billions and billions on content and then they compress it so much to save bandwidth. I think they compress it to save bandwidth and that's a pragmatic decision as to how to deliver it to people. I would love to know Netflix's compression strategy. The research done by the Forever Project in Europe suggests that resolution is the least visible thing. And if you think about a fast-moving object, if it moves by more than two pixels per frame, then that is no different to 1080p. And that's just blur that is caught by the shutter of the camera. But resolution is very, very heavy on bit rate. And what the Forever Project showed was that the thing that actually people really notice the difference with is dynamic range and then frame rate. Completely opposite to what the CE industry has done, so I think that what Netflix is probably doing is they throttle back the resolution a bit, which nobody can see, and they keep those bits for dynamic range and color, which is what you really can see right across the room. So you are definitely getting something much better with that 4K UHD-type stream, but not necessarily the full resolution, but most of the time that resolution may not be visible anyway. So when I was seeing 2017, a 65-inch 799, that was kind of like the basic price for the high-sense TCL stuff like that. And I'm thinking, okay, after Christmas, maybe they discount some of them, and maybe they're just going to stay at 799, but improve the quality maybe for the next generations, right? And that's just amazing to have 65-inch keep improving at that kind of price. And I think that the indications this year at CES are that the industry has decided to fight OLED on quality and that the whole industry is trying to race upwards on quality. That is fantastic news. And if you think about what's going on in content, then Amazon and Netflix are competing by who can offer the best content shot in the most imaginative way with the most fantastic technical image quality. The rumblings of the earthquake are that in China, people are building lots of generation 10 LCD faps. There is going to be structural overcapacity in the industry, starting now. Overcapacity? In LCD panel manufacture. Too many. Far too many. Far too many. Far too many. Even if everybody buys a 65-inch now. Everybody would have to buy a 65-inch. But they might be a good idea, I think. Yeah, but consumers have choices, yeah? Yeah. And that means that long-term, we see that LCD panel pricing is going to remain weak. And that is... Weak. Yeah. So for consumers, that is the good news that those TVs will get cheaper. This is going to get even cheaper. Even cheaper. Yeah, they use it even. That's crazy because it's 799 for a 65-inch 4K HDR. Five years ago, you couldn't have dreamed of that, could you? You couldn't have dreamed of that. Because I was thinking, ah, 55 is going to be plenty enough, and I'm thinking, I'm not going to go less than 65. You get used to it. I think we start to get to the interesting point, which is when consumers say, I can't move any more furniture, or I physically can't get it into my living room anymore, or whatever. And that will start to happen country by country, depending on the housing stock and what sort of size rooms people live in. Maybe the TV should be part of the Netflix subscription. And then they can swap out the TV every two years. Well, maybe that happens. You know, maybe people sell them like mobile phones. There is a company in China that was doing that, which was Le TV. They were trading the TV program. And they were giving a free TV with a seven-year subscription. Wow. But it needs a lot of cash, because you've got to give the consumer the TV today, and you're going to get your money back over the next five, six, seven years. And you've got to be brave and patient. And it broke Le TV. They ran out of cash. Is there any chance that they'll all switch to Android TV? Because I don't like all these systems. It's like fragmentation. I think we will see consolidation. And Android is the largest shipping OS platform. So many apps. It's because the Chinese have gone for it. And 90% of TVs that ship in China have smart functionality, and that is with forked versions of Android. So as a result of China being the biggest TV market and very high penetration of smart, then Android dominates. It's not all Google-compliant Android because of China, but it is the dominant OS. And TCL is part of the badge, you know, as they're sponsoring. But in the US, it's Roku. And in Europe, they use Android TV. What's up with this Roku thing? Why can't they just switch it all to Android TV? I think Roku is an excellent approach. It's very, very simple. And because it's simple, it's very robust. I know that several TV brands have had huge problems with Android because of the number of updates. And literally, they have no idea. Some are still in that version 6. It's even worse. There are updates on the daily basis to Android. And as a result, you suddenly discover that functionality stops working. I had an Android tablet that suddenly stopped playing video. And it took three weeks for Google to fix that. That's not acceptable with TV. And I think Roku, as an example, is a far simpler solution. It's very robust. And at this stage, I'll come clean. I've got a Roku box at home. It's great because it's really simple. And it does what I want to do, which is watch TV. And it wins the teenager test. So my two teenage boys, it's the only TV device they use. Maybe Google didn't do a good enough job to simplify everything and make it better and convince these companies to use it. I think they were afraid to lose profits. Let's call it revenue share. I think what happened with Google is that they created something that was too complex. And the TV is a very different device. When did your TV last crash? And you don't need all this extra featuring on it a lot of the time. The compelling value proposition of TV is long-form video. If you look at app usage on TV, the only thing consumers use is long-form video. And all this other stuff that's in Android, you don't really need it, but it all adds complexity and that complexity adds unreliability and also adds to hardware cost. And as a result, Android is very greedy on memory. And normally people find that they get issues with slow running and they solve it by adding more memory to their designs, but that's all cost. And that comes back to this extra weight of the complexity. All right. Cool. But we can't keep running. We have to see what's going on in there, right? The pepcom. Absolutely. And it's going to be a very busy CES, right? The most busy ever. Is that what you've been told? I don't know. That's what I imagine. Every year it grows, right? Every year it grows and every year it changes. I was on the morning rail and I saw it seems like the wind has a whole bunch of holes now. It's more and more about technology and software and especially automotive now. So the days of 10 or 15 years ago when it was brand goods are long gone. The risk is, I think, that many retailers as a result find it less interesting because you can't sell car autonomy software to consumers. So the show evolves and that's in line with how the business evolves. And I think consumer electronics show is changing into just like the name of the parent organization, Consumer Technology. And maybe not even Consumer Technology. I don't know whether an autonomous car is really a consumer technology or actually a B2B technology. That's for Uber to buy those. And Mercedes and BMW are buying this technology, not us as consumers. Is that really consumer facing? I'm not sure. But also just one last thing, the DOP, I think it's fascinating in doing this trick for doing the 4K, but the claim is HDR, but you can't really do HDR with a projector, right? I don't know is the answer. I've got some demos booked to have a look at. I think in general, the problem that projectors always have is contrast reserve. So the black is the screen of the projector. If you watch it in the dark, that's fine. If you're watching it in normal ambient light, then you can't have blacker than the more. You can't project black. Nobody's yet invented black light. And that's the problem that projectors are always fighting. All right, but that would be a way to see all the pixels. If you have a huge 150-inch, that's the way to see the 4K pixels even from far away. Certainly on all these ones, you have to sit a certain fraction of the screen height away from it. And for 4K, you need to sit at around one and a half times the height of the screen. The further away you can't see it. That's just the human eye. We're not eagles. And if it's 8K, then you need to sit at 0.75 times the height of the screen. If you're further away, you're not seeing all the information that's there. So you need a really huge 8K display. For 8K, you need either a very big display or to be very close to it. Or use it for like a museum. It could be a fantastic monitor format. You know, 55-inch 8K, which is going to be a fantastic desktop monitor format. Like a gallery. I want to see my slideshows in there and come up to the family pictures up close. Yeah, and then it's about realism again. Cool, thanks a lot.