Korea Faces Fierce Competition with Japan in World Digital TV Market

The Iraq War attracted TV viewers` attention around the world. LG Electronics’ digital TV sets were on air as many times as Iraqi President Saddam Hussein was mentioned. His whereabouts are still unknown. PDP (Plasma Display Panel) TVs in the briefing room at U.S. Central Command in Doha, Qatar were all LG Electronics products. The electronic company enjoyed a significant marketing effect from the war coverage.

Japanese companies such as Sony and Matsushita Electronics have led the digital TV market so far, but this year, Korean companies are also showing excellent performance. Korean electronics companies are launching an offensive marketing strategy to dominate the world market with their PDP and LCD TVs.

Both Samsung and LG Electronics set goals to be the world’s No.1 in 2005. In response, their Japanese counterparts set up a strategy to dominate the digital TV market by taking advantage of their predominant status in premium home appliances and analog color TVs.

“The digital media business including digital set-top boxes is vital to the company,” said Vice President Shin Man-young. “We plan to substantially increase our investment in technology development.”

The increased status of TVs has sparked fierce competition between Korean and Japanese companies in the digital TV market. TVs, once seen lagging behind the information age, are seeing a revival with the help of digital technology.

With the most powerful TV brand, Sony is most delighted to see these new developments. Sony President Kunitake Ando ignited fierce competition. “Digital TVs will be the most popular information device advancing this new digital convergence at the 2003 International CES, the world’s largest consumer technology tradeshow, held in Las Vegas early this year,” He said.

The Japanese company is planning to lead the digital market by combining digital TVs with products such as PCs, mobile phones, audio equipment, and electronic games. With semiconductor and PC industries still showing no signs of perking, Korean companies hope that digital TVs will become the country’s major export item in the future.

Despite a relatively smaller number of sales in color TVs than Samsung Electronics, Sony has been No.1 in the market due to its original high definition (HDTV) technology. The company has successfully launched its high definition TV brand Wega with DRC (Digital Reality Creation) technology and Trinitron displays. It plans to maintain its status by applying the Wega Engine, a technology to improve the quality of displays, to digital TVs such as PDP, LCD, and projection TVs.

Sharp, a leader in the LCD TV market, has been utilizing technologies such as ASV and Quick Shoot, which improve the quality of displays, in the AQUOS product.

Korean companies are concentrating on developing the technology to improve display quality. Samsung Electronics has developed a chip called DNIe (Digital Natural Image engine). “This is the heart of the company’s 30 year history,” said Vice President Shin of the technology. LG Electronics has been using the equivalent technology called DRP (Digital Reality Picture) in the production of its line of digital TVs.

Despite Korean companies’ struggles, there still are obstacles that they cannot easily overcome. Those who purchase premium digital TVs tend to prefer Japanese products. “Korean products are still outstripped based on brand competitiveness,” said a senior official at Samsung Electronics. “The challenge is to overcome this inferiority with continuous development in technology and brand marketing.”

The strength of Japanese companies lies in its powerful brands and technology. On the other hand, Korean companies are also in the business of LCD, PDP, and semiconductors, giving them better footing to be more competitive in terms of technology and price.

Sony, Matsushita, and Sharp are nervous that they still rely on supply of LCD and PDP, digital TVs’ core devices, from outside companies such as Samsung and LG Electronics. “As the TV market shifts to digital from analog, the technology gap between the two countries has nearly come together,” said Lim Young-mo at Samsung Economic Research Institute (SERI). “If Korean companies successfully improve their technologies in minor areas such as color and strengthen their brand power, they will be able to dominate the digital TV market.”

Tae-Han Kim freewill@donga.com