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Russia's Analog Switch-Off Triggers Unprecedented Surge in TV Sales

Market reels from massive 94% year-on-year spike in consumer purchases of digitally-ready television sets.

Photo: Small-screen Red Queen: TV set purchase spree sure to boost Russia’s favourite serial.
Small-screen Red Queen: TV set purchase spree sure to boost Russia's favourite serial.
Photo: Small-screen Red Queen: TV set purchase spree sure to boost Russia’s favourite serial.
Small-screen Red Queen: TV set purchase spree sure to boost Russia's favourite serial.

As 2018 drew to a close, sales of television sets across Russia surged by an unprecedented 94% year-on-year. Rather than reflecting a sudden spike in affection for all things small-screen, however, this dramatic uptick in demand was more down to the impending nationwide switch to digital TV broadcasting, which saw the rolling shutdown of the country's analogue services begin on 3 December last year.

The programme will continue throughout the course of this year, with Moscow scheduled to go digital-only as of 15 April, while the country's few remaining analogue strongholds – including Saint Petersburg and the Leningrad region – will see the plug finally pulled on 3 June. At that point, the great Russian viewing public will be solely served by the world's largest digital television broadcasting system, which currently comprises 10,080 transmitters operating at 5,040 sites across the country.

As in most other regional markets, the end of analogue forced many households to upgrade their systems. While some plumped for the budget option – US$10 digital receivers that could be plugged into analogue sets – many chose to embrace this new digital dawn a little more wholeheartedly, preferring to invest in systems with the native capability to receive the 20 free-to-view channels on offer (a number of which had previously only been available to cable and satellite subscribers).

As a result, some RUB3 billion ($4.6 million) worth of TV sets were sold in November alone. To put this into perspective, the total value of television set sales for the whole January-November 2018 period was RUB14 billion. Tellingly the November sales figures even topped that of late spring / early summer, a time when many households upgraded their sets in anticipation of the then-looming Russia-hosted football World Cup.

An analysis of the brands that most benefitted from this pre-Christmas shopping spree is also revealing in terms of the shifting loyalties and preferences of Russian consumers. Taking the top slot, with 18.5% of all November TV purchases, was Germany's Telefunken. In second and third places were two South Korean companies – Samsung (15.5%) and LG (14.2%). The fourth and fifth slots were then filled by Japan's Supra (10.3%) and Russia's own Soundmax (6.8%).

In terms of preferred screen size, 32-inch models were the most in demand, followed by 39-inch and 42-inch sets. Wi-fi connectivity / smart TV functionality was also much in demand and was said to have proved a key factor in more than 50% of all purchase decisions.

In terms of the most unpopular brands, this too had its surprises. Least favoured by consumers, with 0.1% of all November TV set sales, was Singapore's Akira, followed by two Japanese brands in joint second place – Toshiba and Sharp (0.2%). The third-least popular was again from Japan, with Panasonic notching up just 0.4% of sales. Nudging only slightly ahead, with the least worst performance of the bottom five was Ukraine-based Kivi (0.5%).

The constituents of this out-of-favour five are quite revealing and – for several established electronics players – quite alarming. Russians are by their very nature brand-conscious and brand-loyal, with many Japanese companies having invested hugely in affinity-building over the years. To see the likes of Sharp, Panasonic and Toshiba on such a list of shame, then, would have been almost unthinkable just 10 years ago.

Of the successful brands, Samsung and LG have both clearly benefitted from their sustained bombardment of Russian consumers with targeted promotions for more than 20 years. The popularity of Telefunken – a revived German legacy brand – and the post-Soviet arriviste Supra, though, is harder to explain. Indeed, it is an issue few market analysts have yet successfully tackled.

Hong Kong companies, though, should perhaps take heart from the sudden success of such rejuvenated / new-wave brands. There does, indeed, seem to be space in Russia's consumer-electronics market for little-known recent arrivals capable of delivering appropriately featured products at a competitive price.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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