HDTVs: Selling Cheap - Multichannel

HDTVs: Selling Cheap

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Punctuating the end of a brutal year for
major TV makers, average U.S. street prices for many highdefinition TVs were expected to fall to record lows in the
fourth quarter of 2011, according to NPD DisplaySearch.

For the first time, all 32-inch TVs were below $500 and
all LCD HDTV sizes up to 46 inches were below $1,000, according
to the research firm. Newer features such as 3D
still carry premiums, and price-sensitive consumers in
North America have gravitated toward low-price models
or they’ve traded up in screen size instead.

“The flat-panel TV industry is now in a very advanced state
of maturity, and the rapid cost reductions seen in the mid-
2000s due to enormous investments in panel production capacity
have slowed considerably,” DisplaySearch director of
North America TV market research Paul Gagnon said in announcing
the quarterly forecast. “Despite this, consumers
still expect rapid continuous retail price reductions.”

In the last four years, the prices of entry-level HD sets
have fallen roughly in half. The average selling price for
30- to 34-inch LCD TVs was $375 in the fourth quarter of
2011, according to research firm IHS iSuppli — compared
with $725 for a 32-inch set in the fourth quarter of 2007.

A combination of slower-than-expected demand and excess
production capacity in the first half of 2011 led to a dramatic
reduction in key component costs during the third
quarter. That led to bargains on HDTVs in the holiday-shopping
season, according to DisplaySearch’s Gagnon.

TV makers have been hard hit by the trend. Last week,
Sony Electronics announced it was ending its seven-yearold
joint venture with Samsung Electronics to produce
flat-panel screens for televisions.

In 2012, HDTV prices won’t fall as dramatically, Display-
Search predicted. That’s largely because prices of LCD and
plasma panels — which can account for 30% to 50% of a TV
set’s retail price — will stabilize by mid-year and will even
start to gradually increase in the second half of 2012.

Premium-priced TVs have been unpopular in the U.S.
Specifically, 3DTV growth has been slower than expected
in North America, with just 2.4 million units shipped in the
first nine months of 2011, or about 8.5% of all TVs. According
to DisplaySearch, the 3D premium for a 55-inch LCD TV
in the fourth quarter was about 17% over a non-3D model;
that’s down from a 30% price delta in the previous quarter
but is still a significant price difference.


Average selling prices in Q4 2011 for LCD TVs:

$375: 30- to 34-inch models

Under $1,000: All models up to 46 inches,
and 40-inch active-shutter 3DTVs

Under $1,500: All 60-inch models

SOURCES: NPD DisplaySearch, IHS iSuppli