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Holiday Bump

19 Oct, 2012 By: Chris Tribbey

Consumer electronics spending expected to rise for the holidays

The major retailers are mum on their plans for Black Friday, Nov. 23. But industry analysts, studios and the consumer electronics industry have plenty to say about what’s in store for home entertainment hardware during the holidays.

The CEA is forecasting an overall increase in holiday spending of 11%, an average of $1,634, with $842 of that going toward gifts. Of that $842, consumers plan on spending $252 on consumer electronics, up from $246 in 2011.

Seventy-six percent of consumers plan on purchasing consumer electronics as gifts this year, according to the CEA’s forecast. Mobile devices and tablets will lead the charge, but HDTVs and Blu-ray Disc players also made the most-popular gift-giving list.

“Consumers are feeling more confident in the overall direction of the economy this holiday season, compared to last year and, as a result, will spend more on gifts, including electronics,” said Shawn DuBravac, CEA’s chief economist and senior director of research. “CE continues to play a leading role in holiday shopping and this year is no exception, as consumers will dedicate a large portion of their overall gift budget towards electronics, specifically mobile connected devices.”

Jordan Selburn, senior analyst for IHS iSuppli, said consumers should expect Black Friday deals of 42-inch, 1080p HDTVs as low as $200, 55-inch 3DTVs possibly below $800, and Blu-ray Disc players as cheap as under $40.

“At those price points, Blu-ray players and even 42-inch televisions almost fall into impulse-buy territory for some consumers,” Selburn said. “These are the kinds of deals that will get shoppers out on Black Friday.”

The three major big box retailers — Walmart, Best Buy and Target — have certain electronics price matching guarantees in place, with the latter two promising something new. From Nov. 1 to Dec. 16, Target will match its prices with those advertised by Amazon.com, Walmart.com and BestBuy.com, among others. Best Buy is already matching its in-store prices for electronics with those advertised by online competitors.

3DTV and 3D Blu-ray

Whether consumer spending on hardware turns out as good as CEA predicts will depend on one thing, according to Ron Epstein, founder of the Home Theater Forum: Black Friday. And for the home entertainment industry, a solid showing of 3DTVs and 3D Blu-ray players will be extremely important, he said.

“Falling prices on hardware have made overall adoption of the 3D format more attractive for consumers, and these days, consumers no longer see 3D as a luxury add-on to their display purchase,” he said. “There is a much smaller price step when considering 3D over 2D.”

Recent research from Futuresource Consulting forecasts 8.8 million households with 3DTVs by the end of the year, more than 18 million households by the end of 2013.

But it’s not just the CE companies that are invested heavily in Q4 hardware sales. Just ask Danny Kaye, EVP of global research and technology with 20th Century Fox Home Entertainment.

He recently said Fox is eyeing better-than-expected adoption of 3DTVs and 3D Blu-ray players this year, and to help drive adoption of 3D in the home, Fox has started digging through its archive for titles to release in remastered 3D Blu-ray. The Oct. 23 3D Blu-ray combo release of I, Robot is believed to be the first major non-3D theatrical release remastered specifically for 3D Blu-ray.

“Perhaps there hasn’t been enough content, so it’s time for us to dip into the library,” Kaye said. “[But] it has to be high quality.”

Warner Home Video recently brought out the classic Alfred Hitchcock flick Dial M for Murder on 3D Blu-ray. Universal Studios Home Entertainment released Creature From the Black Lagoon on 3D Blu-ray as part of its Universal Classic Monsters: The Essential Collection. But will digging deep in the software catalog help 3D Blu-ray hardware sales?

Benjamin Arnold, consumer technology industry analyst for The NPD Group, noted that 3DTV unit sales were up 20% through the first half of 2012, with the need for glasses remaining the largest obstacle for widespread adoption of 3DTV. That and the lack of 3D Blu-ray Disc releases on the scale of 20th Century Fox Home Entertainment’s Avatar (2010).

“That said, we’ll continue to see the installed base of 3D increase … once this base grows, all it takes is a big film or video game to compel some usage,” he said. “I don’t see this happening, but the potential is there as ownership increases.”

Ben Drawbaugh, high-def editor with Engadget.com, is more optimistic for the short- and long-term success of 3D in the home.

“There is no giving up on 3D. The train has started, and it will continue to be a niche feature that some home theater enthusiasts love and others completely ignore — like surround sound,” he said.

Gaming Plays Its Part

Microsoft and its Xbox 360 have made the biggest pre-Black Friday splash thus far, announcing several holiday bundles, available at most major retailers.

The bundles include a 250GB console with Kinect, Dance Central 2, Kinect Sports, Kinect Adventures! and one month of Xbox Live Gold for $399.99; a 4GB console with Kinect, Kinect Disneyland Adventures, Kinect Adventures and one month of Xbox Live Gold for $299.99; and a 250GB console with Skyrim and Forza 4 Essentials Edition, and one month of Xbox Live Gold for $299.99.

Xbox has been the No. 1-selling console in the United States for 20 straight months through September, according to The NPD Group. Nintendo is aiming to end that streak come Nov. 18. That day Nintendo will launch its much-anticipated Wii U, the next-gen version of its six-year-old groundbreaking Wii console. The high-def system features a touch-screen controller, more than 50 games at launch, and will be available in $299.99 and $349.99 versions.

“With the integrated second screen of the included GamePad and features that instantly enhance the way people play games, watch video and interact with each other, consumers will see how Wii U delivers a completely unique experience and a remarkable value right out of the box,” Reggie Fils-Aime, Nintendo of America President and COO, said when the system was announced.

Not to be left out, Sony Computer Entertainment has new slimmed down versions of its PlayStation 3 ready for retail: $270 for a 250GB console and $300 for a 500GB version.

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