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Analysts: TV Business Looking Down This Christmas

22 Oct, 2013 By: Chris Tribbey

More than one holiday prediction for the HDTV business is in, and they same the same thing: Christmas isn’t looking very merry.

Research firm IHS sees flat-panel shipments for the United States to be down 7% for the second half of 2013, compared with the second half of 2012 (20.1 million LCD and plasma sets versus 21.6 million). Full-year shipments are expected to decline 9% to 34.1 million.

“Driven by holiday sales, the second half of the year is always critical for determining the fate of the U.S. TV market,” said Veronica Thayer, analyst for consumer electronics and technology at IHS. “However, even with TV brands offering lower prices during this year’s Black Friday than they did in 2012, sales in the second half will decelerate sharply. The U.S. television market continues to be stymied by the long-term slowdown in replacement and secondary purchases, with most U.S. homes already owning one or more flat-screen televisions.”

U.S. consumers are moving to larger-sized sets, with shipments of 55- to 59-inch displays surpasses 45- to 49-inch display shipments for the first time ever. But even with deep discounting during Black Friday, the TV industry will be hard-pressed to get out of the rut it’s apparently in.

“When the promotions stop, TV purchasing will stop as well, because U.S. consumers are increasingly sensitive to price,” Thayer said. “An IHS survey indicates that 43% of consumers now believe pricing is a major driver in their television purchasing decisions, up from 28% one year ago.”

Meanwhile, NPD DisplaySearch’s David Hsieh is noting similar problems for the HDTV industry, comparing what’s going on to the second half of 2008, when the global financial crisis hit, driving down panel prices.

“It’s not as bad as the second half of 2008,” Hsieh said. “It’s actually more similar to the second half of 2010, when there was excess inventory in the pipeline and panel makers felt pressure to lower prices. That downturn lasted into the following year, and supply chain participants were still aggravated by that inventory adjustment in 2011.”

He said HDTV production companies are aiming to curb production and work with the inventory they already have. Consumers may see even lower prices for sets in 2014.

“Based on past experience, after display panel prices reach bottom, we tend to see lower costs for LCD HDTVs three to six months later,” he said. “So we can expect HDTV [prices] to reach to a new low level in 2014, which will drive demand elasticity and stimulate consumer demand — especially for larger sizes.”

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