HDTV makers turn to budget stores, larger screens
TV makers' next best opportunity to increase their business is to go big, according to industry leaders at HDTV conference in Los Angeles.
LOS ANGELES--There are a lot of bad economic winds swirling, but the high-definition television industry doesn't appear to be moved.
Here at DisplaySearch's HDTV Conference, there is far less handwringing than in past years, when manufacturers complained about rapidly falling prices, the sudden appearance of too many brands, and consumer confusion.
Instead, far more confident industry leaders led a discussion Tuesday that revolved around how to make gentle adjustments to keep the HDTV sales machine in top condition. In North America, shipments are still increasing 17 percent year over year, according to DisplaySearch data. And this is despite the decline of home values, and the rising gas and food prices over the same time period.
"It indicates demand is there, (and) if pricing is right, TV sales will remain strong," said Paul Gagnon, who monitors the TV industry for DisplaySearch. "It's a positive indicator for this industry."
A year ago manufacturers were beginning to worry as prices dropped precipitously how they'd extract a profit out of this fast-maturing flat-panel market.
Turns out, their worries were a bit premature, as prices mellowed and the market sorted itself out. Discount brands have lost momentum (some entirely came to a halt, like Syntax-Brillian, whichearlier this year), more HD TV content is available than ever, and consumers generally understand the difference and value of an HD picture now.
Plus, there are still many things for HDTV manufacturers to take advantage of to keep consumers buying new products. New designs, the, and the continuing move from standard-definition channels to HD channels and services are ways TV makers hope to convince consumers to buy their bigger, fancier TVs.
Big is the key right now. As picture technologies get better, and TV panels are made larger, it's yet another opportunity for the TV makers to charge a premium.
"The ASP (average selling price) peak is coming in 2008. We can't count on shift in technology to prop up ASPs anymore," said Gagnon. That's why manufacturers will continue to pump out larger, and more expensive TVs.
The 40- to 44-inch size TVs' average selling price will peak next year, according Bob Scaglione, senior vice president of marketing for Sharp. Therefore, he notes, 60-inch TVs and larger are a good opportunity for manufacturers to grow their businesses because though prices are dropping, they're doing so more slowly in that range than 40- to 44-inch sets. So expect to see much more activity in terms of promotions around 60-inch and larger televisions in the next few months.
One reason the big manufacturers are starting to feel comfortable again is that they've retaken their places atop the LCD sales figures. The surprising story last year was Vizio's stunning leap to the top of LCD TV sales in North America. It came from severely undercutting the big guys on pricing and selling through club stores.
It's a different story this year. The big guys in TV figured out what Vizio was doing and responded by creating specific models of TVs for mass market stores like Wal-Mart and Target. By associating their brand names with the prices Vizio and others like Westinghouse and Olevia (made by Syntax-Brillian) were offering, the result has been that Samsung, Sharp, and Sony have, and Vizio has fallen behind.
Key to that change has been manufacturers like Sony and Samsung working with retailers to tailor their products to specific sets of customers. HDTV makers don't need their products to be a luxury anymore. They want everyone to have a high-def set in their home. The industry has reached buyers that were wowed by the technology first, and now it's on to the people who need to upgrade to a digital TV, or have been waiting for prices to drop.
"It's a new phase of HDTV adoption," said Gagnon of DisplaySearch. "Half of U.S. households have an HDTV, but the next wave of consumers is going to come through mass merchants who focus on a lower price point."