HDTV makers turn to budget stores, larger screens

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, which filed for bankruptcy earlier 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 analog-to-digital switchover, 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 leaped back into the lead, 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."

[bruceslog]

That's fine, as long you TV makers always clearly show the difference in performance and features between your cheaper ( Walmart ) sets and your higher priced sets. And do so in plain English on the Outside of the box. Please.
If I cannot tell what I am getting for thousands of dollars, I am not buying.

[Zwack]

To anyone about to take a plunge and buy an HDTV do yourself a HUGE favor and do NOT purchase one online (especially at Buy.Com like I did). No matter what else you do, you are warned to avoid throwing your monay away on the Digital Lifestyles brand (made by Corion usa in China) no matter how attractive their pricing may seem. You get what you pay for and you can't beat brick and mortar satisfaction and name brand reliablilty. We made the mistake and in LESS than 5 months our picture went black and never came back. After a huge mess and hassle the manufacturer agreed to replace the set provided I pay for shipping of their defective unit bcak to them in California ($65) in addition to paying for them to ship me a replacement HDTV as well (another $50). Three weeks after the failure of the old set we finally have the new one sitting in my living room and if it fails then I am told it is the same procedure all over again. They initially wanted to charge me an additional $100 for the "upgrade" because it is a newer model with "more features" and the original one was no longer being made. I had to argue and reason repeatedly with a supervisor about the entire mess before he reluctantly agreed on the swap out and I reluctantly agreed on plunking down another $100 on a brand that is destined to go out of business with their horrific customer service model.