Worldwide TV Prices to Max Out in ’08

Jun 12, 2008  •  Post A Comment

While commuters fret that gas prices are still rising, couch potatoes can rejoice because television prices have peaked.
Worldwide TVs will sell for an average of $536 this year, 3% more than last year and about 40% higher than in 2004, according to a report from NPD Group unit DisplaySearch released last week. Larger high-definition televisions are becoming the norm in North America while gaining traction in developing regions such as Latin America and Eastern Europe.
For the first quarter, liquid-crystal display sets, almost all of which are HDTVs, accounted for 70% of the global dollars spent on televisions. That’s growth of 41% from two years ago, as people in developed regions such as North America started ditching cheaper cathode-ray tube TVs. Buyers also are taking advantage of the improved imaging, as the average TV screen rose to 29 inches this year from 24 inches in 2004, according to DisplaySearch.
“LCDs command a much larger selling price than CRT,” said Paul Gagnon, director of North American TV research for DisplaySearch. “As it grew rapidly, it pulled the average price up.”
TV makers may not be sharing consumers’ joy, though. With worldwide manufacturers such as Sony and Samsung ramping up their HDTV production, the prices for flat-screens will drop, leading to an overall decline in both prices and profit margins starting next year.
The average TV price will fall 3% to $520 next year and will drop below the $500 threshold around 2012. LCD prices in North America will mirror that decline, with the average price of a 32-inch HDTV declining to $509 by fourth quarter 2009 from $690 at the end of last year.
The price drop will be instigated by TV makers like Samsung and Sony, which garnered 22% and 18%, respectively, of the worldwide dollars spent on LCD sets in the first quarter. The companies will continue to battle for worldwide market-share superiority by dropping prices. As a result, profit margins, which had topped out at about 20% last year, will plunge to 4% by the second quarter of 2009.
“Everyone has the same pricing on panels, so you can only lower your price by lowering your profit margins,” Mr. Gagnon said. “We see those brand margins getting squeezed.”

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