Television Business - How much Money can we lose?!

Bottom line - companies need to stop adding in features that US consumers are no willing to pay for. If the value is not there, why lose money bringing items to market that simply have to be marked down. R&D expense goes down the drain. Inventory piles up and is heavily discounted which continues to put quicker unnecessary downward pressure on pricing. US consumer is clearly saying I pay for SIZE and PRICE - BASIC PICTURE QUALITY. We can try to make up a new category as much as we like, but at the end of the day a TV is a TV, the rest is NICHE. If we don't wake up and change direction the TV category will be the next CE category that becomes nothing but a commodity item. This hurts the CE companies, and retailers , and eventually it will be same for consumers. 6-8 years of the Same Old Same Old at CES. No reason to innovate if no one understand the product, value, feature, and converts that to a benefit , need, and attributes a value they are willing to pay to have that item bring those benefits to them.

JZ

By MATT JARZEMSKY And BEN FOX RUBIN

For the first time, the average price of a 47-inch flat-panel television is less than $1,000, good news for consumers but the latest sign of tough times for the TV industry.
The psychologically important sub-$1,000 mark—based on a forecast by market researcher NPD DisplaySearch—signals larger screen sizes are becoming affordable to more Americans as a glut of sets and components erodes prices.

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But such a slump bodes poorly for the profits of set manufacturers, as well as companies such as Corning Inc., the largest supplier of liquid-crystal-display glass for TVs, and Best Buy Co., the largest consumer electronics chain by revenue.
Prices for the 46- to 47-inch screen size, the largest before "big-screen" models of 50 inches or more, are expected to average $940 in 2011, down from $1,020 last year, said Paul Gagnon, DisplaySearch's director of North American TV research.
"We've got these large screen sizes like 40-inch and 46-inch size class products that are relatively affordable," Mr. Gagnon said. "It's really starting to drive a lot of upgrades."
The low prices reflect slower-than-expected demand and excess production capacity, the research and consulting firm said. DisplaySearch said it expects price erosion to be less significant in 2012.
The pricing woes have reverberated through the television supply chain, leading to losses at LCD panel makers such as LG Display Co. and recent plans by Sony Corp. to slash costs at its money-losing TV operation.
Corning last month slashed its fourth-quarter profit estimates, saying LCD glass prices had fallen farther than expected and that a major South Korean customer backed out of part of a sales contract. Corning said its TV display business had never seen a customer renege on part of an LCD order.

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Some consumers went up in TV size instead of features for about the same price. Above, Best Buy customers wheel away a Sharp 60-inch TV.

Retailers have also been burned by lower prices, though Best Buy reported earlier this month TV sales declines at a slower pace in the company's fiscal third quarter than in previous periods.
TV makers have introduced new technologies—such as LED backlights, higher frame rates and 3-D—to bolster demand, but price-sensitive consumers, especially in North America, seem reluctant to pay higher costs for premium features, NPD DisplaySearch said.
In many cases, consumers are opting to trade up in size, rather than features, for a similar amount of money, DisplaySearch said.
Overall, 2.4 million 3-D units were sold in North America, making up 8% of units. The premium for the feature on an average 55-inch set has dropped to about 17% from 33% in the third quarter of 2011, but its adoption is still slower than anticipated. LED backlights carry premiums of 25% to 30%.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com and Ben Fox Rubin at ben.rubin@dowjones.com


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