Conventional Wisdom

There was the Nationwide Marketing Group and Brand Source conventions in mid-August, IFA in Berlin, NECO in Connecticut, RetailVision in Phoenix and finally CEDIA Expo in Denver; so much for a quiet end of the summer. The advantage of all these meetings being held right before, and right after, Labor Day is that many of us who attend a few of these industry events can read the pulse of the industry as we enter prime time — the fall selling season.

Based on the conversations that many of us at TWICE had with you, our readers, during these recent events, it looks like the industry is facing a hybrid season coming up. And no, I don't mean that in a "green" sense either.

First off, there is a consensus in the industry that the demand for HDTV, especially flat-panels, will be overwhelming this season. But while that is happening pricing will be as "competitive," or dare I say cut-throat, especially around Black Friday, as what happened in 2006. Last year the depths of the price cuts by major brands were somewhat unexpected. This year the industry is braced for it — emotionally at least. Financially? We'll find out in early 2008 when the quarterly reports come in, if not sooner.

The other factor that will affect the fall selling season is the general economy. Between new housing starts hitting the skids, the mortgage crisis, a subsequent credit and jitters about a possible recession in 2008, you'd think that the industry, especially those attending CEDIA Expo, would be concerned. While the industry might be perturbed, 4 percent more people showed up at CEDIA Expo, and its trade group of the same name, as well as industry sources, told us that while business isn't what it was last year, it is still growing.

Jay Vanderbree, president of Sony Electronics Consumer Sales, expressed an opinion at the show that has been the industry's conventional wisdom over the years when the general economy is hurting (see p. 1), namely: "When the economy is down, [the industry does] better." Consumers will cut back on other expenses and "spend more money on home entertainment."

And finally what about the Blu ray and HD DVD competition? When will it end? Who will win? Going to the Toshiba press conference at CEDIA and then Sony's right after it, the market share info provided were practically mirror images of each other.

Here's what Warner Home Video president Ron Sanders, whose company still supports both formats, told our executive editor Greg Tarr during CEDIA (see p. 55 and www.TWICE.com) about his view of the format battle. "It's really hard to handicap. It will be really pivotal what Toshiba does this fourth quarter in hardware. If they sell through everything they ship, and it's a big number at the price points that are coming out, then I think [HD DVD] will be around for a long time. If they don't, then it could go Blu-ray's way."

Like the predictions about flat-panel demand and pricing, what Sanders said seems to be sound, conventional wisdom. We'll find out soon enough if conventional wisdom in these cases prove to be correct come New Year's Day ... or better still, when International CES opens on January 7.