INDIANAPOLIS — Despite continued economic pressures, the high end of the flat-panel TV market in 2011 should see modest growth as some consumers tire of more conservative spending practices, according to one DisplaySearch North America display products market analyst.

“It is definitely not easy business, and we’re clearly not back in the go-go days again, but the custom channel [in flat panel] is holding its own this year, and we are even seeing growth,” said Paul Gagnon, Display- Search North American TV market research director, speaking on flat-panel TV displays.

“The mid, high and ultra-high end of the market is supported by the new models that include 3D, as well as new and lower-priced LED models. While a portion of this growth is supported by technological innovation and pricing, a portion is supported by timing.”

Gagnon said part of the reason for the success is the fact that “frugal fatigue has set in” with the wellheeled set.

“Both manufacturers and clients have said that business is picking up at the high end, and 3D is one of the many ‘excuses’ for consumers to upgrade,” he added. “Runco’s 3D model is now fully available and supported strong growth in the $15,000-and-higher segment during the second quarter. First-half volume for the $15,000-and-higher price segment was up 14 percent and revenue was up 41 percent. Conversely, the $1,000-and-over price segment posted a 32 percent first-half revenue decline.”

But if it will last and whether or not manufacturers’ attempts to tap the activity will work remains an important unanswered question.

“While the high-end TV business is attractive to set makers for the higher [average selling prices] and better profits, it seems that demand is still very limited to a narrow segment of customers,” Gagnon said. “The performance variance of flat-panel TVs across a broad swath of brands is much narrower than it used to be, even between plasma and LCD, so the wide gap between the lowest- and highest-priced sets is tough to justify.

“A 70-inch [LCD TV] from Sharp can be had for less than $3,000 at Best Buy,” he continued. “But will it will also be offered for $8,000 or so at MHT under the Elite brand. Will some consumers see it as two to three times as good? That’s a tough question.”

Gagnon said new features like LED, 3D and Internet connectivity are not driving a new replacement cycle as was hoped, and premiums have fallen quickly as set makers resorted to lowering prices to push adoption of higher-end features.

“This doesn’t benefit the high-end retailers who thrive on differentiation and their ability to explain the reason for asking more money,” he said. “It’s not something I see changing much in the future.”

Gagnon said putting a lot of technology into a highend video display is a risky proposition in the custominstallation channel.

“Specialty retailers look to the package sale and installation for profits, rather than individual hardware, so including a very high-end TV with high price points and lower margins eats into that profitability, especially if the set will just be a monitor in a home theater setup.” Gagnon pointed out. “So extra features, beyond performance-improving ones like high frame rates or superior contrast and color, are not going to be needed in many cases. Specialty retailers need a high performance, reliable and unobtrusive display first and foremost without a lot of extraneous bells and whistles. That was something that used to be the purview of brands like Pioneer plasma.”

As for the U.S. display market overall, Gagnon said growth “is flattening, but the shift in channels seems to be in the direction of converting laggard flat-panel adopters, or discount retail in other words.”

He said he observed that “high-end channels have an install base that has already likely fully converted to flat panels fairly recently, and may be competing with low-cost projection at larger screen sizes. It’s a tough segment to operate in these days.”

“The end of dedicated high-end TV brands like Pioneer and NuVision and high-end sub-brands like Hitachi Directors Series, Sony Qualia or Panasonic Onyx over the last five years or so only exemplifies this point,” he added.
Release Date: 
2011-09-08 04:01:00
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Abstract Web: 
INDIANAPOLIS — Sony travels to CEDIA Expo 2011 here this week to dispel notions that it is less than fully committed to the future viability of its TV business.
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