Economy Fears Put Off TV Purchase Plans

By Greg Tarr On Sep 8 2011 - 4:01am

EL SEGUNDO, CALIF. — U.S. consumers planning to purchase televisions this year have plunged to record low levels as Americans continue to worry about the volatile economy, according to a new study from IHS iSuppli.

The IHS iSuppli “U.S. TV Consumer Preference Analysis” report lists the results of a survey conducted during the second quarter of 2011 showing that only 13 percent of U.S. consumers who had not purchased a TV during the past quarter are planning to buy a new set during the next three to 12 months, down sharply from 32 percent in the first quarter.

Some 83 percent of respondents said they had no intention of buying a new TV set within the next 12 months. This compares with the 66 percent of respondents who said the same during the first quarter, marking the highest negative level of response to the question since the studies were first made public in 2010, IHS said.

The remaining 4 percent in the study represented those who had received televisions as a gift, up from 2 percent in the first quarter.

“The latest survey indicates a tremendous shift in preferences among an increasingly cautious buying public, unnerved by the continuing gloom of the economy,” said Riddhi Patel, television systems and retail services director at IHS. “The findings suggest a growing willingness among U.S. consumers to suspend — if not totally abandon — their ongoing love affair with the television, the primary entertainment device for many American households. A sort of wait-and-see attitude has taken hold -- whether it is waiting for the economy to improve, or for television prices to fall some more, or for the arrival of better deals that combine both reduced prices and highend TV features.”

Among consumers who bought TVs in the second quarter, the most important criteria were picture quality, price and screen size, IHS said.

Brand name has become a less important factor in the purchasing decision because of the diminishing price differential between different makes, IHS said.

More troubling, the study showed higher-end features, such as connected TV systems and LED backlighting, were also not seen as critical decision factors in the purchase.

Still, IHS said, LED-backlit TVs accounted for nearly 30 percent of TV purchases in the second quarter, up from 26 percent in the first.

Overall, televisions featuring LCD technology represented 86 percent of flat-panel TV sales in the second quarter. Plasma displays accounted for the remaining market, although plasma sets experienced an increase in overall average pricing as well as favorability ratings, due to new models’ larger sizes and advanced features.

A slight increase was detected in buyers going for 50-inch-and-larger sets, but IHS said the number of people who purchased under-30-inch sets increased a surprisingly high 38 percent, mainly for reasons of price as retailers offered fewer and smaller discounts in the bigger sizes.

As for so-called Smart TVs with Internet apps, the use of Netflix among households soared to 66 percent for new TVs connected to the Internet, and together with Facebook, YouTube and games represented the mostaccessed applications by consumers.

IHS said its recent survey was conducted among more than 45,000 randomly polled U.S. households from a continually refreshed pool of 2 million, with a margin of error at 1.6 percent.

Further information is available in the report at www.isuppli.com