Austin, Texas - Video display market analyst DisplaySearch issued fourth-quarter forecasts for North American LCD TV sales Tuesday calling for annual shipment totals to increase from just more than 31 million units to 34 million units, with all of the increased volume coming from smaller than 40-inch screen sizes.
The large-screen portion of the LCD TV market, which DisplaySearch defined as 40 inches and larger, is expected to grow 25 percent year over year in 2009, which is about half the pace of 2008 growth.
Shipment volume for LCD TVs smaller than 40 inches is expected to grow 23 percent in 2009, similar to 2008 growth levels.
"This is a clear result of the lower spending power by consumers worldwide in this recession, pushing them to look at more modest screen sizes when choosing a new LCD TV," stated Paul Gagnon, DisplaySearch North American TV sales analysis director. "However, we think this is a temporary effect; as the world emerges from the recession in 2010 and beyond, growth rates for large screen sizes will again outpace smaller sizes by a more substantial margin."
The outlook in the U.S. during the critical holiday selling season will be a measure of how confident consumers are with the economic recovery, and how far brands and retailers are willing to go in order to drive store traffic, said Gagnon. "We expect unit shipments to outpace the weak results from a year ago, but it will take aggressive promotional prices from major brands and retailers alike to bring consumers into stores, especially for larger screen sizes, something that is even more challenging considering key costs have drifted higher in recent months."
The firm also increased its expectations for worldwide LCD TV sales from 127 million to 130 million units for full year 2009, representing a 24 percent annual growth rate.
DisplaySearch attributed the stronger expectations to strong LCD TV shipment growth during the second quarter in key markets including China and North America and indications that growth levels will be sustained through the balance of the year. However, the forecast for global TV shipments of all display technologies in 2009 was reduced from the previous forecast by 3 percent to 195 million units for a 5 percent shipment decline from 2008, as the market for traditional CRT TVs declined faster than previously expected while flat-panel display makers struggle to churn out enough product to compensate for the difference.
"The transition from CRT-based TVs to flat-panel TVs is largely complete in developed regions worldwide, like North America, Western Europe and Japan," stated Hisakazu Torii, DisplaySearch TV research VP. "Now the transition to flat is accelerating in emerging markets like China, and we are seeing sales of CRT TVs fall faster than flat-panel TVs can grow, mostly due to supply constraints in LCD TV."
Having recently started tracking on LCD TVs with higher frame rates (100Hz to 120Hz and 200Hz to 240Hz), DisplaySearch said the higher-margined/higher-performing models will account for 31 percent of LCD TV revenues worldwide in 2009 while 200/240 Hz will take about 5 percent of revenues. By 2013, 100/120 Hz will account for 32 percent of LCD TV revenues, while 200/240 Hz will account for nearly 22 percent.
DisplaySearch said the global economic recession continues to impact purchases of TVs.
"Consumers still want to purchase flat-panel TVs, but they are trimming their budgets and setting their sights a little lower in terms of size and price," the company said.
A large majority of the increased shipment forecast for LCD TVs in 2009 is in smaller sizes, less than 40 inches. As a result, the average LCD TV screen size will be nearly unchanged in 2009 compared with 2008, after 4 percent growth last year, DisplaySearch said.
Average sizes were forecasted to resume growing in 2010 but at a slower rate than in recent years.
Meanwhile, the price of LCD panels used in TVs has been rising sharply in recent months, effectively increasing the cost of producing LCD TVs, DisplaySearch observed.
Despite this, LCD TV average selling prices continue to erode by an expected 22 percent year to year in 2009. Combined with rising panel costs, the continued price erosion will have a negative impact on profit margins at many points in the supply chain, the firm predicts.
DisplaySearch is still forecasting a revenue decline in 2009, although it has been reduced to a 3 percent drop from 6 percent previously, due to the increase in expected unit shipments.