NEW YORK –
Despite manufacturers’ best efforts to keep the flat-panel TV business from commoditizing, the 2011 holiday selling season appears poised to be another big event for bargain-hunter blow outs, industry observers told TWICE.
Pressured by the combination of the lingering economic malaise and a highly saturated U.S. TV market, manufacturers have aggressively pushed large-area display screens, 3DTVs, superfast refresh rates and various levels of IPTV functionality. But the majority of the holiday consumer interest appears to be fixed on price, first and foremost, analysts say.
“It is all about price right now,” said Tamaryn Pratt, Quixel Research principal. “Branded, no name, large screen and small screen — these are challenging times in the TV business, and there are no angels.”
Rey Roque, Westinghouse Digital marketing VP, said the climate has been advantageous to valueoriented TV brands like his.
“Value has been in great demand during these difficult times, and Westinghouse has grown tremendously this year,” Roque stated. “Continued softness in the economy will drive further growth. Westinghouse will have a complete line from 22 to 70 in LED and LCD for 2012.”
Pratt suggested LCD and plasma TVs with 55-inch and larger screen sizes “will be where the big brands play, primarily, but there will be plenty of deals on 32- inch products and other small-screen models.”
For the opening price point (OPP) brands, expect to see holiday specials of $89 for some 19- inch LCD sets and $169 for some 32-inch models.
In the better-known brands, 720p LCD TVs will be seen at $229 and $249, Pratt believes.
“As they say, ‘The retailers will be the ones to enable these prices,’ ” she noted.
In 40- and 42-inch CCFL-backlit LCD with 720p resolution, models will be seen at the $259 to $279 level for OPPs and aggressive second-tier players, according to Pratt.
Look for same size 1080p models at $329 and 46-inch at $399. For 55-inch OPP-branded 120Hz CCFL-backlit LCD TVs, she expects to see prices as low as $499 to $599.
The better-known brands will come in closer to $629 to $699 for their CCFL specials, Pratt offered.
As for bigger-screen surprises, 55-inch LED LCD TVs will see Black Friday specials of $999 “with a few bigger brands,” according to Pratt. “At 60-inch there are whispers of a stripped $799 CCFL LCD TV model coming, a $999 LED TV model, a 70-inch model at $1,899 and an 83-inch model at $4,999. But for those big-screen [enthusiasts] with tiny pocketbooks, look for a 73-inch microdisplay rear-projection TV model in the $799 and $899 range on Black Friday and an 82-inch at $1,799.”
But for some Japanese suppliers, the price-cutting bonanza of the past may be more tempered this year.
Scott Ramirez, Toshiba TV products marketing VP, cautioned that “panel availability will be a little tight for Q4, so [manufacturers] being more aggressive than last year may not make sense. However, Toshiba and the industry will most certainly continue to create opportunities to drive traffic and sales.”
He added that “dealers should make their volume commitments now, as late upside may not be available.”
Paul Gagnon, DisplaySearch North American TV market research director, said he is targeting shipments of the 40- to 49-inch LCD size segment for high-volume growth during the holidays.
However, plasma volume will fall at these sizes, he predicted.
“We are projecting shipments of 46-, 47-inch LCD TVs to be up 14 percent year to year in the fourth quarter and 40-, 42-inch units to increase 10 percent year to year,” he said.
The 32-inch segment will still be the highest volume screen size for the holidays, but share of shipments will be down from 28 percent last year to 26 percent this year, Gagnon said.
“With 40-inch class LCD below $500 and 46-inch class below about $750, they are very attractive upgrade sizes for current flat-panel TV owners,” Gagnon pointed out. “With 32-inch expected to be widely available for under $300, demand is falling fast for smaller sizes, especially 18.5 inches and 22 inches, as people just head straight to 32 inches.”
The analysts expect LCD TVs with LED backlighting (a traditionally higher-step feature with larger margin opportunities) to be used more aggressively this year in doorbuster specials.
“Adoption has been a bit sluggish this year, falling behind projections, so we’ve lowered our target some,” Gagnon said. “The problem is the premium, which is still 30 to 40 percent at many large screen sizes.”
In smaller screen sizes, though, Quixel’s Pratt proffers: “LED has become pervasive.”
“It is already a door-buster at some screen sizes,” she said. “In the first half we saw plenty of 40- and 46-inch bargains for 60Hz models because LED resonates on a variety of levels with consumers, but refresh rates are just superfluous at this time. We are expecting that to continue with drop-ins or price reductions for those limited models which were intended to move volume at low price points.”
Pratt sees 25 percent of the 19-inch LCD TV segment business already having LED and 50 percent in the 22-inch screen size.
“Share will increase here due to the cost parity on the manufacturing side,” she added.
The plasma TV segment, which has presented some of the hottest bargains in recent years, will start to cool off this year, as LCD pricing starts to equalize.
“We’re not expecting to see the same boom in demand for plasma (mainly 720p HD) this year as we did a year ago,” observed DisplaySearch’s Gagnon. “Plasma shipments should be down about 40 to 50 percent year to year in Q4 at 42 and 46 inches, and down about 16 percent year to year at 50 inches.
“We might still see some great Black Friday prices of $349 for 42-inch 720p HD and $499 for 50-inch 720p HD, but I don’t think plasma brands are focused as much on driving cheap plasma this year since the upside potential in volume is lower,” he continued.
Quixel’s Pratt said she believes the industry will be singing the “swan song” for plasma in the 42-inch screen size this year.
“It won’t be surprising to see $349 on Black Friday — and maybe even more dramatic than that — and $399 consistently throughout the holiday season,” Pratt said of 42-inch 720p plasma sets.
The 50-inch plasma segment in both 720p and 1080p resolution “will drive the lion’s share of volume” over the period, she predicted.
For FullHD plasma, the OPPs will be offering $499 specials where the big brands will be at $699 for the most part. But some big brands will offer 50-inch 720p plasma models starting at $499 and $649 for FullHD (1080p), Pratt continued.
Some bargains will also present themselves in 60-inch plasma, but Pratt sees limited supply keeping sell-through numbers tight.
As for brands that are expected to be the most aggressive this holiday season, Pratt said Westinghouse should continue to gain momentum at Best Buy and Target. Vizio will continue to be a player in the warehouse clubs and Walmart, and Samsung will be busy at Best Buy, among other venues.
Gagnon stated, “Comments from Japanese brands indicate they are concentrating more on profitable business, so the Korean brands and opportunistic second- and third-tier brands will probably drive more of the volume through discounts, but there is still plenty of time for brands to course correct.”
Less prevalent this year will be bundled promotions, which Pratt said “might not be providing the gains and buffer that had been prognosticated.”
Gagnon, however, expects to see plenty of 3D glasses bundles, adding, “But it can’t continue forever. At some point, 3D products will need to stand on their own.”