Growing Challenges for LCD-TV Manufacturers
Low prices for the upcoming holiday season are expected, and are indicative of the changes and challenges occurring in the LCD TV industry. These challenges have some manufacturers wondering whether it's better for their business to "stay tuned" or leave the market entirely. Toshiba recently announced it would implement structural reforms in its TV business, and won't be the last company to change its approach to the TV business, especially in developed and mature markets like North America and Europe.
During Black Friday week in 2007, Samsung offered 32" LCD TVs at $799; this year, some volume brands' prices could be as low as $100. Even 60" LCD TVs, featuring "good-enough" specifications, could be less than $600 in Q4 2013. By pricing LCD TVs so low for price-sensitive consumers during the holidays, manufacturers and retailers hope to drive retail traffic, like they did last year. In spite of the risk of financial losses from lowered ASPs, the holidays are just too important for some TV makers to ignore. In the North American market last year, for example, 12% of TVs sold out during Black Friday week and one-third of TVs sold out during the last two months in the year, according to our Quarterly LCD TV Value Chain & Insights Report.
While it may seem that LCD TV prices are bottoming out and can go no lower, the channel-decided ceiling price for 60" sets is leaving less room for all the other sizes to develop, differentiate, and find a way to survive. Competition is becoming increasingly tough for TV supply-chain players, because brand-name and private-label products -larger sizes, with slim and bezel-less form factors - actually look and perform quite similarly, if one is viewing at a distance.
In the past, LCD TV business plans and strategies for products, sourcing, and manufacturing for the coming year would normally be proposed and deployed by the middle of the third quarter. This year, confusion over the TV panel supply base has caused planning delays. TV brands are striving to make the right bets on TV screen sizes, product features, and value propositions related to the customer portfolio and supply base they choose to work with.
Of course the role and value of TVs has changed over the past few years; Internet video is replacing broadcast and pay TV as a primary source of entertainment, handheld smart devices are acting as companions to TV, and TV-everywhere services mean that consumers no longer have to watch the same program at the same time. This new eco-system presents new opportunities, as well as threats, to companies looking to make a place for themselves in our living rooms.
The latest changes in the LCD TV market create many questions: Can TV find its place in the multiscreen era? What new applications will emerge for TV over the next decade? And how will these developments change how TVs are used? These and other questions will be addressed next month at the 2013 DisplaySearch Taiwan Smart TV Conference.
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