HDTV Prices Drop To Record Lows: Analyst

Punctuating the end of a difficult year for TV makers, average U.S. street prices for many models of high-definition TVs are expected to fall to record lows in the fourth quarter of 2011, according to a new forecast from NPD DisplaySearch.

For example, all 32-inch TVs will be below $500 for the first time and all LCD high-definition television sizes up to 46 inches will be below $1,000, according to the research firm. While new features such as 3D still carry premiums, price-sensitive consumers in North America have gravitated toward low-price models.

"The flat-panel TV industry is now in a very advanced state of maturity, and the rapid cost reductions seen in the mid-2000s due to enormous investments in panel production capacity have slowed considerably," DisplaySearch director of North America TV market research Paul Gagnon said in announcing the quarterly forecast. "Despite this, consumers still expect rapid continuous retail price reductions."

A combination of slower-than-expected demand and excess production capacity in the first half of 2011 led to a dramatic reduction in key component costs during the third quarter -- leading to bargains on HDTVs in the holiday-shopping season, according to Gagnon. Other TV models DisplaySearch expects to hit record-low prices in Q4 include: 40- and 42-inch cold-cathode fluorescent lamp (CCFL) 2D LCD TVs, which will have average prices below $500 for the first time; 40-inch active-shutter 3D LCD TVs, dropping to below $1,000; and 60-inch LCD TVs, falling to under $1,500 on average with some available for less than $1,000.

TV makers have been hard hit by the trend. On Monday, Sony Electronics announced it was ending its seven-year-old joint venture with Samsung Electronics to produce flat-panel screens for televisions.

In 2012, DisplaySearch predicts that HDTV pricing will not fall as dramatically. That's largely because prices of an LCD and plasma panels -- which can account for 30% to 50% of a TV set's retail price -- will stabilize by midyear and will even start to gradually increase in the second half of 2012. LED-backlit LCD panel prices will likely continue falling in 2012 but at a much slower pace than in the second half of 2011, which will slow retail price erosion, according to DisplaySearch.

Premium-priced TVs have been unpopular in the U.S. Specifically, 3DTV growth has been slower than expected in North America, with just 2.4 million units, or about 8.5% of all TVs, shipped in the first nine months of 2011.

According to DisplaySearch, the 3D premium for a 55-inch LCD TV in the fourth quarter will be about 17% over a non-3D model; that's down from a 30% price delta in the previous quarter but is still a significant price difference. Gagnon said that in many cases consumers are opting to trade up in screen size rather than get additional features.

DisplaySearch's Quarterly TV Cost and Price Forecast Model forecasts average street prices for four years using metrics including panel prices, TV bill of materials, brand and retail margins, and logistics costs.