Not many people realize how indicative of leisure spending the payout on a new TV set is, but when a household feels it can afford a new TV, they are buying something which is a pure luxury, since virtually every household in the western world already has 2 sets.
Behind TV set purchase, sign ups for Pay TV follow, and let’s face it Pay TV sign ups have never really gone away in this recession, with only traditional cable suffering slightly, while DTH has prospered and IPTV has powered ahead.
So when DisplaySearch says that the numbers of TV sets sold in Q3 is the first time in a year that sales went up, not down (as measured by shipment numbers), it is a turning point of some sort. Of course that doesn’t mean that there is enough demand that device prices are about to go up, or even hold up, but as more and more people come back to the market, first devices ship in greater volumes, then, as capacity is reached, prices will stop falling so fast..
Total unit volumes for total TVs of all types went up just 1% to 54.9 million units in the quarter, but it is the direction that counts, up. LCD TVs have been growing through the recession, but not enough to offset the rapid decline in shipments of CRT TVs, until now.
LCD TV shipments globally rose 38% reaching a record 37.5 million units in the quarter partly driven by Government stimulus programs in China and Japan, plus continued falling prices. LCD TVs hit double digit growth in every region except Eastern Europe and DisplaySearch now expects 2009 total LCD TV shipments will reach 140 million units.
But as we said revenue growth may continue to be elusive and may not return. TV sales revenues fell 10%, to $26.2 billion, for the fourth quarter in a row. In just LCD TVs, the disparity was even more dramatic, with LCD TV revenues up just 1% on that 38% shipment growth.
‘The dramatic difference between strong unit growth and weak revenue growth is a problem for the TV industry,’ noted Paul Gagnon, Director of North America TV Research for DisplaySearch. ‘The strong unit demand from consumers is predicated upon attractive retail prices in the current economic environment, but manufacturers and retailers can’t keep up price declines forever, as production costs fall more slowly and new advanced features require modest to high price premiums.’
Average selling prices for LCD TVs fell 27% during the past 12 months, twice as fast as the overall average for all types of TVs. However LCD panel prices have been rising for most of 2009 with the result being a huge margin compression.
What’s happening in the shops are that special offers are triggering sales or people are opting for smaller screen sizes, so screen size growth has simply hit a wall.
These conditions are also hitting the emergence of new, and expensive technologies such as OLED which has virtually stopped shipping in the TV form factor.
While China is also doing a lot to encourage sales, in Japan, the eco-points program rewards consumers of highly energy-efficient electronics with points that can be spent on merchandise and gift certificates. This has meant that Japan’s growth rate has reached its highest in over three years despite the fact that there are almost no CRT TVs left in the country, so this is not a replacement market.
Samsung remained the global brand share leader in revenues for the fifteenth straight quarter, but lost about a point of share, to 21.9%, LGE was second and overtook Sony in Q1, who’s revenue fell below 10% share for the first time.
In the US Samsung remains ahead but Funai overtook Vizio to take the number 2 spot. On a revenue basis, Panasonic, which is the leader in Plasma TVs, which can be very expensive, climbed two spots to number 2, overtaking Sony and Vizio.