TV prices will drop only slightly for holidays

By Nathan Olivarez-Giles Los Angeles Times

LOS ANGELES — Prices on big-screen TVs will be going down in time for holiday shopping this year, but don’t expect the dramatic discounts of 2009, when they fell 20 percent.

This year, according to research firm DisplaySearch, prices for high-definition televisions will drop about 8 percent, which means you’ll be able to pick up a 32-inch LCD model for an average price of about $360 and a 55-inch set for an average of about $1,675.

It would be nice for U.S. retailers if the relatively soft discounting could be blamed on booming business, but forecasters predict that sales this year will be flat compared with 2009, in part because so many households already have high-definition televisions. Indeed, there’s a surplus of unsold TVs in the country.

“It seems like it would make sense to drop prices on TVs when you have a warehouse full of them,” said DisplaySearch analyst Paul Gagnon. “But that’s not the whole story.”

Blame the near-steady prices this year, mostly, on good retail sales in 2009, when two factors boosted HDTVs. First, there was the advent of government-mandated, all-digital broadcasting in June of that year. Many people took that opportunity to get rid of their old analog sets and go digital.

Second, prices fell so much by the holidays that it made HDTVs irresistible to many, even in the midst of a sad economy.

“Those two things resulted in supply shortages,” Gagnon said. “That drove up costs from suppliers, and that drove prices of TVs to stay flat or, in some cases, increase. But then demand dropped off and boxes are stacking up, and it seems everyone made too much.”

Without the special market conditions that hit in 2009, there was not much to spark sales in the U.S. this year.

“The reason that people buy TVs is either to replace an old TV that breaks or to add a new TV in the house,” Gagnon said. “In the U.S., we’re becoming a mature market, which means a lot of our TVs are now flat-panel TVs. The same thing is going on in Japan.

“But in countries such as Brazil or China, not many homes have flat-panel TVs, and that’s where we’ll be seeing the market growth. This is a pattern we’ll be seeing for the next couple of years and one we’ve seen before.”

The most hyped new television technology this year, by far, was 3-D. At the giant Consumer Electronics Show in January, almost every major TV manufacturer introduced 3-D-capable models at the high end. Also, 3-D Blu-ray disc players became available.

The advent of 3-D has not shown any signs, however, of jump-starting sales in mature markets such as the U.S., said ISuppli analyst Riddhi Patel.

“3-D TV; it’s not a huge hit,” Patel said. “It’s a hard sell, and there are a lot of hidden costs that people don’t want to take on right now.”

3-D TV, like 3-D movies, can’t be viewed properly without the use of special glasses to give the illusion of depth. In some cases, glasses come with the sets, but otherwise they have to be purchased a la carte. Also, not many TV shows or Blu-ray discs are available this year in the format.

“The content is still not there. You have to buy each pair of glasses. You have to buy a 3-D Blu-ray player. You can’t use the glasses across TV brands,” Patel said.

Of the 32 million HDTVs expected to be shipped to retailers in the U.S. this year, only about 1.2 million of those will be 3-D HDTVs, she said.

A type of LCD TV that uses low-power LED backlighting is gaining in popularity, in part because it can be made especially thin for hanging on a wall. These LED-backlit sets are still more expensive than regular LCDs, but prices are narrowing.