Pricing for U.S. flat-panel televisions rose slightly in December as manufacturers temporarily halted their interminable price wars in order to boost revenue as much as possible before 2011 came to a close, ac- cording to an IHS iSuppli U.S. TV Price & Specifications report from information and analysis provider IHS.
Average prices in December 2011 reached approximately $1,120 for U.S. flat-panel TVs encompass- ing both liquid crystal display (LCD) models and plasma TV sets. Although that figure marked a scant 0.5 percent increase from $1,114 in November, the slight uptick constituted a big reversal from the prior 3.4 percent drop posted by the market just one month before December.
The December increase occurred as retailers staunchly held up prices in a bid to regain the upper hand, IHS believes. Retailers suddenly seemed to realize that overly competitive pricing wars couldn’t be sustained if profitability was to be maintained in the long run. And the strategy of deploying low pricing in the past often yielded debatable results, given that the scant gain in market share was achieved by com- panies at a painful loss to profitability, with precious little margin left over to celebrate.
The most significant increases in December took place within just two size groups, with prices as- cending 5 percent in the 20-inch-and-smaller category following growth in demand for the small-sized TVs as gifts during the holiday season; and up a more modest 2 percent in the highly competitive 50-inch- and-larger segment.
In general, plasma TVs cost more than LCD sets. The average price for plasma sets in Decem- ber was $1,494, compared to $1,026 for LCD televisions. And unlike LCD sets, whose price hike in December mirrored the general uptick of prices in the overall flat-panel TV space, plasma prices continued to shrink in the final month of 2011—an indication of the continued depressed state of that market.
No such concerns beset the LCD space, where brands ironically had to apply fewer premium features in order to keep prices down—unafraid that doing so would cause them to lose customers. In particular, LCD sets driven by light-emitting diode (LED) backlight technology continued to command premium prices. Internet connectivity was also a valued feature, with the prices for such sets inching up 0.5 percent in December in what was the second straight quarter of increase for Internet-enabled televisions.
In the rarefied 3-D market, average pricing for 3-D LCD sets climbed to $2,237, up 1.6 percent from the earlier month but a 25 percent decrease from the same time in 2010. Meanwhile, pricing for 3-D plasma models descended to $1,820, down 1.0 percent.
As the end of 2011 approached, retailers and brands could look back to a time of tough competition in a year of slowing growth, with consumers becoming more perceptive than ever at ferreting out the best deals on the market. Suppliers in 2012 are most likely to play out the year by finding new ways to compete, rather than sliding back into the costly and expensive TV pricing wars of the past, IHS believes.
Learn More > Price War Ends as Retailers Strive to Improve Profits Before 2012