New Forecast Shows First Drop in U.S. Flat Panel TV Sales in Years

2012 will see a 5 percent drop in TV sales according to IHS iSuppli

In what appears to be a decisive turning point, U.S. flat-panel TV shipments are projected to dip for the first time on an annual basis this year, ending an unbroken string of growth since the market began. Shipments in 2012 of flat-panel TVs into the American market are forecast to decline to 37.1 million units, down 5 percent from 39.1 million units in 2011, according to an IHS iSuppli U.S. TV Market Tracker report from information and analytics provider IHS. Only last year, shipments had inched up 1 percent from 38.6 million units in 2010. Some consumer electronics companies continue to do well, like Vizio, which can be seen in the video below showcasing new big screen TVs.

 

 

 

Shipments of flat-panel TVs—a category covering the dominant liquid crystal display television (LCD TV) sector, the smaller plasma TV segment and the negligible and moribund rear-projection TV market—peaked last year. Shipments are projected to continue to weaken for the next three years until at least 2015, as shown in the figure attached.

“The U.S. flat-panel television market has never declined on an annual basis, even at the height of the recession in 2008 and 2009,” noted Lisa Hatamiya, TV research analyst for IHS. “The decline starting this year suggests that demand may have crested for the mature U.S. TV market. Sales in the United States now are being driven by consumers who are replacing their older flat-panel sets with new models boasting more advanced features. This contrasts with developing regions of the world where vibrant, untapped markets remain for buyers making their first-ever purchase of flat-panel sets.”

Irrational exuberance in 2011 contributes to sales decrease in 2012

Beyond the long-term maturation of the U.S. television market, sales will contract in 2012 because of specific supply and dynamic developments that occurred in 2011. In retrospect, television brands were also too optimistic last year, contributing to this year’s expected historic downturn. Believing that consumers were finally ready to buy new TVs and part with their money, manufacturers increased shipments in the first quarter last year—only to be proven wrong when the hoped-for sales failed to materialize. A negative chain reaction then ensued that lasted throughout the year, with sets being very aggressively priced toward the third and fourth quarters to make up for a frail first half.

These price cuts hurt profits horribly across the board for almost every vendor.

As a result of last year’s bitter prescriptive, brands will be very cautious in 2012. Manufacturers will attempt to control new shipments into the U.S. market, so that prices remain steady and won’t drive as much demand as last year. The attempt to rein in pricing could also prove dicey, possibly risking the ire of a purchasing public used to discounting or a pattern of gradually lower prices. The overall effect will serve to inhibit shipments this year.

A silver cloud to the lining will be that despite the projected shipment decline, the industry as a whole expects to be more profitable, with less discounting bringing in more revenue.