Monday, November 7, 2011

Why Large-Screen TV Prices Are Falling

The 3-D fad is over. In the television business, the main focus has returned to large-screen televisions this Christmas season. But most American households that had a use for a large-screen had already purchased one by 2010.

When manufacturers are trying to keep selling into an already saturated market, that is reason enough to expect big price cuts. And there is another, more fundamental reason for lower prices of televisions this year. Engineering and design improvements have improved the manufacturability of the video displays. Flat-screen televisions now cost less to make than they ever did.

But even prices as much as 40 percent less than two years ago may not spur enough demand to sell all the televisions that manufacturers can make. Consumers who purchased a television within the last three years will subconsciously avoid the television promotions in stores, not eager to discover that the unit they paid $4,000 for is now worth less than $2,000. With banks in the news again, many households will think twice about making a frivolous purchase on a scale that resembles a monthly mortgage payment, perhaps opting to delay until the mortgage is paid off.

This, then, could be the last year in which large-screen televisions dominate Christmas-season store layouts. Everyone who was holding out will have a chance to buy a large-screen television in the after-Christmas, pre-Super Bowl sales of January. After that, manufacturers will have to cut back on production, and retailers on floor space, to a scale that fits a replacement-cycle product.