Unit demand for flat panel TVs in 2009 was much better than expected at the beginning of 2009, mainly due to price erosion. During the first half of the year, it was easier for brands to cut prices, as LCD TV panel prices had plummeted during Q408 and Q109, affecting products sold in Q109 and Q209. However, the situation reversed itself in the second half.
Because the rate of ASP decline was slower at retail during the first half of 2009 than the pace of panel price declines, manufacturers and retailers were able to boost margins from the low levels in Q408, noted Paul Gagnon, Director of North America TV Market Research at DisplaySearch. However, during the second half of the year, panel prices increased, peaking in September, and stayed fairly elevated in Q409 during what is normally a weak period seasonally. As a result, TV manufacturers and retailers gave back the margins gained early in the year to ensure that retail pricing didnt stagnate, or even rise, which could have been disastrous to demand.
Average prices for LCD TVs are expected to fall more slowly in 2010 as the rate of LCD panel price erosion slows sharply, especially with booming demand in China keeping the supply situation tight in the first half of the year. In addition, the increased mix of premium priced LED-backlit LCD TVs and 3D TVs will serve to help offset natural price erosion, resulting in the volume weighted blended average price falling only about 4%. LED-backlit LCD TVs carry premiums ranging from 30% to 50%, although those premiums will drop quickly as the supply chain matures and brands drive LED margins down to hasten the transition away from CCFL models. 32 HD LCD TVs could approach $300 on average by the 2010 holiday season, even from premium tier brands, although the margins for such a commoditized size category will be negative. Supply chain participants are actively trying to transition consumers towards more profitable size categories, especially 40+.
Figure 1: Y/Y Change in Average Price for LCD TV and PDP TV
Average prices of PDP TVs are forecast to fall 15-25% in 2010, also at a slower rate than PDP in 2009, but a little faster than comparable LCD TV sizes. All 50 and smaller PDP TVs will be below $1000 on average by Q210, and even large sizes like 58 are now below $2000 and seeing an increase in demand. 42 HD remains a volume driver for the PDP TV category, largely due to promotional prices that are nearing the $500 mark. Average prices for 42 HD PDP TVs are forecast to fall below $500 by the 2010 holiday season. 50 1080p PDP TV has been gaining share at a healthy rate recently, as all three major producers are now fielding a wide range of 1080p models and 50 1080p will be the key size for the rollout of 3D PDP TV this year.
With extensive cost modeling, including LCD TVs by frame rate and even backlight types like LED, the DisplaySearch Quarterly TV Cost and Price Forecast Model & Report forecasts average street prices for four years out using panel prices, TV bill of materials (BOMs), brand and retail margins, logistics costs and more. This cost model includes historical and forecasted costs, price and margins for all major sizes and resolutions of CRT, LCD, PDP, RPTV and OLED and leverages the NPD Group's volume weighted average retailer pricing information.
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