US TV set market set to decline for second year in a row

Michelle Clancy | 23-10-2013

Shipments of flat-panel televisions in the United States are set to decline by 7% in the second half of 2013 as the holiday season delivers little reprieve from the long-term slowdown in domestic demand.

That's according to the latest US Television Market Tracker report from IHS, which estimates that a total of 20.1 million LCD and plasma television sets will ship in the United States in the second half of 2013, down from 21.6 million during the same period in 2012. With the majority of TV sales occurring during the last six months of every year, the second-half decrease will set the stage for the second consecutive annual decline for the US flat-panel television market.
"Driven by holiday sales, the second half of the year is always critical for determining the fate of the US TV market," said Veronica Thayer, analyst for consumer electronics and technology at IHS. "However, even with TV brands offering lower prices during this year's Black Friday than they did in 2012, sales in the second half will decelerate sharply. The US television market continues to be stymied by the long-term slowdown in replacement and secondary purchases, with most US homes already owning one or more flat-screen televisions."
Accordingly, US flat-panel TV shipments for the full year of 2013 are expected to fall to 34.1 million, down 9% from 37.3 million in 2012. This follows a 6% loss in 2012.
Television sales during Black Friday and other promotional days this holiday season are expected to generate about the same level of consumer activity as in 2012. However, the sales surge this year will not carry over to the rest of the holiday season, with overall Christmas demand expected to weaken compared to last year.
"When the promotions stop, TV purchasing will stop as well, because US consumers are increasingly sensitive to price," Thayer noted. "An IHS survey indicates that 43% of consumers now believe pricing is a major driver in their television purchasing decisions, up from 28% one year ago."
On Black Friday, television brands and retailers are expected to offer price promotions on sets with larger screen sizes of 50" and bigger. Strong competition is anticipated to drive prices for these sets to lower levels than last year.
IHS did note that the move to larger-sized sets is gaining momentum among US consumers. Shipments of 55" to 59" flat-panel sets this year will surpass the 45" to 49" size range in 2013 for the first time.
However, shipments of smaller sets are declining. In 2012, 32% of the LCD TVs shipped in the United States were in the 30" to 34" range, making this the largest screen size by a significant margin. In 2013, this share is forecast to fall to 27%, and will continue to shrink to reach just 12% in 2018, due to the increase in shipments of big-screen TVs.
US consumers also are embracing light-emitting-diode (LED) backlighting, which has almost completely supplanted the older cold-cathode fluorescent lamp (CCFL) technology in LCD TVs. In 2013, shipments of LED-backlit televisions are anticipated to amount to 28.1 million units, representing 88% of the LCD TV market.
CCFL shipments are projected to tail off dramatically by 2015, as LED TVs account for virtually the entire market.
"LED TVs have been a big consumer hit," Thayer said. "This is because they have been marketed as being eco-friendly and possessing better image quality. Furthermore, the price differential between CCFL and LED backlights has dwindled, adding to the latter's appeal."