Home Ent safe from recession pressures

The past few days have seen pay-TV operators suffer heavyweight share-price tumbles owing to anxieties that consumers will either trade down their subscriptions or abandon pay TV altogether. Those anxieties may be over-stated suggests a report from Futuresource Consulting.

Oct 28 saw BSkyB's share price, for example, fluctuate at around £3.60p but has fallen £2 since July. BSkyB unveils its latest numbers this Friday. However, Futuresource have looked into the impact the current economic situation might have on consumer electronics generally and says: "Rather than going on vacation or dining out by candlelight, consumers see the purchase of hot new ‘must have' electronics items like Blu-ray players, flat panel TVs or smart phones as a far better value-for-money option. The tangible benefits of these products can be enjoyed for a long time to come and are seen by many as essential items once consumers begin the retreat into their living rooms."

"Futuresource research from the economic slump of 2001 reveals digital cameras and DVD players continued to grow sharply when the economy stagnated, giving us a clear indication that home entertainment can ride the storm. Stretching the timeline backwards further, during the economic downturn of the early 1980s, sales of VCRs in the UK rocketed, growing by 440% between 1980 and 1983," says Futuresource.

New figures released by Futuresource last week show the markets for flat panel HDTVs and Blu-ray disc players will continue to expand in Europe and the USA this year, with the majority of consumers continuing to migrate up to more expensive, better specified products.

"The US flat panel market is on track to reach nearly 30 million shipments this year, with LCD screens experiencing a healthy 40% growth on 2007. However, although they're still seeking that HD fix, many consumers in the US are shopping for smaller screen sizes, between 32" and 42". Subsequently, we are likely to see slower growth for the US in the giant screen size segment (50"+). By 2010, overall shipments will have grown to 36 million units.

"In Western Europe the TV market is also holding up well, with overall volume growth of 6% predicted by Futuresource for this year. In addition, significant price reductions of up to 25% in the larger screen (42"+) categories are fuelling interest amongst first time buyers. Many European consumers are also looking to upgrade their bedroom or kitchen CRT sets to a small screen LCD display.

"Flat panel growth is expected to continue into 2009 and beyond, with panel suppliers expanding production and opening next generation plants, which will ultimately help to drive average prices down further and boost demand."

The pattern of growth is similar for the Blu-ray disc player market, with Futuresource projections showing player shipments to Europe's top 5 markets (France, Germany, Italy, Spain and UK) more than tripling between 2008 and 2009, to reach in excess of 1.8 million units shipped in 2009, excluding PS3.