Why TV prices may go UP

TVs just keep getting cheaper, right? Maybe not for much longer. The chart on the right shows a breakdown of 55-inch TV prices (in US$) plotted against the costs of the panels used in those TVs. The top grey line is the average price for a premium brand, and the blue line is the average price for a secondary brand. And the red line is the price of the panel. (All these are for 1080p, since the chart goes back to 2014, when UHD was a rare thing and, at first crazy expensive.)

The shrinking gap indicates how profitability is in crisis, with retail prices dropping far more rapidly than the underlying panel prices, which have actually risen recently, back to earlier levels following a dip in 2017. Three years ago the panel in a premiumbranded 55-incher cost $290, with the final TV selling at $900. By January 2017 the panel cost $210, but the final TV was selling for only $450.

“And now people are starting to say ‘no bid’,” says Paul Gray of IHS Markit, whp furnished us with these charts.

“Obviously you know most of the trends”, Gray told us at the recent IFA Global Press Conference held in advance of IFA 2017 in Berlin. “TVs are getting bigger, there’s more and more pixels on them and they’re getting brighter and deeper colours and everything like that, and up until recently the prices have still been falling… and on a per-feature basis they still are.

“And yet panel prices are really at the levels they were two or three years ago — so they’ve gone down and they’ve come back up, whereas TV prices haven’t. And this year I think it’s very likely that those panel price rises that we’ve seen in the last six months will come through to retail, and that’s going to be an incredible challenge for the industry that has up till now always been using size as a way to grow the business.”

This ongoing growth in size is indicated by the chart shown below, in which IHS Markit shows the variation in prices for difference sizes of LCD and OLED models. While consumers may be spending the same amount or more on each television, the expectation of ever-growing screen-sizes getting cheaper all the time continues to squeeze already tight margins.

According to HDGuru.com, quoting another IHS researcher Paul Gagnon, the cost issue has been exacerbated by an industry-wide shortage of LCD panels, including Samsung closing a Gen 7 LCD plant and Foxconn halting LCD panel sales to Samsung, Hisense and others.

The result of all this? Expect fewer TV promotional deals this Christmas, and quite possibly a slew of retail price rises following the next pricing negotiation with US chain Best Buys.

The upshot? If you’re thinking of buying a TV in the near future, you might save money by buying now, rather than later.

More info: www.ihs.com