Why TV prices may go UP

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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

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