Pre-Black Friday Thoughts

Posted by Paul Gagnon in TVs on November 24, 2010 | 2 comments

Paul Gagnon – Director, North American TV Research, DisplaySearch

As we near the ultimate expression of consumerism in the US, Black Friday, it may be helpful to take a quick look back at the state of the TV industry leading up to this time. We will also consider how Black Friday results could impact the overall global TV market.

In North America, TV market growth has been stagnant. Each quarter this year, shipments were essentially flat. Total TV shipments did not even increase by half a percent over the first three quarters. How can the market grow 8% in 2008 and 12% in 2009 (during a recession!), but be flat now that economic growth is returning, at least according to GDP figures?

The answer is pricing.

Total average TV prices fell 8% in 2008 and 22% in 2009, significantly enhancing growth as consumers looked for bargains and found them during the recession. Coupled with a looming digital TV transition and consumer cocooning (or spending more time and money at home instead of traveling), growth boomed on a unit basis.

Due to a rise in component prices in 2H’09 and 1H’10, retail prices have fallen much slower in 2010, down only 6% Y/Y through the first three quarters. With many economic factors remaining negative, such as high unemployment, consumers are simply looking for better deals and probably deferring a ‘want’ purchase for later.

However, there is a bright side. As a result of the anemic growth in North America this year, the TV supply chain has been backed up with inventory, leading to an oversupply situation upstream. Starting in July, prices for LCD TV panels (the key component in an LCD TV) began falling rapidly and have continued to do so each month since. Given that it takes about three months to work through the supply chain to the retail level, lower prices are arriving just in time for the holiday period. The hope is that consumers have just been sitting on the sidelines, waiting for the holiday shopping season in order to get a better deal.

If so, the demand this season should be strong and will help unclog the supply chain. A strong holiday season, including Black Friday, will go a long way towards improving the health of the supply chain. North America accounts for 18-19% of total TV shipments worldwide during the fourth quarter. This is roughly equal in share to China and Western Europe. On average, over the last five years, Q4 has been the most seasonally strong quarter of the year, especially in developed regions such as Japan, North America and Western Europe. In North America, a Q4 shipment result of mid to upper single digit growth Y/Y seems possible.

However, if Black Friday weekend has disappointing results, that could indicate structural shifts in consumer demand for TVs, particularly in relation to factors other than price. Since about two-thirds of households have a flat panel TV now, demand for electronics may be shifting to mobile devices such as smart phones and tablet PCs, as indicated by some consumer surveys about gift buying this year.

We will be eagerly anticipating the results from Black Friday. Happy Holidays!

http://gigaom.com/video/vid-biz-comcast-nbcu-sonys-qriocity-fox-hulu-ads/ Vid-Biz: Comcast-NBCU, Sony’s Qriocity, Fox-Hulu Ads: Video «

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I decided to give up my CRT and began searching for a new TV a couple of weeks ago. Every year previous, I asked myself, ‘Next year, they will be better and cheaper so why not wait?’ A large part of my concern was the rapid evolution of the electronics running the TV rather than the LCD itself.

The specifications and features listed at both physical and virtual stores were incomplete, vague, or outright misleading to someone with more knowledge of their evolution than Joe or Jane Consumer. I asked questions of salespeople and received interesting answers that told me more about public perception and marketing tactics. The ultimate decision was mine, though. Here are my own perceptions on the Thanksgiving holiday TV selection.

The “big screen” television market, which I think of as 32″ and greater, had the deepest discounts on CFL or 60 Hz versions of all LCD sizes. PDPs were very aggressively priced and initially attracted my attention for their accurate colors, fast response time and 3D compatibility.

The next discount tier was comprised of those with 120 Hz LED backlights and, perhaps, some internet compatibility using widgets. Most of these were either new to the market or no more than a year old. They seemed to represent the center of the performance versus price curve. This group probably sold very well, just not with me.

There are three ways a consumer can approach the TV market; buy the discounted tail of the technology curve, buy the center, or buy toward the leading edge. Those at the tail end can buy several TVs over the course of the next five years for the price of a single TV at the head of the curve. I do not buy very often so I searched for future-proof features.

I noticed several things about image quality at my local brick-and-mortar store. First, if I connect a TV to a PC and want to read 8-point font from a normal seating distance, I was going to need something larger than 50″ diagonal. If the TV was too large, though, it would be like sitting too close to the screen in a movie theater. This became an interesting diversion trying to estimate the right size for my home given my totally unexpected need for large pixels. Watching a movie in high definition is surprisingly different than reading tiny text. The fusion between PC and TV also meant I had to rule out sets with “overscan,” meaning all rear-projection despite their great price points and features, so that my “Start” button was not hidden off-screen. Anyway, I figured that in another ten years QHD will be the norm after the next bout of pixel-inflation and I will still be agonizing over the tiny text PCs love to display so I might as well get on with the decision process.

Compared to other sets, the LED backlit TVs were bright; much brighter than PDPs. That would help in uncontrolled ambient lighting and was a mark against plasma. One salesman said he had a PDP in his basement and a LED LCD in his living room. That made uncommonly good sense to me.

Next, I looked at black levels. Some manufacturers stood out for having good low luminance blacks, though not as good as a plasma in the dark. Others stood out for having very high black levels. I shied away from those. Maybe the settings were not right but I was informed that all the TVs on the wall were set to their most vivid by default, or the store policy. ANSI contrast, the regular type, not with dynamic backlights, is very important to me and ranks fairly equal to luminance.

Anti-glare and anti-reflection surface types appeared to be split between manufacturers, product lines and especially product types such as PDPs with their preference toward AR coatings. I prefer having a little of both. Anti-glare alone can still raise black levels in a brightly lit room while even a faint blue or purple image of the surroundings in dark scenes or letter-box borders is distracting. This year, I was fortunate enough the rest of my search criteria produced a candidate I felt reasonably satisfied with.

Display size and optical performance characteristics are important but are also only a small part of the system. When I purchased a set-top box for off-the-air HD (ATSC), the first complaint I had was over all of the digital artifacts due to compression. When the signal was weak in NTSC, I saw little specks of noise. Even when the signal is strong in ATSC, I see little Lego-shaped people zoom by as the camera tracks the football. I did not need correction for digital artifacts with analog TV. Now, I am sensitized to the potential problem and looked closely at each model for artifacts and digital blocking. A curious explanation of the benefits of 120 Hz refresh was those displays correct for digital artifacts.

Among the many 120 Hz LCD panels were some 240 Hz models. There were no 480 Hz at the stores I visited and I began to wonder how much benefit 8X backlight scans or blinks and frame interpolations would have. Really, the idea is not to see the wrong gray levels in the first place rather than a smear of artificially created ones. Even the 120 Hz LCDs looked passable on some models. Several had text tickers scrolling across the bottom showing a difference between 120 Hz and 60 Hz. Of course, I would like at least 240 Hz for future 3D capability.

The 3D demonstration display I saw was PDP-based. It still flickered and I did not know if it was because something else was interfering with the IR synchronization signal going to the glasses. I had already decided to wait for RF shutter glasses and the cost of the active eyewear should decrease over the next few years to something near $20, anyway. When a 3D kit approaches $100, I will think about it. However, the demonstration put plasma off the table, in my opinion. The darker gray levels seemed to merge with black while using shutter glasses in typical in-door lighting. The PDP used just did not have enough luminance. Maybe improvements in the active glasses will increase transmission but the store setup I used should have been placed in a very dark corner.

The word “Internet” was pasted on many models, even some 3 to 9 months old. Widget selection became an on-line research hobby I worked at for a few days. Some makers had better tie-ups with widget providers than others. I became confused on the topic but noted which brands had the longest list. Later, I found out “internet” required a separate dongle, whether USB or ethernet. I preferred the USB but then had to think about how many USB ports I needed. Fortunately, I remembered there are plenty of inexpensive multi-port hubs. In any case, it seemed like a good idea to watch YouTube without connecting a computer to the television.

Of course, that is exactly what Google TV did. Playing around with some of the features in the store, I realized the user interface is better suited to couch-surfing than a normal desktop OS. This is something I was positively impressed by. Next year, I may purchase a set-top PC like Google TV. This year, I spent more than I was comfortable with just on a TV.

The TV I finally purchased was a higher-end model without BD or 3D packages. I decided to let those mature a bit more. My gaming console will play BD and a few internet widgets just fine so the widgets became somewhat of a side-issue. The final criteria were as follows: greater than 50″, LED, very good black levels in “vivid” mode, the best compression-correction I could find, 240 Hz for 3D sometime in the future and some sort of internet connectivity.

Which television did I buy? Well, I am not sure it matters as much as the process I used to make the selection. There were several brands that may have missed the boat to market, so to speak, with the right set of features to justify a premium price. This year seemed to be another one of transition between one standard of TV technology and the next and I very nearly held onto my old CRT another year. If I did not think the leap was large enough and the technology curve tapering, I might have put it off again but that is just me and I am not an average TV consumer, or am I?