Big Picture: HDTV Sales On Upswing

by , Sep 29, 2009, 4:23 PM
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Despite any economic hangover, as prices continue to fall, sales of high-definition TV sets are expected to accelerate through the holiday season.

Research firm SNL Kagan projects an 11% increase in the number of HDTVs sold in 2009 -- although revenues for manufacturers and retailers are expected to fall.

Kagan also estimates that 71% of U.S. TV homes (about 82.3 million) will have an HDTV set by the end of the year -- a figure that was at 16% in 2005. Programmers are banking on the more pristine picture to help drive viewership and serve as a counterweight to increasing video consumption on the Web and other screens.

The researcher forecasts 29 million sets to be sold this year, up from some 26.2 million in 2008. Lower pricing and "pent-up demand" were cited as factors. Another contributor: during the first half of the year, consumers bought HDTVs equipped for the digital transition.

Consumers are showing some reluctance to buying the massive screens that characterized HDTVs when they first hit the market, notes Kagan. Instead, they are favoring "budget, midsize" displays, which could trim profit margins at both the manufacturer and retail level.

Kagan estimates that HDTV retail revenues in 2009 will come in at $25.5 billion, down from 2008's $28.4 billion.

With the average cost of an HDTV set estimated to drop to the $600 to $700 range over the next two to three years, Kagan projects that as many as 90% of TV homes will have a high-definition set by the end of 2011.

"Looking past 2012, we project almost all TV households will have at least one HDTV," said Kagan analyst Justin Nielson. However, retail market revenues "will flatten at $24 billion, due to market saturation, as displays sold at the retail level will be high definition by 2017, and the average retail price drops to about $500."

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