US Television Market Shrank 9 Percent in 2013 from Persistent Softness

El Segundo, Calif. (Feb. 7, 2014)-The U.S. television market fell a steep 9 percent in 2013 despite the usual last-minute rally during the holiday season in the fourth quarter, which failed to compensate for low demand among Americans throughout the year, according to a new report from IHS Technology (NYSE: IHS).

U.S. TV shipments in 2013 declined to 34.0 million units, down sharply from 37.5 million in 2012. The country's television market as of last year consisted entirely of liquid-crystal display (LCD) and plasma display panel (PDP) sets, with old analog tube-type TVs long gone and the last rear-projection TVs having exited the market completely in 2012.

Both the LCD and PDP segments lost volume in 2013 from a year earlier. LCD TV shipments slid to 31.9 million units, down 6 percent; while PDP TV shipments plunged 42 percent to 2.1 million, as shown in the attached figure.

“The TV market in the United States has reached a point of saturation following a period of huge growth in years past, especially as the flat-panel-TV craze set in,” said Veronica Gonzalez-Thayer, analyst for TV systems at IHS. “As a result of the market's maturity, and also because of lingering uncertainties in the economy, American consumers have been less eager to rush out and buy new replacement TV sets.”

From 2009 to 2011, the U.S. TV market continued to grow or remained at robust levels, and each year saw shipments of more than 38 million units. In contrast, 2012 volume was less than 37 million, and shipments last year dipped below the 34 million mark for the first time in five years.

For 2013 the lower overall figures stem not only from the significant decrease of plasma TVs but also because of continued weakness in the LCD TV segment, Gonzalez-Thayer noted. Plasma TVs are on their way out with shipments on the retreat since 2010, while the LCD TV segment was down in 2013 for the second year in a row.

These findings are contained in the report, “U.S. Flat-Panel TV Market Continues on a Declining Trend,” from the U.S. TV Systems Intelligence service of IHS.

Revenue suffers as well; each quarter in 2013 worse off than in 2012

The decline in U.S. TV shipments during 2013 also shows up in the balance sheet, with revenue for the year down 12 percent to $23.5 billion from $26.9 billion in 2012.

In retrospect, an increase in the shipments of large-sized flat-panel models with advanced features like Internet connectivity and full high-definition 1080p resolution could not offset the loss of shipments on the whole and a general 3 percent decline in average selling prices during 2013, said Gonzalez-Thayer.

Underscoring the market's softness last year, shipments during every quarter in 2013 were down from their equivalent periods a year earlier.

The first-quarter deficit was approximately 700,000 units, with the difference in shipment volume ballooning during the second quarter to nearly 1 million units. The third quarter then incurred a loss of 800,000 units compared to the same time in 2012, and the fourth quarter fell short as well by more than 1 million units.

Prospects to improve this year

Last year's contraction was the second straight year of decline for U.S TV shipments. However, the market will start to stabilize this year as the consumer purchase cycle readjusts after two years of continuous losses. Shipment growth will be flat to slightly positive in 2014, IHS predicts.

In particular, LCD TV shipments are forecast to be up this year from 2013, reversing last year's decline. And for the first time, active-matrix organic light-emitting-diode (AMOLED) TVs will be entering the U.S. market in perceptible volume. About 8,000 shipment units are expected in 2014 of AMOLED TVs, which will feature super-thin profiles and significantly improved contrast ratios that could appeal to TV connoisseurs eager to become first adopters, even though very steep pricing at present makes the units out of reach for most buyers.

Together the projected rise in LCD TV shipments as well as the entry of AMOLED TVs will help revitalize the U.S. TV market this year. Both factors will also help cover expected losses in the plasma segment, which will finally cease shipments after 2015.