U.S. LCD TV Market Suffers First Annual Decline in 2010
El Segundo, Calif., December 7, 2010—U.S. shipments of liquid-crystal display televisions (LCD TVs) are expected to decrease on an annual basis for the first time in history in 2010, with sales impacted by lingering economic concerns and slow price declines for most of the year, according to the market research firm iSuppli, now part of IHS Inc. (NYSE: IHS).
Shipments of LCD TVs in the United States are expected to amount to 31.9 million units in 2010, down 1.2 percent from 32.3 million in 2009. While this may seem like a small decline, it represents a shocking reversal for a U.S. LCD TV market that has expanded robustly during every year since volume shipments commenced in 2006.
The attached figure presents iSuppli’s forecast of annual U.S. LCD TV unit shipments.
“Year after year, in both good economic times and bad, U.S. consumers always have found a way to devote more of their disposable incomes to purchasing sleek, new flat-panel LCD TVs,” said Riddhi Patel, director and principal analyst, television, for iSuppli. “However, in 2010, the realities of the economy finally caught up with the LCD market, causing sales to decline for the first year ever. Despite this setback, shipments will resume their growth in 2011 as consumer confidence rises again.”
Flat economy, flat shipments
Although economic conditions improved in 2010 compared to 2009, U.S. consumer confidence remained low as unemployment stayed high. Meanwhile prices for LCD TVs did not decline at their customary rapid pace in 2010. With most consumers already having purchased a flat-panel set of some type during the preceding years, the combination of economic uncertainty and paucity of deals spurred a decline in shipments.
Given the historical trend in the LCD TV market, consumers have grown to expect that price declines would continue to be aggressive in 2010. However, because of supply constraints during the first three quarters of the year, prices did not decline enough to motivate consumers to buy more sets.
Furthermore, consumer electronics makers also de-emphasized price declines as a means of promoting sales.
“LCD TV makers shifted strategy in 2010, moving away from the traditional market-growth approach of cutting prices to stimulate sales—and toward a value-added tact of offering sets with more advanced features that retained their price power,” Patel said. “These features included LED (light-emitting diode) backlighting, built-in Internet access and 3-D display.”
LCD TVs also faced increased competition from other consumer electronics devices.
“Alternative consumer electronics products—including iPads, eBook readers and portable media players—all vied for the same discretionary income that LCD TVs did,” Patel said.
Brighter picture for LCD TVs in the future
iSuppli is forecasting growth will return for U.S. LCD TV shipments in 2011 and beyond. Rising consumer confidence during the coming years will boost sales of consumer electronics, particularly televisions.
LCD TV shipments in 2011 also will be boosted by the shift to LED-backlit products, which use less electricity than traditional cold cathode fluorescent tube sets. Many state and city governments are instituting energy consumption laws and consumers are becoming more environmentally aware, spurring sales of these sets. Furthermore, aggressive pricing of LED-backlit televisions will encourage consumers to resume their replacement of older flat-panel sets.
Global outlook remains bright
While shipments in the United States will decline in 2010, the global LCD TV market will continue to expand this year, rising by 20.3 percent.
“The global LCD TV market continues to grow on the strength of emerging markets like China, parts of the Asia Pacific region and Latin America,” Patel said. “These regions are seeing strong growth as LCD TVs become more affordable.”
For more information on this topic, see iSuppli’s new report, entitled: Can Price Declines Jumpstart Consumer TV Purchases in U.S.?
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