COMMENT: A massive TV war is set to break out in Australia as vendors struggle to get share in a declining market.

This month several vendor, including Samsung, LG, Panasonic and Sony will roll out new TV models prior to the Olympic Games in Beijing in an effort to lift sales. The new generation TV’s are thinner and more stylised with vendors set to back the new models with massive TV and billboard advertising campaigns.

In a farcical move LG under their new Marketing Director David Brand, have even gone as far as asking media organisations to sign a confidentiality agreement for a TV that is already on sale with retailers. Set to be officially launched in mid May the TV is also being advertised in Harvey Norman catalogues and has been on sale in Korea since February and in the US from this week.

This TV which is part of a 100M global dollar marketing campaign is already being discounted with Harvey Norman offering a $120 trade in discount.

For many vendors the biggest issue is profitability and pricing. Earlier this week a leading research Company DisplayBank, said that Sony was set to start a massive LCD TV discount war. They also said that the Sony display division that invented the Bravia TV brand was unprofitable and that the only way for Sony to survive was to slash prices.






The latest economic indicators, including a drop in the Consumer Confidence Index to ten-year lows, point to a further tightening of consumer spending in Australia. Also impacting the market is an increase in mortgage rates.

Energy prices are set to rise as home prices continue to fall, limiting discretionary income and placing pressure on how consumers spend the discretionary income that remains.

Research conducted by SmartHouse shows that consumers are cutting back and that despite the upcoming Olympics flat panel TV sales could fall by up to 20%.

Another big battle will be Plasma Vs LCD TV’s with plasma manufacturers like Panasonic Samsung and LG set to benefit from a perception that plasma is better in larger models where there are more margins for retailers and vendors.

Recent shipment results for Plasma panels and LCD panels indicate robust growth. Plasma panel shipments rose 53% Y/Y in Q1’08 and TFT LCD panels used in TV applications rose an impressive 88% Y/Y during the same period.

While vendors are still investing in new TV inventory the question for many is will consumers keep buying.

During the next few weeks we will be watching which products and channels stand to lose the most from a slowdown in consumer spending. There are many unanswered questions such as:

The looming deadline of 2013 for the digital TV transition is certainly providing a boost to consumer spending on TVs and related services, but is it enough to overcome the downward pressure from the economy? How can brands and retailers extract maximum benefit from the transition?

Is a TV price war imminent? A price war in Australia would boost TV spending and consolidate market share. Top players see this as a leading strategy to prompt consumer spending and push weaker companies out of the market, but will it work?

What changes in TV product mix should retailers contemplate for the peak TV shopping season? What trends will impact the 2009 TV market?  How will they affect brand and retailer strategies?
Will second and third tier brands receive adequate allocations of panels from panel makers this year to fulfil demand?

With Flat Panel TVs no longer a novelty, what will be the drivers of value and profitability in the coming years?

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