Flat-panel TVs to lead ’08 electronics growth

U.K. firm says Blu-ray revenue will be ancillary

By Danny King -- Video Business, 5/22/2008

MAY 22 | Revenue growth in worldwide consumer electronics products will be led by demand for flat-panel TVs this year as customers in developing regions buy more liquid-crystal display and plasma TVs, U.K.-based research firm Understanding & Solutions said this week. Blu-ray player sales will continue to be an ancillary portion of home-entertainment revenue.

TV manufacturers will ship 128 million LCD and plasma sets this year, up 38% from 2007, according to John Bird, principal consultant with Understanding & Solutions. Total TV sales will increase 8% as customers buy fewer cathode-tube-ray TVs.

Meanwhile, Blu-ray player shipments, excluding those installed in Sony PlayStation 3 game consoles, will account for about 5% of the 100 million DVD players sold this year, he said.

“The global flat-panel TV boom is still in mid-spate as a major growth generator,” said Bird. “Blu-ray is at an early stage and will add value and drive DVD market renewal rather than make a big dent in overall global consumer electronics market growth.”

In February, the same month that the Sony-led Blu-ray format won the high-definition player war against Toshiba’s competing HD DVD, Blu-ray set-top player sales dropped 40% from January, as few standard-DVD player owners chose to upgrade, according to NPD Group’s Retail Tracking Service.

Sales of devices that transfer online video directly to TVs remain at a “low level,” as most customers either watch Web videos by streaming content directly to personal computers or by transferring it to hand-held devices, Bird said. Other consumers are using connections such as HDMI or USB ports to move content to TVs from PCs.

“Infotainment convergence is a reality but will take several years to develop,” said Bird. “A new generation of ‘connected’ products like TV and BD Live will help catalyze the market. In heavy pay-TV markets like the U.S. and U.K., the major service providers will be leading the charge to integrate broadband-delivered Internet protocol services into personal video recorders to develop video on demand.”

Overall, consumer electronics sales growth will slow this year to 7.6% from 15% in 2007 as the slowdown in the U.S. and U.K. economies, exacerbated by a credit crisis, will cause customers to taper off their spending on gadgets, the firm said.

Earlier this week, NPD Group unit DisplaySearch said worldwide TV sales in the first quarter were flat, down from the 5% year-over-year increase in the fourth quarter, as a jump in flat-screen TV demand was nearly equaled by the drop in sales of cathode-ray-tube and rear-projection TVs.