It is not so long ago that the television set was considered to be an eyesore in the corner of the living room, something to hide away. But the launch of flat-panel technology has changed all that, and the ultra-modern TV screen is fast becoming the centrepiece of stylish living rooms.
The launch of flat-panel plasma and liquid crystal display (LCD) screens has kick-started a sector in which innovation was for many years limited to the size of the screen and the colour of the box.
But so far the high price tag on plasma and LCD screens has meant that they have only been affordable to the corporate world and more affluent consumers. But this is set to change. Consumer electronics brand Sharp has appointed advertising agency Wieden & Kennedy to produce a launch campaign for a range of LCD TVs aimed at the mass market. The TVs are understood to be more “competitively priced” (MW last week). Other brands are expected to follow suit, making flat screens the battleground on which manufacturers will fight for a greater share of the mainstream market.
The TV market in the UK is going through major change. According to market research company GfK, volume sales of TVs have doubled over the past ten years to 6.5 million sets sold last year. The overall market is worth £1.4bn and the flat plasma and LCD sector accounted for 40 per cent of that in value terms in July this year, a portion that has doubled since last year and is expected to increase to 50 per cent by Christmas.
GfK director David Binks says this growth is attributable to the fact that there are now more TVs per household, the lifespan of the products are shorter and, of course, new technology. “The new screen formats have helped to push the market ahead, and the UK market has been the most dynamic in Europe,” he says. “As prices become more competitive, it opens the market up. You only have to look at what happened with DVD equipment to see how quickly prices drop.”
The majority of traditional consumer electronics brands such as Hitachi, Philips and Sony make plasma and LCD screens, although Sharp has focused on the LCD format since 1973. But Sony, the leading brand in the overall TV market, has been slower than its rivals to respond to the shift in trend and move into the plasma and LCD sector, a move that management at the Japanese consumer electronics giant has admitted was a mistake. It hopes to regain lost ground through its launch of eight flat-panel LCD screens in Japan earlier this summer under its Wega and Qualia brands.
Sony also faces tough competition from new entrants, such as IT company Hewlett-Packard, which announced earlier this month that it is launching two plasma and two LCD flat-panel screens. Binks believes that although new entrants make the market more interesting and dynamic, it is the major existing brands that lead the way on innovation and are putting pressure on Sony’s market share.
Plasma screens have until recently been more popular than LCD screens but LCD TVs have seen an explosion in sales this year. This is partly because LCD TVs have been made available in smaller screen sizes, better suited to the size of the average living room. It is not cost-effective for manufacturers to make plasma screens below 32 inches but the LCD format is better suited to screen sizes up to 45 inches, at which point the quality of the picture is affected. As a result, the LCD market is steaming ahead and this year is estimated to be worth £299m in value terms compared to plasma’s £258.6m, but both are still experiencing growth.
Sharp senior product manager Alan Joannidi says that more companies have moved into LCD production over the past year. “There were only four or five brands making LCD TVs a year ago and now nearly all of the major brands have a version.” And he adds: “Prices are dropping now, which means they are becoming more obtainable to mid-range consumers.”
Industry experts agree that while the LCD format is likely to emerge as the more popular option for the home market, there is room for both. Philips senior consumer TV marketing manager Matthew Moran says this is because consumers are buying into the concept of flat screens and not the technology. “Primarily, consumers buy flat screens because of the way they look. They do not buy them because one technology offers benefits over the other,” he explains.
Hitachi senior manager for display products Richard Bass believes that as sales of flat screens increase through retailers such as Dixons and Currys and they become more mainstream, consumers will be even less interested in the technology. He says: “Generally, consumers don’t worry about the technology, just the style. A small proportion are always interested in the technology side, but consumers at the major retailers don’t want to know.”
Bass believes that the marketing and advertising of these products will become more aspirational and stylish because it is this, and not the emphasis on technology, that has captured the public’s imagination.
But Adam Coomber, product manager for LCD and plasma at Sony, disagrees. He believes that it will become more important to explain to consumers what they are buying. “Flat panel is about electronics and the challenge is how to simplify that message.”
Coomber says that explaining the technical advantages will become more important when innovations such as high-definition TV broadcasting, which gives viewers a picture that is significantly more detailed, are introduced. Sky TV has announced that it plans to offer high-definition content by subscription from 2006. Other technological initiatives include the development of a mobile device with a built-in digital TV receiver. O2 has teamed up with Sony and Nokia to launch such a device next spring.
Industry experts say there are few major innovations to challenge plasma or LCD technology for the foreseeable future. However, it is likely that features such as built-in digital receivers and DVD players as well as screens capable of receiving high-definition content will start to appear and be enough to keep consumers upgrading to the latest model.