TV sales PLUMMET. But no one's prepared to say what we all know

Soz, LCD-makers, this is really happening ...

Analysis TV sales are falling everywhere. It’s kind of official, but people are still prepared to argue about it. The number of LCD screens are being forecast to recover but no one is giving a reason why, as the number of TVs that they ship in, are definitely not rising.

There is lots of intelligence out there in TV land, but the two major followers are IHS Technology and DisplaySearch and this week IHS put out headlines which continue to suggest TV sales will recover.*

According to our forecast, TV sales will fall below 200 million this year, although even we think that is a very low number, and descent to that level may slip back a few quarters. But for the second straight year IHS reported this week that sales had fallen. They fell 7 per cent in 2012 to reach 238 million, and they have fallen a further 6 per cent to 225 million. They would have to fall another 11 per cent in 2014 to go under 200 million and for our forecast to be spot on, but certainly the run rate could drop below 50 million a quarter by the third quarter.

But the unique point is that Faultline made that forecast last year when both IHS and Displaysearch said that the recovery would begin in 2013. So at least we are going in the right direction in not forecasting exactly the opposite of what has happened.

The problem seems to be that there is a “rare” deceleration in the liquid-crystal display (LCD) TV space in China, in the Asia-Pacific and in Eastern Europe. These are the markets that everyone said would hold up. But they are also the markets that were latest to embrace tablets and now tablet mania is taking hold, replacing secondary TV sets in many instances.

“The global TV market continues to be in transition following a golden period of tremendous growth from 2009 to 2011,” said Jusy Hong, principal analyst for consumer devices at IHS. “Television shipments were down again in 2013 just like in 2012, but an unusual development was the slow market last year in China, Asia-Pacific and Eastern Europe – until recently among the brighter spots for the industry.”

Consumers in North America and Western Europe continue to show little appetite for buying new TVs, and are all nearly saturated from flat-panel sets during the last major upgrade of the growth years.

China didn’t suffer its reversal until the third and fourth quarters of 2013 partly because of the expiration of a subsidy programme in Beijing. If you drive that kind of reversal through the next 12 months, instead of just the last six, then LCD TV sales MUST fall once again.

What this means is that to avoid going below 200 million, prices will have to be slashed to the bone to resurrect demand in China. A cut will have to take in the level of the subsidy to make any headway or an early introduction of OLED technology may be mounted by some manufacturers. 4K devices are already on the market in parts of Asia Pacific and may have some impact in the US and Europe, says IHS.

LCD TV shipments in China fell to 13 million units, down from 14.0 million a year earlier and the fourth quarter declined to 14.4 million, compared to 14.5 million a year earlier. Asia-Pacific LCD TV shipments were 23.8 million, down from 25.4 million in 2012. New suggestions coming out of China are that 2014 sales will be closer to 45 million, down at least 3 million and all the hopes rest on a renewed subsidy, which has been predicted a few times, but not materialised.

DisplaySearch reported that a last quarter push on 4K devices got China over the line with an extra million sales in the last quarter.

The next area of hope is in Latin America, as the FIFA World Cup soccer championship generates sales as will Summer Olympics in 2016. But we would suggest that Brazilian import duties will slow this effect.

* Faultline said they won’t – and explained why not – in its report “Requiem for the TV.”

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