- The cost of TV components is rising, squeezing already thin margins
- A report says that advertising in smart TVs has helped avoid price increases
- It also says fierce retail competition has helped keep prices low
The price of almost everything electronic has risen dramatically in recent months, with one notable exception: TVs. And a new report says there’s good news and bad news about it.
The good news is that TVs have really bucked the trend of increasingly expensive electronics, which has been ideal for anyone looking for a new WC TV.
The bad thing is that it’s because broadcasters keep prices artificially low as they switch to making money from advertising on your screens instead.
That’s according to market research firm Omnia (via Digitimes ), which says North America is a particularly clear example of the trend. Because competition between retailers is so fierce in the television market, broadcasters have been under intense pressure not to raise their prices.
And because TV margins have been so low for several years anyway, that means they’ve been forced to find another revenue stream: ads.
So we have experienced a classic double-edged sword. The push by TV producers to throw more ads at you hasn’t made anyone happy; but it is believed that they have been able to cope with component price increases without passing it on to us.
What is the state of the television market?
People buying TVs for the FIFA World Cup have helped push up TV shipments: They’re up 6% year-on-year, according to market research firm Omdia.
Virtually everywhere other than China showed sales growth: 13% in Asia and Oceania, 12% in Latin America and 11% in North America. Omdia suggests that part of the change is the result of Chinese firms aggressively targeting overseas markets to offset slowing demand at home.
However, the increased sales are based on increased and ever-increasing costs. So companies continue to move toward what Walmart calls a “content-to-commerce” platform.
By linking streaming activity with advertising on its Vizio platform and Onn TV, it aims to generate recurring revenue from advertising rather than relying entirely on hardware sales.
When you sell a TV, you only get paid once. But you can sell ads on that TV forever. And that’s why companies are willing to absorb a little extra cost now, in exchange for making sure you choose their TV and they can make long-term money from you in the future.
The downside? Well, if component prices keep going up, broadcasters may conclude that they can always show you more ads in more places… but in the meantime, at least you’re buying a nice new giant screen.
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