Big Picture: Plasma Prices Plummet

April 11, 2007 — -- Those thin, beautiful, wall-hugging televisions are flying off the shelves these days. But increased sales don't necessarily mean retailers are making more money from flat-panel plasma screens.

Revenue generated from plasma televisions dropped 16 percent in February, even though the number of sets sold increased by 30 percent, according to a new report from the NPD Group, a major retail research company.

That means consumers are picking up great bargains when compared to a year ago. "It's a trend that we've seen across the board in HDTVs," said Ross Rubin, an analyst at NPD.

Buyers of LCD panels -- a competing high-definition technology -- are also getting good deals, but they are buying larger screen sizes, offsetting the overall downward price trend. The NPD report shows that the dollar volume of LCD sales increased by 58 percent in February.

But the trend to larger screens hasn't been mirrored in the plasma market. Buyers are sticking with the same screen sizes they bought last year, leading to the big reduction in dollar volume sales for this type of set. NPD says plasma prices have dropped by 35 percent since February 2006.

The trend has hurt some retailers, who have seen their sales driven by consumers looking to upgrade their old TVs to HDTV, Rubin says.

"Savvy retailers need to look more beyond the box -- or the 'slate' in this case, since we're dealing with flat panel TVs -- to accessories such as cables, mounts and stands and audio systems to make their money," he said.

Today consumers make buying decisions mostly on screen size and price, but changes in the technology will mean new choices for shoppers in the next few years.

Many manufacturers are starting to roll out models that hook directly into a home network, allowing people to log into the Internet -- with all its streaming video and multimedia content -- without having to hook it up to a computer.

"Not only are the prices coming down, but the technology continues to improve," said Rubin. "It's the classic technology growth curve."

There is still plenty of room for sales of HDTV flat panels to increase, analysts say, since fewer than 25 percent of American homes currently have a high-definition set.