HDTVs Enter the Mainstream in 2006

High definition televisions (HDTVs) are no longer just for the super wealthy, or early-adopters. This holiday season saw a buying frenzy for these modern TVs, giving retailers a headache.

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RENEE MONTAGNE, host:

Going into 2007, HDTVs are becoming a must-have technology. No longer for the super-wealthy or early-adopters, this holiday season witnessed a buying frenzy for this high-tech TVs. And it's given retailers a headache.

NPR's Jessica Smith reports.

JESSICA SMITH: Ever since the big box discounters put flat screen TVs on their shelf, the competition has gone into overdrive. It's not just Best Buy and Circuit City anymore. Now Wal-Mart, Costco, even Home Depot, sell LCD and plasma high-definition TVs. All this jockeying for sales push prices down an average of 40 percent. Consumers may be jumping for joy but retailers aren't. Ted Schadler is a consumer electronics analyst with Forrester Research.

Mr. TED SCHADLER (Consumer Electronics Analyst, Forrester Research): So, the retailers have been competing on price, and that's of course what retailers do. At the same time as the sales are high, the profits are low. And they're low for the retailers and they're low for the manufacturers as well.

SMITH: The electronics chain Circuit City recently reported a quarterly loss, in part because of the drop in prices. And flat screen TVs aren't likely to brighten Wal-Mart's bottom line as much as that retailing giant had hoped. But for consumers, analyst Schadler says it's a boon. Even if the average flat screen TV is likely to set you back more than a thousand dollars, plus there's the added cost of high-tech confusion, which means paying someone to set up the new fangled TV.

Mr. SCHADLER: They have to have the right cable, which could be a hundred dollars easily. They have to have HD programming from their cable provider or their satellite provider, and that's usually $10 or $12 a month. They might have to upgrade their audio. So there's a lot of extra spending that consumers have to do in order to get the full benefit of HDTV.

SMITH: But he doesn't predict that will deter people from buying flat screen TVs.

Mr. SCHADLER: Consumers seem to have almost an infinite wallet to buy consumer electronics, whether that's PCs, or MP3 players, or digital cameras, or televisions. And I'm confused myself where that money is coming from, but consumers are certainly able to find it.

SMITH: Schadler says when the 2006 figures are out they'll show that 34 percent of American households now own a high-definition television set. That's up from 17 percent the previous year.

Jessica Smith, NPR News.

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