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How Low Will Holiday TV Prices Go?

NEW YORK ( MainStreet) -- The HDTV sets retailers tout as holiday must-haves are bigger and packed with more features than Santa's bag, but the televisions on holiday wish lists have prices smaller than that of a day's feed for eight reindeer.

Holiday shoppers face a television market filled with new 3-D and Internet-connected high-definition flat screens, but that won't prevent global demand for televisions from falling an estimated 1% in the fourth quarter, according to Paul Gagnon, director of North American TV research for consulting firm Display Search. A high conversion rate from old cathode-ray tube sets in North America and Europe and a lukewarm response to new technologies has flattened demand between holiday 2010 and this season. Inventory projected to be right in line with holiday demand isn't exactly sending prices through the roof, either.

Those 3-D and Web-connected high-definition flat screens aren't selling enough to keep prices high.

Prices on LCD HDTVs, which make up 80% of all global television shipments, have dropped roughly 7% during that time and are falling at a much faster rate than those of plasma televisions. Though overall sales may increase slightly for all of 2011, shipments of plasma televisions are expected to drop 9% this year and 5% to 6% each year thereafter.

"We expect very low, single-digit unit increases," says Stephen Baker, vice president of industry analysis for market research firm NPD Group. "Aggressive price competition will help keep unit growth positive, although we anticipate revenue growth will be negative despite a fairly strong market for TVs above 50 inches."

The combination of economic uncertainty in the U.S. and Europe and the emergence of lower-priced sets made by Samsung and others has taken its toll on Sony (SNE), which announced plans in August to restructure every aspect of its TV division from development to production. The division that produces Sony's heralded Bravia sets has already closed TV factories in Mexico, Slovakia and Spain and outsourced production to Taiwan's Foxconn. It has posted seven consecutive years of losses and is heading for an eighth after reducing its annual TV sales forecast this summer from 27 million sets to 22 million.

Rival Panasonic (PC), meanwhile, announced last month that it will cut its flat-screen production in half and close plasma and LCD factories in Japan after forecasting $5.4 billion in losses for 2011.

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