Has the Plasma Market Flattened?

Consumer electronics revenue took a hit in February, affecting the once skyrocketing category of plasma TVs. Industry watchdog NPD Group reported that it's retail tracking service found that plasma TV dollar volume dropped 16 percent in February compared to February 2006, the first ever year-over-year decline.

Remember that Circuit City cited this as one of the main reasons for it's employee downsizing. Price declines drove the revenue loss with average prices down more than 35 percent from February 2006, in other words good news for those wanting to get into the plasma market. Despite a 30 percent increase in unit sales, plasma TVs only generated $181 million in February compared to the nearly $216 million in February 2006. The average price of a plasma TV in February was $1,688, the second lowest price in three years, just behind November 2006 when prices bottomed out at $1,672.

Mr. Ross Rubin of NPD Group says: "Unlike LCD TVs, plasma TVs have not been able to offset lower average prices by reaching high volumes in their larger screen sizes, while these lower prices have allowed plasma manufacturers to reach out to a broader consumer base with a differentiated display technology, it's still not enough to keep revenue on the rise."

Forty-two inch plasmas were the best-selling screen size based on units in February, followed by 50-inch, which are continuing to grow in popularity and taking some of the lion's share from the 42-inch sets. However, 50-inch plasmas were the top revenue producers with an average of $2,040.

Overall the tough month for most consumer electronic categories, television sales dominated the consumer electronics landscape, bringing in over $900 million in revenue, even though sales were down 18 percent and revenue off by 13 percent compared to February 2006. Surprisingly, LCD TVs showed the highest revenue growth with a 58 percent dollar volume increase over February 2006.

So what do these numbers mean to you? Nothing and everything. If you just bought a plasma you saved a ton of money that you can use to buy that A/V receiver you need or how about a speaker upgrade. Should you wait till year's end to jump on the plasma bandwagon? No, there are excellent units on the market that can be had for under $1,500.

Prices are finding their market level as we progress to different generations of plasmas, the up-and-coming kid, the LCD, will find it's prices flattening as market penetration reaches the same levels as the plasma.