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3-D TVs are Coming to your Media Room
The major TV manufacturers are introducing new models with the latest 3-D technology to take advantage of the massive interest that recent 3-D movies have generated in the market. Two Japanese companies, Panasonic (PC) and Sony (SNE), and two South Korean enterprises, Samsung Electronics and LG Electronics, are taking the lead in pushing the industry’s transition to 3-D technology. On average, the cost of a 3-D TV is about double that of a comparable 2-D set. In the near-term, the main gating factors for the speed of the transition are high hardware prices and limited 3-D programming. Nevertheless, the four largest TV manufacturers are intent on expanding their 3-D lines rapidly.
In March, Panasonic launched its first 3-D television set in the United States in a joint promotion with Best Buy Co. (BBY). The large U.S. electronics retailer is setting up special sections at its stores where prospective customers can try out Panasonic 3-D TVs. The suggested retail price is $2,900 for a 50-inch plasma set, one pair of glasses, and a 3-D Blu-ray DVD player. An extra pair of glasses costs $150.
Panasonic hopes to sell 500,000 3-D TVs in the U.S. during the first year of availability, which amounts to about half its global sales target. The 3-TV launch is an important part of Panasonic’s plan for a profit turnaround in its television business in fiscal 2010 (ending March 2011), and the Best Buy advertising is expected to bring a lot of people into stores to look at the complete line of Panasonic TV products.
Samsung Electronics also introduced its first 3-D television set in March. The Samsung offer is $3,000 for a 46-inch set, two pairs of glasses, a 3-D Blu-ray player, and a 3-D copy of “Monsters vs. Aliens”, a movie from DreamWorks Animation (DWA). A 55-inch 3-D set is also available at a price of $3,300 for the set alone. A Blu-ray player would be an additional $250 to $400. LG Electronics is scheduled to launch its 3-D television sets in May.
Sony will begin a major worldwide introduction of its new 3-D TV products in June. At the same time, the company is also expected to announce 3-D compatibility for its PlayStation 3 game console through a firmware upgrade. Sony’s first two models will be 40- and 46-inch sets that will be bundled with two pairs of 3-D glasses; U.S. prices are set at $3,215 and $3,890, respectively.
In July, Sony will launch six more 3-D models, including 52- and 60-inch sets that come with 3-D glasses and four “3D-ready” sets that have 3-D circuitry but require the purchase of glasses and an infrared transmitter. The least-expensive model will be a 40-inch set that will sell for about $2,445 plus the cost of glasses and a transmitter. The price of the glasses is estimated at $135 per pair, and the transmitter, which sends out a signal to synchronize electronic shutters in the glasses, should sell for about $55.
Included in each set will be a real-time 2D-to-3D converter, which can simulate a 3-D image from a conventional 2-D TV signal. Sony’s ambitious goal is to sell 2.5 million 3D-compatible TV sets this year, which would represent 10% of its total TV sales target.
The popularity of 3-D entertainment has been boosted by the success of such 3-D films as “Avatar”, from the Twentieth Century Fox unit of News Corp. (NWS), and “Alice in Wonderland”, from Walt Disney (DIS). But the availability of 3-D movies on DVDs has been rather limited. Consequently, the studios are in a hurry to release more 3-D discs. Twentieth Century Fox has already announced that it will bring out “Ice Age: Dawn of the Dinosaurs” on a 3-D Blu-ray disc.
While the increased availability of 3-D movies and DVDs should certainly help to promote the adoption of 3-D television, another main driver could be sports programming. In June, ESPN, which is a part of Disney, plans to launch a new 3-D network that will air over 85 live sporting events in its first year, including 25 World Cup soccer matches.
So, in summary, 3-D television should be considered another illustration of how manufacturers use the latest technological innovation to generate a new product growth cycle for the saturated TV market, where sales come primarily from replacement demand. The last cycle was HD (high definition) sets. In this round, though, it seems that the TV makers are using pretty aggressive projections. We think it is possible that the magnitude and timing of the transition to 3-D TV may not be as fast as current forecasts maintain.