With panel prices falling, can a price war still break out in the TV industry?

A lot has happened in the TV industry over the past year. Panel prices have continued to rise for more than a year, which has directly led to profit compression and sales declines for many TV manufacturers, reducing consumer enthusiasm for purchasing. LeTV, which is good at price wars, opened a new chapter with the birth of the new LeTV after encountering a serious crisis. After finally waiting for the panel price to fall, facing the Double Eleven, can the price war still be played?

The price war in the past two years has led to a sharp increase in the demand for TVs, and major domestic TV manufacturers have accelerated their global layout. In addition, the smartphone and PC markets continue to be hot, and at the same time, LG and Samsung have successively shut down some LCD panel production lines. For more than a year, the supply of panels has not been relieved.

The price increase has hindered consumers' purchasing power, which has indirectly reduced the market supply pressure. According to the latest data survey, panel prices have gradually loosened since the end of September, and will continue to fall in October and November, especially the price of 43-inch, 50-inch and 65-inch panels has dropped significantly.

Coincidentally, the Double Eleven promotional war has already begun among major e-commerce companies. The decline in panel prices is likely to bring about another unprecedented TV buying boom. After all, a lot of consumer desire has accumulated over more than a year.

This year's Double 11 will be held online and offline simultaneously, which may be good news for the TV industry. Xiaomi TV has taken the lead in price cuts, and the price of a 32-inch smart TV has dropped to 999 yuan, which is the price of a thousand-yuan machine. Major brands have already planned their promotional strategies for Double 11 online and offline, and a price war is inevitable.

Without LeTV, the TV market seems to be much calmer

Once the Double 11 shopping festival is over, it is not certain whether the price war will continue like last year. This year's smart TV market seems to have lost a lot of highlights, because LeTV TV, which is the best at creating hot spots, has not made any major moves after the company fell into crisis. In my opinion, the TV price war in the past two years was largely triggered by Internet TV brands, and LeTV was also an important role in exacerbating the price war.

With the entry of Internet brands such as LeTV, Xiaomi, Baofeng, and Whaley, they quickly took a share of the pie from traditional TV manufacturers with their super high cost-performance ratio, forcing traditional TV manufacturers to launch Internet TV sub-brands to compete. However, they are all playing the low-price game, and no one can be as ruthless as LeTV.

As soon as LeTV TV's slogan of "hardware at a loss" was announced, it quickly became the target of public criticism. The reality is that LeTV TV does have a greater appeal in terms of price for TV products with the same positioning, which has also led other TV manufacturers to unanimously point the finger at LeTV. In September, many TV brand days were held, and many brands such as Coocaa and Whaley challenged LeTV. This was also a relatively representative time point during the price war in the TV industry.

In three years, LeTV's TV ownership exceeded 70 million, and it did achieve quite good results. Therefore, after the birth of the new LeTV, TV can still be its core business. But in 2017, without LeTV, the TV industry is obviously much calmer and less explosive.

Smart TVs are developing towards the high-end market

In fact, TV manufacturers themselves do not like to engage in price wars. Cost-effectiveness was originally one of the biggest advantages of Internet TV, but because the production of TVs is completely dependent on third parties, there is not enough profit margin to adjust after the panel price increase, so they can only bite the bullet and increase prices. For example, LeTV has been dissatisfied with many consumers after the price increase, although they all understand that it is caused by the global panel market.

On the other hand, after Internet TV brands have gained a firm foothold in the TV industry with their cost-effectiveness, they are also willing to develop into the high-end TV market. The low-price strategy is accompanied by low profits. Although smart TVs can be subsidized by software service revenue, the overall willingness of domestic consumers to pay for resources is relatively low, and it cannot generate sufficient benefits.

With the rise in prices across the industry, both traditional and Internet brands have reached a relatively good price range. After the price of panels has dropped, profit margins have become ample, which has indirectly forced many brands to move into the high-end market, with higher profit margins and better development prospects. Joint venture brands including Samsung and Sony have also focused on the domestic high-end TV market.

Judging from the pricing of TV products, today's smart TVs are not as low as last year's level. For example, the 32-inch Xiaomi TV that just reduced its price is 999 yuan, which was probably the price of a 40-inch TV when the price war was hot last year. For example, the price of the Baofeng Super Body TV 40X-Men Edition is about 2,000 yuan, which is still much higher than the same period last year.

The continuous price war has overdrawn consumers' purchasing power

As mainstream TV sizes continue to grow, the prices of high-end TVs such as 55-inch and 65-inch TVs are basically the same as last year, but they have failed to arouse consumers' purchasing desire.

According to data from Aowei Cloud Network, during the National Day holiday, the total sales volume of the domestic color TV market fell by 15.6% year-on-year, with sales of only 11.8 billion yuan, a year-on-year decrease of 11.9%. The first major holiday promotion after the price cut still failed to reverse the current decline in the smart TV market. This also made people worry that the TV market during the National Day holiday might still not be optimistic.

This is probably related to the fierce price war last year. In 2016, the global TV market shipments were about 230 million, an increase of only 0.75% compared to 2015, while the domestic market exceeded 50 million units, an increase of 7.8% compared to 2015. It should be noted that with the general power-on rate of smart TVs gradually declining, the sharp increase in the domestic TV market is undoubtedly the stimulus of the price war, and the continued weakness in 2017 shows that the price war that lasted for a whole year in 2016 has overdrawn the purchasing power of the domestic smart TV market.

The seller is unwilling and the buyer is powerless. This may be the best description of the current smart TV consumer market. Even if the TV panel price continues to decline in the next few months, it will not decline too much. Under the premise that the overall smart TV market is developing in the direction of high-end and large size, the Double Eleven promotion will continue, but the price war may not continue.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.