Why Do TV Prices Keep Falling-Economics of TVs

Ethan
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 TV PRICES

In our inflationary world filled with fiat currencies and money printing, increasing prices is simply a reality of daily life. Whether you’re trying to buy a house, a cup of coffee, or a nice meal, you can bet that prices are only gonna go up over the long term. In the 1960s for example, a Big Mac only cost 45 cents. 

Today, a Big Mac costs over 10 times that at $4.95. This trend is especially true in the world of new tech where companies are constantly trying to create the next big thing and charge as much as possible. However, in this universe of inflation, there is one notable exception: TVs. 

why do tv prices keep falling


Even if you don’t follow TV prices too closely, you’ve probably noticed TV prices creeping down whenever you stroll by them at Costco or Best Buy. Nowadays, you can get 4K TVs for as little as $200 and 85-inch 4K TVs for just $800 or for less than the price of a flagship smartphone. 

Just 10 years ago, both of these would’ve cost you thousands of dollars. But is this just a case of new TV tech becoming cheaper or are TV prices actually falling across the board? Well, if you take a look at the historical price of TVs, it becomes clear that it’s very much the latter. 

Basically, since 1950, TVs have been consistently falling in price. There have been a few years here and there where they went up but most of those years had even higher inflation. So, the real prices of TVs were still going down. 

This trend has only accelerated over the past 20 years during which TVs have been consistently falling by 15% or more every single year. At the same time, TVs have been consistently getting bigger and better as well. 

At the turn of the century, the average TV was only 24 inches. Today, the average TV is 50 inches. We’ve also gone from plasma TVs to LCDs to LEDs to OLEDs, QLEDs, neo QLEDs, mini LEDS, and who knows what else. Not to mention, resolutions seem to be endlessly going up. 

So, somehow, we’re able to get bigger and better TVs than ever for a lot cheaper than ever. So, here’s the inexplicable economics of TVs and how TV prices keep falling into a seemingly endless abyss. 


ADOPTION DELAY

Taking a look back, the phenomenon of TVs falling in prices can be traced all the way back to the beginning of TVs themselves. Well, technically, the technology used in TVs can actually be traced back to the early 1800s, but we’re more focused on modern commercial TVs which take us back to September of 1928. 

This is when the first commercially produced television set was shown off to the public. This, however, was terrible timing as the Great Depression hit just one year later making it extremely difficult to introduce new consumer tech into the market. In fact, it would take a full 10 years for this demonstration to turn into a widely available product. 

But, it was worth the wait given that it would become an instant success, but things were just getting started. It wasn’t till after World War 2 and after America entered a new age of prosperity and economic growth that people started splurging on homes, cars, and of course TVs. Not only were TV sales going to the moon, but so was TV tech. 

Starting in 1946, we would see a heated race between CBS and RCA to bring color TVs into every household. CBS would end up beating RCA to market but not without making a massive sacrifice. The color television sets that CBS came up with weren't compatible with the black and white TV sets that millions of Americans already had. 

Nonetheless, the FCC would declare CBS color TVs as being the new national standard. Instead of fighting against the FCC on this decision though, RCA would simply continue developing a more compatible color TV standard. And the FCC would eventually concede that RCA’s design was much more practical making them the new standard in 1953. 

It was a classic case of the better invention coming out on top, but honestly, none of this really mattered. It wasn’t till 13 years later in 1966 when color TV broadcasting became more popular that people actually started buying color TVs. And this brings us to the first unique factor of the TV market which is that it has always had a massive adoption delay. 

The first commercial TV was created in the late 1920s but it didn’t take off till the 1940s. The first color TVs started popping up in the late 40s and early 50s, but they didn’t really gain steam till the late 60s. And it’s the same case to this day. OLED for example was created in the late 1980s and it first started showing up on TVs in 2004. 

But, it’s only now that the general public is buying into OLED, and even now, there’s still a lot of room for growth. For whatever reason, people are willing to be extremely patient with TVs which is in stark contrast to any other tech industry. 

Take smartphones for example. 5G didn’t even start getting deployed till 2018 and 2019, and it wasn’t till the 2020s that it was actually widely available. Yet, by the end of 2022 itself, over 100 million Americans, or about a ⅓ of the country already had 5G. 

With most tech industries, people want the absolutely latest and greatest. They’re often reluctant to buy something even 2 or 3 generations old but it’s the complete opposite with TVs. People are not only willing to buy 5-7-year-old tech but they’re also happy to depend on new tech. 

Just 10 years ago, it was extremely popular to hate on 4k. The common belief seemed to be that you couldn’t even tell a difference between 1080p and 4k and that 4k was a waste of money. That was until 4k became dirt cheap and people completely forgot about their concerns and picked up a 4k TV. The same thing is happening with 8k as we speak. 

Who even needs 8k? You can’t even tell the difference. 8k is so stupid. There’s not even any 8k content and on and on and on. It’s actually crazy how heated people get over new TV tech. The reality is that if you have an 85 or 98-inch TV which is increasingly becoming the norm, you can tell a difference between 4k and 8k. 

Just not a difference that’s worth an extra 3 to $4000. If you give it 5 to 10 years though and wait for 8k TV prices to become comparable to 4k TV prices, you can bet that the general public will forget all about their concerns and buy an 8k TV. And honestly, that’s great. 

People are happy to buy the new TV tech when it's offered at a reasonable price. But until then, they’re somehow completely immune to marketing hype. If consumers approached every industry with this mindset, credit card debt wouldn’t even be a thing, but unfortunately, this magical consumer clarity only applies to the TV industry which brings us to the question of why? 


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CONSUMER CLARITY

Trying to answer why consumers aren’t moved by TV marketing is a rather tough question to answer. The obvious explanation is that TVs are a mature market that isn’t progressing all that quickly. So, it’s easy for consumers to settle on something a bit older but that’s not really true. There’s quite a big difference between regular LED TVs and OLED TVs. 

Definitely a much bigger difference than the iPhone 12 vs the iPhone 15. Yet, I feel that it would be much easier to convince someone to hold back and buy an LED TV than it would be to get them to buy an iPhone 12. And it’s not just with smartphones either. I could make the same argument with cars. 

Assuming that all prices were the same, it would be much harder to convince someone to buy a 10-year-old car than to buy an LED TV, and cars don’t even change. And this brings me to one of the most basic marketing rules: features don’t sell products. Automakers and Apple understand this perfectly. TV makers do not. 

For decades, TV makers have been trying to push TVs based on new tech whether that be OLED or 8k or whatever. Consumers aren’t really moved by features though. They’re moved by apparent change. For example, unless you are a TV nerd, you probably don’t know the difference between OLED, QLED, neo QLED, and mini LED. 

But, regardless of how knowledgeable you are on TVs, I bet you remember when TVs went from being boxes to being flat or when they went from being 24 inches to being 85 inches. These sorts of changes may not actually make that big of a difference to picture quality compared to LED vs OLED. In fact, bigger TVs usually have worse picture quality. 

But, nonetheless, they’re often much more compelling reasons to upgrade. If everyone around you has upgraded from box TVs to flat-screen TVs or from 55-inch TVs to 85-inch TVs, you’d probably wanna upgrade as well. This is precisely the formula that automakers leverage. Every couple of years, automakers will change the design of their cars just to keep things feeling fresh and new. 

This way, by the time your current car is 10 to 15 years old, even if it’s working perfectly fine, it’ll feel old and outdated. It’s the same case with Apple. With every generation, they try to add something that makes it distinctly clear that it’s the new one. 

For example, iPhones that still have home buttons definitely feel outdated. iPhones with notches as opposed to dynamic islands are even starting to feel outdated despite it being a nonmaterial difference. At this point, there’s not much more that can change with the iPhone’s design and that’s why Apple is dragging those out for as long as possible. 

Things like removing the dynamic island or camera bump altogether. With TVs, on the other hand, they’ve basically always been in their final form. It’s only a few times in history that the design has fundamentally changed at which point people did upgrade quickly. But putting those instances aside, there’s really no obvious difference between any of the new TV standards. 

Sure, they’re better and you want it, but unless you put them side by side, you wouldn’t even notice a difference. So, people can be surprisingly patient when it comes to new TV tech and they don’t particularly feel left behind or left out either leading to astounding consumer clarity. But while this is great for consumers, it sucks for TV makers leading to some pretty odd solutions. 


FORCING CHANGE

Given this consumer sentiment, TV makers have been trying to introduce material changes as regularly as possible but most of these efforts end up falling flat. For example, remember that time that TVs went from being flat to being curved to being flat again? Or what about that time that 3d TVs were supposedly the next big thing. 

The reality is that it’s extremely difficult to force changes like these unless you’re Apple and over the years, TV makers have come to accept this reality. Instead, they’ve turned their attention to alternative modes of monetization like data collection. It turns out that you’re viewing habits are extremely valuable to streaming services like Netflix and Disney+. 

So, TV makers no longer even need to make money when you buy the TV. Instead, they make their money in the following 5-10 years selling your data to streaming giants. In fact, the average margin across the TV industry is only 6% and that’s with the stupid expensive 8k OLED TVs pulling that margin up. 

So, if you buy a regular TV with a strong discount on Black Friday or Christmas, there’s a good chance that you got that TV at cost or even under cost. Larger brands like LG and Samsung don’t even care all that much about post-purchase monetization either. For them, the TV industry has become something that they use to simply maximize brand presence and dominance as opposed to really making money. 

So, why do TV prices keep going down? 

Well, you’ve of course got all of your classic stuff like economies of scale, the commoditization of TVs, new tech making old tech cheaper, and all that jazz. But the real bottom line is that the general public doesn’t buy into TV marketing hype. 

So, after TV makers burn through the rich buyers who can afford to burn a couple grand, they’re forced to quickly decrease prices to appeal to a much broader audience. Some TV makers have figured out alternative modes of monetization but for the most part, TVs have become a near 0 margin industry that companies just use to stay relevant and omnipresent resulting in TV prices falling forever. 

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