For makers of LCD TVs, this is time to think big. Samsung Electronics' announcement this week that it will begin selling giant 70-in. liquid crystal display (LCD) TVs next year underscores a brutal fight to own the giant-screen TV market. Typically, the dominant technology for really large TVs has been plasma, but Samsung and other LCD makers are challenging that.
The Korean giant isn't stopping at 70 inches, for instance. The company says it will soon move on to 82-in. models. Meanwhile, LCD TV powerhouses Sony (SNE) and Sharp (SHCAF) are also gearing up to march into mammoth screen territory that has so far been dominated by plasma TVs.
Plasma TV makers are fighting back. Next month, Japan's Matsushita Electric Industrial (MATSF), the plasma camp leader, will begin taking orders for its new 103-in. plasma TV at an expected price of $51,000.
MUSEUM PIECES. As the broadcasting standard shifts from analog to digital technology (see BusinessWeek.com, 11/7/05, "Dive Into HDTV"), size will become more important for viewers wanting to enjoy high-definition TV as fully as possible.
The rivalry will boost the market for TVs measuring 60 in. or more diagonally—but thin enough to be hung on a wall—to 666,000 in four years from an estimated 81,000 this year, according to market-tracking outfit DisplaySearch.
Sure, those humongous screens are way too large for most living rooms. Most digital TV sales are in the 30-in. and 40-in. categories. Yet industry officials say price cuts brought by technological innovation will push the mainstream to the 50-in. class within years. With consumers trading in cathode-ray-tube TVs for sleek, slim models, the size of people's walls has become the only limiting factor for screen size, executives from the TV makers say.
PRODUCTION INNOVATION. DisplaySearch figures that by 2010 nearly half of all TVs sold in the U.S. will have either LCD or plasma screens bigger than 37 in., up from only 16.5% this year. "If you live in a Manhattan apartment, the real-estate value of the space taken up by a fat traditional TV is worth far more than a huge flat screen," says Choi Gee Sung, Samsung's president in charge of TV and consumer digital gadgets.
The popularization of big, thin-screen TVs is happening thanks largely to aggressive expansion by LCD panel makers in Korea, Taiwan and Japan. This year, both Korea-based LG.Philips LCD and Samsung, the world's two largest LCD panel makers, began mass production at new plants that produce bigger glass sheets, allowing technicians to carve out more and bigger panels for TVs and computer monitors.
LCD TV leaders are betting big on the technology. Sony, Samsung, and Sharp are investing billions of dollars in next-generation factories. Sharp already sells 65-in. LCD TVs and this month launched a new fabrication facility to cut eight 45-in. panels from one sheet of glass. That compares to only three panels that a nearby Sharp factory can produce from one sheet of glass.
MORE AFFORDABLE. Sony and Samsung, whose existing joint venture in Korea cuts eight 40-in. TV panels from a glass sheet, have agreed to invest $1.9 billion to keep pushing for innovation. Their new plant, due to come into operation in the fall of 2007, will churn out sheets of specialized glass 2.5m by 2.2m in size to be cut into six 50-in. panels each.
All this investment is leading to bigger and more affordable LCD TVs. Panel prices have fallen to the point at which thin TVs will be within range for the global mass market. Consumers can now buy a 32-in. LCD TV for less than $1,000 and a 42-in. flat TV at just over $2,000.
Global sales of LCD TVs jumped 135% in the three months to June from a year earlier, to 9.4 million units, accounting for 22% of the world's TV market, up from 17% three months earlier, according to DisplaySearch.
CLOSING THE GAP. And the LCD makers are rapidly catching up to their plasma rivals in large-sized screens. "We are confident 50-in. LCD TVs will be a mainstay in the digital TV market in the near future," says Cho Yeong Duk, Samsung's vice-president in charge of strategy for the LCD business. "We see appetite for 70-in. flat TVs among consumers, but we'll test out its market size with initial sales next year."
With the price gap between plasma and LCD TVs narrowed to as small as $100, a "rivalry between them in the 50-in. class could certainly be a reality," says Lee Hak Moo, an analyst at Mirae Asset Securities in Seoul.
Plasma TV makers are in no mood to concede a single inch. Matsushita, whose Panasonic brand TVs held a 21.6% share in the global plasma market in the first three months of this year, has recently increased its plasma panel output capacity by 50% and expects to double its plasma-TV sales to 4 million units this business year.
Korea's LG Electronics, the No. 2 plasma TV maker with a 17.8% global share, has pledged to keep expanding its monthly plasma capacity to 550,000 panels later this year and 730,000 next year from the current 310,000. But the LCD makers will likely continue closing the size gap. Only a few years ago, few believed LCD screens would even cross the 30-in. threshold (see BusinessWeek.com, 5/30/06, "Korea: Set to Duel in Digital TV").
Moon is BusinessWeek's Seoul bureau chief. With Kenji Hall in Tokyo
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