Companies That Will Fix the Flagging TV Market By 2013

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You would think convincing people to buy televisions would be easy. Manufacturers like Sony (NYSE:SNE) and retailers like Best Buy (NYSE:BBY) are facing consumers that are only spending on budget-priced sets, meaning what sales they do make are worth less.

An August report from research group Quixel said LCD TV sales declined 3% during the second quarter and revenue stayed relatively flat at $3.8 billion for the quarter. The value of LCD sets, however, fell 16% year over year. By the end of the year, DisplaySearch expects the entire industry toship just 248 million televisions worldwide — almost flat with 2010’s 247 million.

What is going to get consumers buying televisions again? It isn’t 3D TV — consumers have spoken on that technology. Is it Internet-connected smart TVs? The technology seems close to capturing attention, but it’s still far away from mass success. Connected sets made up 21% of all television sales in 2010, but nearly half of owners don’t use the features.

Chipmaker Intel (NASDAQ:INTC) has decided to stop developing smart TV technology altogether, choosing instead to focus on popular smartphones and tablets.

But it might be those devices that ultimately revitalize the television industry.

Sony, Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Motorola Mobility (NYSE:MMI) are just a few of the companies working fast to meld their mobile and television businesses into cohesive wholes. Google attempted to kick-start the smart television industry last year with Google TV, an operating system for smart TVs made by Sony. Apple, too, tried to capitalize on new technology last fall, introducing a new model of Apple TV set-top box that allowed video to stream from the iPad to televisions via an app called AirPlay. The thinking was that, with consumers increasingly supporting streaming television businesses like Netflix (NASDAQ:NFLX) and Hulu, they would be drawn to having those services stand alongside standard television options in a living room setup.

The problem is that the technology to hook consumers wasn’t in place yet. Google and Sony’s interface was unwieldy, and content providers like News Corp. (NASDAQ:NWS) and Disney (NYSE:DIS) blocked the device from accessing a good deal of streaming content. While consumers flocked to the iPad, they remained indifferent to Apple; Apple has sold nearly 29 million iPads but just 2.3 million Apple TVs since 2010.

The key for driving television sales through smart TV technology, then, is making tablets the interface. The tablet solves the usability issues with Google TV, and building televisions that directly interface with tablets will remove a set-top box from the equation. And there are hints that the industry is moving in this direction already.

Apple is rumored to be preparing its own line of HD TVs, not to mention its own streaming video service. Sony also is integrating its Video Unlimited streaming service into its new Tablet S devices, which already work as remote controls for Sony Bravia televisions. Google, meanwhile, has said that it is working hard on a revamped version of Google TV, and with new subsidiary Motorola — a longtime maker of cable boxes for Comcast (NASDAQ:CMCSA) and Time Warner (NYSE:TWX), among others — working under it, you can bet on Google to make a connected handheld device that interacts directly with HD TVs.

With the holiday season just weeks from kicking off, none of these technologies will hit the market soon enough to turn the TV market around fast. They can be expected to trickle out at trade shows during the next 12 months, with possible releases by 2013. When these technologies do hit, though, their value could be impressive. Apple’s entry into the TV market alone could raise the company’s market cap by as much as $100 billion.

How do you get people to buy televisions again? By making televisions a big part of what people already are buying.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/10/companies-that-will-fix-the-flagging-tv-market-sne-aapl-goog/.

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