December 15, 2010
3D, Internet TVs Fail To Inspire US Consumers So Far
US television shoppers have been uninspired by the onslaught of fancy new features such as 3D screens and Internet connectivity, hurting a much anticipated recovery in the global consumer electronics market, according to a recent Reuters report.
TV manufacturers are learning that cutting edge features such as razor-thin LED TVs and fantastical 3D technologies are just not enough to stage a comeback in the United States.
The largest American electronics chain cut its full-year profit forecast, and its disappointing results put pressure on shares of Best Buy -- and other electronics companies.
"The fund got killed today," Frank Ingarra, co-portfolio manager of Hennessy Funds, which holds 32,000 Best Buy shares, told Reuters. The retailer's shares dropped 15.5 percent to $35.25 in afternoon NYSE dealings on Monday.
Despite better-than expected November retail sales performance, consumers are holding off on big-ticket items, such as new TVs with high-tech features.
Investors are now looking for answers as to why big retailers aggressively pushed for a new generation of TVs after many consumers had just upgraded to their first flat-screen models this year.
"People don't understand the added benefit of 3D," Ingarra said. "When you get into $2,000 TVs, you start thinking: 'At what point do I really need this, and is it going to make my viewing experience that much better?'"
Most consumers are also put off by the need to purchase expensive 3D glasses that go along with the new TVs, said NPD analyst Ross Rubin. 3D content has also made some viewers feel nauseous. "If the 3D content hasn't been produced well -- if it has been aggressive on certain kinds of effects -- that can result in discomfort for viewers," he told Reuters.
Consumers seem to have been more interested in buying TVs with bigger screens this holiday season, rather than pricier ones with more features, Rubin added.
Sales of TVs with Google TV software, which lets viewers surf the Web directly from their TV sets, were also hurt as consumers realized they could find the same services, like movie service Netflix Inc, elsewhere. "People can also buy lower-priced alternatives to connected TVs, be it video game players, Blu-ray players or Apple TV," said Rubin.