The incredible shrinking TV replacement cycle

Consumers only replace their TVs every seven or eight years: That’s been industry gospel and is frequently cited as a reason for slow smart TV adoption, as well as one reason many people say Apple (s AAPL) shouldn’t enter the TV business. But the rapid adoption of HDTVs suggests that old wisdom might be becoming outdated, as prices fall and consumer electronics manufacturers add new features and content to their HDTV sets.

As part of the its Fourth Quarter 2011 Report, Leichtman Research Group noted that over the past five years, more than half of U.S. households have adopted HDTV sets. LRG found that by the end of 2011, 69 percent of households in the U.S. had at least one HDTV set, which is up dramatically from 17 percent five years ago. What’s more, about 20 percent of all households bought HDTVs last year, with another 19 percent expected to purchase HDTVs over the next 12 months.

But that only tells part of the story, as a growing number of consumers have two or more HDTV sets in the home. According to LRG, about half of all HDTV households have more than one set in the home. And about a third of all households have multiple HDTVs. That’s up from about a sixth of all households two years ago, and 4 percent in 2006.

What that speaks to is much more frequent purchasing among consumers than TV manufacturers typically see. It also is part of a phenomenon by which consumers don’t necessarily get rid of older sets, but move them around the house when they get a new HDTV. So what they’re really replacing is the TV set that gets watched the most — typically the one in a family’s living room.

So what’s driving the increased adoption?

Pretty clearly the number one factor is a drastic decrease in price among HDTVs. LRG’s research shows that the mean spending on an HDTV set was about $940 in 2011. That’s down 23 percent in less than two years, and half of what consumers paid five years ago. Even at the low end, prices are no longer out of reach for most consumers: a 32-inch flat-panel LCD HDTV can typically be had for as little as$250 on Amazon.com. (s AMZN)

Not surprisingly, HDTV ownership is concentrated among those who can afford to splurge on consumer electronics. LRG reports that 85 percent of households with an annual incomes of more than $75,000 have an HDTV. That compares with 67 percent of households that make between$30,000 and $75,000. But HDTV adoption isn’t just limited to the rich and middle class: Falling prices mean that nearly 50 percent of households with incomes of under$30,000 also have HDTVs.

HDTVs might not have reached the two-year replacement cycle that most consumers have for their mobile phones, but consumers are definitely making HDTV purchase decisions more often. Those decisions are happening more along the lines of the three- to five-year cycles that consumers have for computing devices.

“Low prices make it tempting for people to replace their TV sets more often. We estimate that today’s household replaces it’s TV set every four to five years. If TVs continue to get bigger, better and significantly cheaper, we estimate that people will replace them more often,” Retrevo spokesperson Jennifer Jacobson wrote in an email.

And as time goes on, there might be another reason for consumers to begin replacing their TV sets — or at least, the TV sets in their living rooms: They might soon become obsolete. As more and more “smart” TVs enter the market, the applications and app development frameworks available on the first generation of Internet-ready televisions will find themselves eclipsed by more powerful and attractive options. In the same way that consumers upgrade their mobile and computing devices for those with more features and processing power, they could soon find themselves replacing those early connected TVs to take advantage of new applications and capabilities.

Photo courtesy of Flickr user Sugar Pond.