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The incredible shrinking TV replacement cycle

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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 But the rapid adoption of HDTVs suggests that old wisdom might be becoming outdated, as prices fall and consumer electronics manufacturers add new features and content to their HDTV sets.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 (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.

11 Responses to “The incredible shrinking TV replacement cycle”

  1. People are gradually replacing old tvs with flatscreens…the fact that they’re hd is not important as most don’t even use the hd option!…people like the lightweight, compact size and flat screen…no one is replacing a 50-inch flatscreen any faster than grandpa replaced that refrigerator sized color tv in his den…and the whole connected tv thing is going nowhere…just like 3d tv…and I like apps as much as anyone but people get on the phone to interact, people watch tv to relax and not be disturbed so the app
    thing is not welcome there for most of us.

  2. meta.morph

    It is all a question of (hidden) pricing: Once BestBuy et al learn how to bundle TV sets to TV/movie subscriptions and consumers need to pay less for the set, we will see a decrease in the replacement cycle…

  3. ChrisDPayne

    I’d be interested in comparing flat screen HDTV lifespan with the traditional 7 year replacement cycle. I’m sure that part of the reason that prices are reducing is down to the use of cheaper, less resilient components.

    If intentional, this ‘planned obselecence’ through reduced undoubtedly keeps market buoyant.


    • I have owned a TV repair company for 27 years. Mr Payne hit the nail on the head. TV’s used to “wear out”, not fail suddenly and unexpectedly. We now see random failure due to rapid deployment (virtually no test time pre- or post- production).
      The average repair labor 10 years ago was $250 in home, the average age of a set we repaired was 3-5 years old (even though we honor all warranties), and the consumer would only replace the set if the parts were not available or if the repair cost was >50% of the price of the unit.
      Now we have a hard time convincing customers to repair if >30% of new price, because new units are so much “better”. Average labor $160 unadjusted for inflation,
      And 80% of the TV’s we work on are <3 years old. We get plenty of phone calls on older sets, but they rarely call.

  4. Surely if people replace there TV every 7 or 8 years then at any given time at least half the population would have been expected to have replaced their TV in the last 4 years. Which is in line with the stats presented. There is absolutely no evidence in a change in buying habits.

    All these people you have bought a new TV in the last couple of years still are unlikely to upgrade in the next 5 years.

  5. Jeremy Toeman

    An alternate theory here would be the past 5 years have seen people adopt their first HD sets, due to plummeting prices. But I don’t think we have yet seen evidence that they’ll get swapped out again quite as rapidly…

    • PXLated

      Am betting you’re right.
      Just because two new technologies came along (Digital & HD) and caused a buy spree doesn’t mean a buying trend has been established.

    • Ryan Lawler

      The key argument against is that they haven’t just bought one set over the last 5 years. When 50% have two or more HDTVs, that tells you that the cycle for buying (for those who can) has dramatically decreased.

      • No, Ryan, it doesn’t. It says that eventually people want to replace all their TVs with digital / HD ones. Once that’s done, they are done. There isn’t a shred of evidence that people want to change out their living room TVs with any great frequency, nor any evidence that the window for replacement is actually decreasing. These market research firms have a bizarre agenda to promote ridiculous notions like “TVs are beginning to be replaced like mobile phones”.

        Your TV doesn’t become obsolete due to lacking apps. On some level that was true the day you bought it. Fortunately, we’re all used to having boxed attached to it which are insanely cheap (or free) and can be updated much more easily.

        Once someone obtains an HDTV of the desired size in their living room, they are more or less done for a half decade or more — at least as concerns their living room.

      • Ryan Lawler

        @Mark – I have to disagree. I think there’s a lot more innovation to be had in the TV space than we’ve seen so far. We’re on the brink of a huge shift in the features and capabilities that are available. People might have upgraded recently just to get a pane of glass capable of HD in the size they want, but I think we’ll soon see them upgrade to take advantage of the software soon available. Remember, it wasn’t too long ago that mobile phones were just a way to call people, and there wasn’t any good reason to upgrade. I think we’ll soon see the same type of paradigm sift take place with smart TVs.