Are Plasma TVs Making a Comeback?

By Alfred Poor, dealnews contributor

A recent press release from the Plasma Display Coalition paints a rosy picture for plasma HDTV sales in the U.S. this year. It cites data from the market tracking firm NPD that indicates plasma sales from January through April topped one million units, up from 805,000 units for the same period last year, amounting to a 25% increase. The release also points out that LCD HDTV unit sales only increased 2% over those same periods.

A Lot for Less

There are good reasons why plasma HDTVs have seen good unit sales numbers. You can talk about their excellent black levels, and the fact that the high image refresh rates make them well-suited for stereoscopic 3DTV using shutter glasses, but these factors likely take a back seat to something even more important: price.

Compare the price of equivalent plasma and LCD models and you're likely to find a strong advantage in favor of plasma. For example, the LG 42" 42LD520 LCD HDTV is available for $549 including shipping. This is an attractive price, especially for a model with 120 Hz refresh rate. On the other hand, the LG 42" 42PT350 plasma HDTV is available for $540 with free shipping. The deal also includes a $100 gift card, however, which effectively drops the price to $440. In the end, you would pay almost 25% more for the LCD model.

Or consider this: The LG 47LX6500 is a 47" LCD HDTV with 3DTV support, and it's available for $1,102 with free shipping. Now compare that with a Panasonic TC-P50ST30 50" 1080p plasma HDTV with 3DTV support for $973 including shipping. The smaller LCD costs 13% more.

Low-Cost Models

The fact is that consumers have been buying the lower-cost plasma models at a faster clip, which has driven the increased sales. Many of the units shipped to the North American market have been 720p resolution models in the smaller sizes, according to Paul Gagnon of DisplaySearch. In large part, these are made in older factories such as those from LG and Samsung, and are not the high-end 1080p products made by companies like Panasonic. Panasonic had plans to double its production capacity, but has slowed those growth plans. LG and Samsung have increased their plasma production, but simply by adding more shifts and running the production lines around the clock. Since the original investment in their older plants has already been paid back, they can afford to sell the products at a lower cost.

A Dim Future

Despite this increase in unit sales, the future for plasma is dim because revenues have remained flat. In other words, the manufacturers are selling more product but not making any more money.

While plasma technology has certainly improved in recent years, it still faces many challenges in its effort to compete with LCD. LCDs are thinner and lighter in general, especially with new LED edge-lighting designs. LED backlights also provide enormous advantages in terms of lower energy consumption, reaching efficiencies that plasma cannot match at present. And LCD panel production continues to improve with higher efficiencies and lower-cost materials, producing products that rival the black level and viewing angle performance of plasma.

As a result, plans for expanding plasma production are on hold. In contrast, companies are moving ahead with major investments in new production capacity for LCD panels, especially in the larger sizes where plasma used to have an advantage.

As a result, DisplaySearch has forecast plasma HDTV shipments to start to decline slowly starting next year. Over the same period, unit shipments of LCD HDTVs are expected to grow by 8% to 11% a year. As prices continue to drop, LCDs are likely to see little or no growth in revenues in spite of the increased unit shipments, but plasma will have to deal with 10% to 15% annual declines in overall revenue.

The bottom line is that plasma has probably evolved as far as it is going to go for HDTV applications. The immediate future belongs to LCD technology, and while plasma is not likely to go away any time soon, its share of the display market worldwide will continue to shrink.

Alfred Poor, known on the Web as the HDTV Professor, is an independent technology industry analyst and freelance writer based in Pennsylvania, specializing in PC-compatible microcomputer hardware and software products. He was a contributing editor to PC Magazine and Computer Shopper, and currently is a columnist at HDTV Magazine.