TV Prices Shrink — Yet Average TV Purchase Costs More

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The longer technology is around, the cheaper products get for consumers. The price of a 32-inch flat-panel television, for instance, reached an all-time low average of $435 during the second quarter of 2012, down from $546 in the same period a year ago. Even so, the overall average price paid for a new TV has actually risen lately.

How could this be? As a new report from IHS iSuppli explains, consumers are increasingly likely to be buying bigger, fancier TVs that are loaded with features—and that cost significantly more than a basic 32-inch LCD. The percentage of units sold with 3-D, Smart features, and LED-backlit screens all rose in the second quarter of 2012. TVs with large screens are growing more popular as well, with 46-inch LCDs accounting for 12.2% of units sold (up from 11.8%) and 60-inch LCDs rising from 4.2% to 5.2%.

The numbers seem to indicate that consumers are clamoring for ever larger screens and fancier features. That’s probably not the case — not exactly. In fact, the number of LCD TVs shipped globally shrunk recently for the first time ever, and the explanation for the decrease is that most consumers just aren’t ready to upgrade their TVs—because there’s a good chance they purchased a new unit fairly recently.

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The majority of viewers actually seem to have no interest in 3-D TV. The technology may not even represent an upgrade to some. The results of a survey published this past spring indicated that less than 1 in 5 viewers deem 3-D TV as “appealing,” and just 16% found 3-D TV “useful.” A Wall Street Journal reviewer who recently spent three weeks viewing 3-D TV had little good to say about the technology. “I’m probably not going to recommend it to anyone” because “it’s practically impossible to find anything in 3-D worth watching,” he wrote. A line that the technology being “not necessarily superior … just more eccentric,” is the closest he gets to complimenting 3-D TV.

So, if it’s not improved technology driving viewers to buy larger and fancy models, what’s causing the shift? One simple explanation is that these TVs—and all TVs, for that matter—are getting less expensive. Earlier this year, 55-inch 3-D TVs were selling for as little as $700, roughly half of what they cost 12 months prior.

The average 32-inch LCD TV sold for $435 in the second quarter of 2012, down from $495 in Q1 and $546 in Q2 of 2011. In June, the average 42-inch LCD TV hit an all-time low of $761, down from the May average of $807. Overall, though, the average amount consumers paid for a new TV has risen—from $1,190 in the first quarter of 2012, to $1,224 in Q2.

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If prices are dropping in all categories of TVs, why is the average consumer paying more? It appears as if shoppers are looking over the options and perhaps deciding that, since the price differentials aren’t as vast as they were in the past, it’s worth it to go with a bigger, fancier unit. The thinking seems to be: For a couple hundred bucks more, what the heck, why not? That goes even for 3-D TV, which has its share of problems, and it seems to go especially for smart TVs with Web 2.0 features: 44.3% of new TV purchases are smart TVs, up from 40.9% in the first quarter of 2012. And smart TVs are pricey, costing an average of $1,907 in June, which is down from May ($2,015), but up sharply compared to the average smart TV sold in June 2011 ($1,724).

It is the sales of these smart TVs, and just plain bigger TVs, that’s bringing up the average price for all TVs sold. If all you’re after is a decent price, you have your pick of solid, relatively inexpensive 32-inch and 42-inch LCDs. Then again, considering how well such units sold during last year’s winter holidays and in the years prior, there’s a good chance you already own one—or a few.

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That’s just one more reason why the average TV purchase price has been rising: The people who are buying probably aren’t looking for any old decent-priced TV. Instead, if they’re in the market for a new TV, they’re fairly likely to be upgrading.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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