Unplanned TV Accessory Purchases Can Add Up

With consumers taking advantage of deep discounts on flat-panel TVs this holiday season, The NPD Group’s recent TV Market Basket Study is a well-timed look at the entire value of the TV purchase– accessories and add-ons included. The study found, on average, $135 is spent on accessories and services (such as extended warranties) per television set sold. Added up, this equates to a sizeable amount of incremental revenue above the purchase price of the TV.

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Cyber Monday Stands on Its Own

For Cyber Monday, retailers seemed to have a different strategy for product discounting than what I observed in-store on Black Friday. While great deals on video products mainly took center stage Friday, Monday had a decidedly PC and imaging feel. I noted several offers for laptops, digital cameras, PNDs and accessories that, while present Friday, weren’t as prominent in-store. NPD’s Anatomy of Black Friday Study found that for Cyber Monday PCs and cameras were the most commonly purchased CE products, bought by 28 percent and 20 percent of all tech purchasers, respectively.
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Three Black Friday Observations

With Black Friday now behind us, it’s time to find out what was hot and what we can expect over the final weeks of the holiday shopping season. With NPD’s Anatomy of Black Friday study data as a gauge, a couple things struck me as I reviewed both the results and my experience at the stores.

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They Came With A Purpose

Preliminary results from The NPD Group’s The Anatomy of Black Friday study show that the aggressive pricing posture taken by the CE industry appears to have paid off. Significantly more tech shoppers were driven into the stores (or online) by the prospect of a great, desirable product at a great price. Almost 65 percent of tech purchasers bought in 2011 because they saw what they really wanted on sale. In addition, 28 percent were enticed by the big sales available at the specific retailer where they were shopping. Both of those numbers were approximately 50 percent higher than the overall population of Black Friday shoppers and 10 percent higher than last year.
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My View From the Line

After doing much of the cooking for my family’s epic Thanksgiving dinner, I wrestled with the prospect of going out into the cold November night to meet up with 600 of my closest electronics buying friends. My curiosity, however, got the best of me and I ventured out after my family had long gone to sleep. As we all know, Black Friday starts earlier and earlier each year and this Thanksgiving night, around 11pm still smelling of pumpkin pie, I set out to hunt for bargains. I visited my local Best Buy and Walmart– strategically mapped out near my home to avoid the inevitable traffic jams.
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The Long March

With stores opening their doors on Thursday for Black Friday sales this year, our annual Black Friday retail adventure encompassed a much wider swath of time and space then we have covered in previous years. The end result was some surprising insights and some, what we hope, are interesting observations on how this change has impacted Black Friday.
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First Thoughts

The holiday season kicked off on Thanksgiving evening with some of the most aggressive pricing, promotions, and sales tactics in years. But those rock-bottom prices and record early-opening hours illustrate the concern of the entire technology industry views this holiday season. NPD has been predicting that this would be the worst holiday since 2008, on a revenue basis, and the early season aggressiveness from the industry confirms this level of concern.
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Multiroom Goes Multichannel

At any point in time, my nonagenarian uncle wouldn’t know what to do if you set a PC before him. In the ’80s, though, he was an early adopter of something few Americans have today — multiroom audio. His three bedroom Upper East Side apartment — large by Manhattan standards but smaller than many houses with multiple floors — had ceiling speakers that delivered Sinatra tunes from vinyl, tape, and FM to nearly every room in the dwelling.
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The WiMAX climax

Sprint’s announcement last Friday that it would begin offering LTE-capable handsets next year as a first step toward migrating to the 4G standard signaled the beginning of the end of WiMAX in the U.S. Starting out as an underdog against a global LTE commitment, Sprint’s rollout of the first 4G network was marked by numerous delays and false starts (such as XOHM) during a time when the carrier was struggling financially. After initially first touting the superiority of WiMAX, Sprint soon shifted to the practical argument that it was supporting the technology because it was available and LTE was not.

Sprint’s time-to-market advantage, however, varied by municipality. In New York City, for example, its lead was particularly short. The Big Apple was one of the last cities in which Sprint rolled out WiMAX, but it was one of the first cities in which Verizon rolled out LTE, resulting in a head start of only a few months.

As noted in today’s press release, based on NPD Mobile Phone Track data, Sprint’s WiMAX efforts were not in vain. The carrier’s early adoption of 4G resulted in relatively high adoption of smartphones that delivered what had been the fastest wireless broadband speeds available. Indeed, Sprint was the only carrier for which 4G handset purchases accounted for the majority of unit sales. That’s particularly impressive given the relatively easier evolutionary path to 4G afforded by T-Mobile’s and AT&T’s HSPA+ networks.

Sprint notes that it will continue to offer WiMAX handsets throughout next year, which likely ensures that its WiMAX network will remain in operation for some time to come. Eventually, though, the company will be able to tap into the greater global scale afforded by LTE, scale that have proven compelling to its two larger domestic competitors.

The Taming of the OTT Video Shrew

Like many disruptive technologies and market segments, the over-the-top (OTT) video market has been cast as the great equalizer. Greedy corporations would be forced to concede to consumer demands for viewing TV and movie content when, where, and on the device of choice. We could finally be rid of the expensive pay TV services, in favor of less expensive, but more personalized, online entertainment services. The day of reckoning for the US entertainment industry was just around the corner.

Somewhere along the way, this utopian vision has been lost. A dramatic shift in the industry is happening that will take the OTT market down a path quite unimaginable just a few months ago. Signs of this seismic shift are everywhere. Over the past year, Netflix has found itself vilified and rejected by HBO, Showtime, and most recently Starz. There is little chance for mending fences in the short term.

Forced to fight, Netflix appears to be headed towards a new strategy that will transform the company into an online premium-TV network. Like HBO and other premium TV channels, Netflix will attract and retain subscribers from original TV programming and high-value movies. They will be introducing their first original TV series, “House of Cards,” in 2012, and they are busy licensing a wide array of supplemental recent TV series, movies and specials. Welcome the newest premium TV channel: on-demand, unbundled, and multi-platform.

Other streaming VOD services are going down another path. Last week, DISH Network announced a Nefllix-like streaming VOD service under the Blockbuster Movie Pass moniker, but the service is not designed to compete directly with Netflix. The Movie Pass service will be available only to subscribers of DISH satellite pay TV service. Thus, Dish is positioning Movie Pass as an extension of their core pay TV service.

Even Microsoft is aligning itself more closely with the pay TV industry. The company recently announced its Xbox Live video service that will stream live broadcast TV programming. The Xbox service is linked to TV Everywhere services, such as Comcast’s Xfinity and Verizon FiOS services. As long as you have an appropriate pay TV subscription, users will be able to stream live TV broadcasts to their TV via their Xbox 360. Not exactly disruptive, is it?

As streaming VOD migrates toward a more premium TV-centric model, movie studios still must monetize their movies through online rentals and electronic sell-through (EST). The studios are realigning their release windows and introducing the Ultraviolet digital locker platform to encourage more online video purchases; yet much of their success will be left up to fledging transactional VOD (T-VOD) suppliers, such as Vudu, CinemaNow, Amazon, Alphaline, Qriosity and Blockbuster. Consumers have been slow to adopt online video rentals/purchases and the content producers have limited leverage to speed up the process.

After all is said and done, it appears that the OTT video shrew has been tamed. The OTT video market will be split between the pay TV industry commandeering the subscription VOD services and the movie studios that will control online rentals and EST. Maybe it was inevitable. Maybe it is for the best. Even though we will continue to pay premium rates for entertainment, we will at least be able to view it when, where and on the devices we choose.