Smart TV Ads Offset Component Costs, Keeping Set Prices Stable
Smart TV prices have remained stable despite rising component costs, largely due to increased advertising revenue and fierce retailer competition, according to a report. TV manufacturers are prioritizing ad income over price hikes, a trend particularly evident in North America, as component price increases are absorbed by the advertising model.
Key points
- Smart TV prices have not increased despite a global component cost crisis.
- A report from Omnia suggests increased advertising revenue on smart TVs is offsetting rising component costs.
- Fierce competition among retailers has also pressured manufacturers to maintain low prices for television sets.
- TV manufacturers are shifting focus to advertising income as a primary revenue stream, rather than passing costs to consumers.
- This trend is seen as particularly pronounced in the North American market.
Despite a global surge in electronic component prices, television sets have bucked the trend, maintaining stable prices for consumers. Market research firm Omnia, as reported by Digitimes, indicates that this stability is largely a result of manufacturers increasingly relying on advertising revenue generated through smart TV platforms.
The strategy allows TV makers to absorb rising component costs without necessitating price increases for their hardware. This is especially prevalent in highly competitive markets like North America, where aggressive retail competition further pressures manufacturers to keep device prices low. Consequently, the profitability of the TV business has increasingly shifted towards in-screen advertisements and other digital services.
While consumers may benefit from unchanged TV prices, this pivot means manufacturers are prioritizing advertising income over direct hardware sales profit. This shift in business model has become a key factor in navigating the current economic climate impacting electronic supply chains, ensuring televisions remain an accessible purchase for major events like the FIFA World Cup.
Sources
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