October 21, 2008

CEA Forecast: DTV Transition Could Play Role in Holiday Purchases

Does anyone's crystal ball really work well enough to predict what consumers are going to do this holiday season? Forecasting consumers whims these days is about as tough as predicting which way the Dow will swing, but CEA is trying, detailing Mon its 15th annual "CE Holiday Purchase Patterns Study." While consumer spending is expected to be down overall, as we previously reported, CEA expects consumers to allocate more of consumer electronic gifts (Cfax , 10/8). Its new, more detailed report explains just where it expects that money to go. Of the $1,437 consumers expect to spend during the holidays (down $200 from last year), 28% is expected to go to CE—a 6% increase from last year, CEA said. In a positive sign for cable, computers ranked 2nd on adults' wish lists (behind "peace and happiness"), while TVs ranked 6th (down from 3rd last year). Televisions also ranked in the top 10 for gifts people planned to give, after not making the list last year. 85% of those planning to buy a TV expect to make it an HD set. 63% plan to buy LCDs, a hearty 54% are looking to buy a TV that's 40 inches or larger and 45% plan to purchase a plasma set. The DTV transition does appear to be a factor, with 28% saying they plan to buy a set to prepare the recipient for the transition. That could be good news for cable operators looking to entice over-the-air-only homes to subscribe to their services. The biggest reason (48%) to give a new TV was that the recipient's older set needs replacing. 24% of TV givers are doing it because they want the recipient to upgrade to HD, with men more likely to cite this as a reason. Some of those TV buyers will be looking to "trade down," ie, CEA predicts about 28% are expected to buy a less expensive version, shop at a discount retailer, buy a store brand, etc. Despite the optimism for CE purchases, we did note that 38% plan to cut back CE purchases and 20% plan to eliminate them over the next 6 months. The numbers were lower for cable/DBS subscriptions, with 20% saying they'd cut theirs back and only 11% saying they'd eliminate it over the next 6 months.