Fancy new features like 3D screens and Internet connectivity have failed to inspire U.S. television shoppers, dashing a hoped-for recovery in the global consumer electronics industry.
Manufacturers such as Sony Corp, Samsung Electronics Co Ltd and Sharp Corp are learning that features such as razor-thin LED TVs are just not enough for television sales to stage a comeback in the United States.
On Tuesday, Best Buy Co Inc Chief Executive Brian Dunn told analysts that sales of 3D TVs had fallen behind industry expectations.
There was confusion about 3D early (on), Dunn said. It was a little short on content.
The largest U.S. electronics chain cut its full-year profit forecast, and its disappointing results put pressure on shares of Best Buy and other electronics companies.
The stock got killed today, said Frank Ingarra, a co-portfolio manager of Hennessy Funds, which holds 32,000 shares of Best Buy. The retailer's shares dropped nearly 15 percent on Tuesday to close at $35.52.
Despite a better-than-expected performance by U.S. retailers in November, consumers are holding off on big-ticket purchases like TVs with the latest bells and whistles.
Consumer electronics executives say TV sales will improve once more 3D content becomes available next year and when consumers start recording their own content on 3D-enabled camcorders.
Just like how high-definition TV started in sports and movies, as 3D evolves, it will go with sports and movies and then become more of an everyday thing, Jay Vandenbree, head of home entertainment at LG Electronics USA, said in an interview.
For now, investors are demanding to know why retailers aggressively pushed a new generation of TVs after many consumers had just upgraded to their first flat-screen sets this year.
People don't understand the added benefit of 3D, Ingarra said. When you get into $2,000 TVs, you start thinking: 'At what point do I really need this, and is it going to make my viewing experience that much better?'
Consumers are also put off by the need to purchase expensive 3D glasses to go along with the new TVs, said NPD analyst Ross Rubin. The picture quality of some shows produced in 3D has also made some viewers queasy.
If the 3D content hasn't been produced well -- if it has been aggressive on certain kinds of effects -- that can result in discomfort for viewers, Rubin said.
This holiday, consumers are more interested in buying TVs with bigger screens, rather than pricier ones with more features, Rubin said.
Sales of TVs with Google Inc's Google TV software, which lets viewers surf the Web directly from TV sets, were also hurt as consumers realized they could find the same services, like movie service Netflix Inc, elsewhere.
People can also buy lower-priced alternatives to connected TVs, be it video game players, Blu-ray players or Apple TV.
(Reporting by Liana Baker; Editing by Kenneth Li, Gerald E. McCormick and Matthew Lewis)