Washington, D.C. (October 14, 2008) -- Will the stock market decline and talk of a deep recession finally force consumers to stop buying High-Definition TVs?

The high-def set is now in more than 30 million U.S. homes, but some analysts are telling The Wall Street Journal today that the sagging economy could bring sales to a halt.

Additionally, TV providers, such as DIRECTV, which have relied heavily on promoting expanded HD services, could also be hurt.

"It's not a coincidence that signs of a real turn in HD sales date to the middle of September, when the story of the stalling economy jumped from the business page to the front page with the collapse of Lehman Brothers," Craig Moffett, an analyst at Sanford C. Bernstein & Co, told the newspaper. "Consumers are justifiably scared and the wide-screen TV is among the most discretionary of purchases."


Will retailers see fewer people shopping for big screens?

Moffett says a report issued last week by MasterCard revealed that spending in the electronics category fell by 14 percent in September, compared to September 2007. In the previous two months, sales fell just three and six percent respectively.

Thomas Eagan, an analyst at Collins Stewart, said many consumers are wary of buying any large-ticket item now.

"Given the economic circumstances, the next leg of customers may be slower to adopt HD services," said Eagen.

If high-def sales slows, it could be bad news for DIRECTV, which has invested heavily in marketing and infrastructure to offer more than 100 HD channels. The satcaster's advantage over rival operators such as Dish Network and the cable TV services could become less important.

And, finally, a sales decline could be bad for current HD owners who might find their TV providers slower to add new HD channels.


Commentary:
In my view, it's too early to conclude that the economy will suddenly bring HD to a halt. Instead,  I think you will see consumers shopping for smaller, less expensive sets ranging in size from 32 to 42 inches and ranging in price from $500 to $1,000. The giant-screen TV that can cost from $2,000 to $5,000, however, will likely find fewer buyers until the economic picture becomes clearer.

However, I do fear that DIRECTV and other TV providers will take a cautious approach in the final three months of the year, adding fewer channels and other HD-related services.

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