The last TV I bought was a 43-inch smart TV that cost me around $500 in 2016; it is no longer in my possession, but my former roommate still uses it much to his delight. That means once again I’m scouring online for a new TV. I’ve noticed something exciting but a bit crazy: I can buy a bigger TV for less money, which reflects a general trend of how high quality TV has become incredibly cheap over the the last decade.
It’s not like they started off particularly expensive – a 2011 New York Times The story noted that TV prices have tended to decline over the past few years, “resulting from a huge increase in manufacturing capacity that has resulted in oversupply and continued downward pressure on TV prices. low-cost manufacturers and online retailers”. But the pace of price decline has remained steady ever since: the price of a 50-inch 4K HDTV, the main new picture quality standard introduced over the past decade, has fallen by around 80% for reach $467 between 2012 and 2017, according to market research firm Statista. Between 2018 and 2019, according to the Bureau of Labor Statistics, the average price of televisions dropped nearly 20%.
Conservative think tanks like the American Enterprise Institute have said these price cuts mean we should reassess what poverty means (“How poor can you really be if you have a television?”). Although this argument does not hold water when you consider that many more essential things such as health care have become more expensive, the fall in the price of televisions indicates developments in both How? ‘Or’ What people buy and use TVs – and how TV makers themselves make money. These two changes are representative of how the US economy as a whole has changed over the past decade.
There are a few immediate causes for the continued decline in television prices. On the one hand, there are a lot more companies that can now make a lot more TVs; a few of the larger manufacturers (Vizio, TCL) have only exploded in popularity in the US in the last 10-15 years. Plus, you no longer need a TV to watch TV; Nielsen’s data pretty consistently shows that people are watching more on their phones and less on their TVs. With less demand for actual TVs, manufacturers have less reason to price them even more.
But the most interesting and telling reason TVs are now so cheap is that TV makers have found a new source of revenue: advertising. If you’re buying a new TV today, you’re most likely buying a “smart” TV with software either from the manufacturer themselves or from a third-party company like Roku. Reducing advertising revenue from these pre-installed video channels is a big business for TV manufacturers, as is selling user viewing data and other information to marketers.
Because only 37% of U.S. homes currently have smart TVs, according to market research from Forrester, that means these companies still have plenty of revenue to pull off. TV makers are understandably doubling down: this week Vizio announced it was launching its own in-house advertising unit, seeking to capture a bigger share of the estimated $4.4 billion advertising market in video streaming in 2020.
The story of inexpensive HD television over the past decade is, in many ways, the story of the American economy as a whole. Prices may be low, but so are most people’s salaries. And while customers are getting a glut of free new content from TV products, it’s because customers are now themselves the products that TCL can sell to outside marketing companies.
For many large companies that manufacture physical products, manufacturing products is no longer lucrative enough. Car manufacturers, for example, can now expect to make larger profits from the loans they make on the sale of cars than from the sale of the actual cars. And like TV makers and automakers, even ad-unfriendly tech giants like Apple know that their real margins will no longer come from hardware. That’s why Cupertino is spending heavily on content to shore up its growing “services” revenue.
The tradeoffs for cheap TVs are that customers themselves become the product of TV makers, mirroring Silicon Valley’s biggest innovation of the past decade: the digital advertising business that catapulted Google and Facebook at their current stratospheric stock market valuations. It is generally less labor intensive and more exploitative of both workers and consumers. For something to be as cheap as a good TV, people have to give something up, whether they know it or not.
Noah Kulwin is the future editor of The Outline.