The television price war, which has been heating up over the past year, is expected to become "ferocious" in the first quarter of 1977, according to industry sources. While consumers stand to benefit from all-time low prices for portable domestic manufacturers stand to lose more jobs to Japanese competition.
Two warning salvos were fired last week by RCA and Zenith. RCA announced it would reduce factory prices on eight color sets during a five-week promotional campaign. The models include 15, 19 and 21-inch portables in their standard XL-100 line, and a 19-inch and four 25-inch consoles in their higher-priced Color Trak line.
This works out to a 4 to 7 per cent cut, or $20 to $40 per set off suggested retail prices. Reductions on already discounted prices - those charged by stores like George's and Luskin's - will be smaller.
Zenith declined to give details of its marketing program or comment on what it will mean to the consumer. Distributors were notified Dec. 28 of the start of a merchandising program, involving "promotional color products and sales allowances (that) will keep Zenith competitive with recent color TV pricing moves."
A Washington area TV dealer, who asked to remain anonymous, said the local Zenith distributor had approached him the previous day with reductions varying between 1.5 and 4.5 per cent, depending on the models. He declined to state how much of that reduction would be passed along to customers, but said the biggest reductions were more likely to be on sets loaded with features than on bottom-of-the-line models.
"I doubt if we'll see a $250 19-inch set again," he added. "The cuts will be on the $700 sets." He predicted substantial cuts this spring - in excess of 10 per cent in some cases - due to a stagnant market.
Some merchants did not wait out the Christmas season to lower prices. A Landover dealer reported a comparison shopper told him of discovering a difference in price of between $5 and $200 on the same deluxe model sold at five separate outlets.
During the 1974 recession, the lowest-priced 19-inch TV - the most popular size and, as such, regarde as the industry bellweather - was about $250. But it contained tubes.
Today cheapest 19-inch set, now being advertised in this areas at $267, is solid state. This advance, taking into account inflation, puts the 19-inch at a record low price. At the other end of the scale is the 19-inch Sony at nearly twice theprice.
Price cutting is normal during the slow six months after Christmas and before the introduction of new models. However, what escalates this into a war is the very slow market, which lacks new major technological innovations like the Sony Betamax video recorder to spark sales, as well as high inventories.
Approximately 8 million color and 5 million monochrome sets were sold in the United States last year. Japanese exports to this country for the first 11 months of 1976 totaled almost 4 million sets (an increase of 135 per cent over the previous 11 months), but numbers of these remain unsold, in dealers' inventories, Japanese manufacturers continue to ship in anticipation of possible quotas and/or tariffs later this year.
Last September and organization of labor unions and domestic manufacturers, the Committee to Preserve American Color Television (COMPAC), petitioned the International Trade Commission to rule that imports have caused serious injury to the U.S. industry. Another complaint, filed by GTE, charging the Japanese with selling sets below cost in the United States, has been suspended pending resolution of the COMPACT action.
Corning Glass Works has been quoted as estimating 8,000 American jobs are lost for each million color TV's imported from Japan, Taiwan, South Koreaand, starting last November, Singapore.
By law the ITC mus act by March 22, after which President Carter will have 60 days in which to decide on a remedy, if any. International political considerations, added to what industry sources see as the only "moderately beneficial" help quotas could offer, make presidential action impossible to foresee.
As far the ITC, Television Digest last week predicted it would recommend restrictions solely on finished big screen (25-inch) imports and not on imports of small-screen color and monochrome sets, chassis and kits.
The newsletter reasured that slapping quotas or tarrifs on these would create difficulties for U.S. manufacturers whose black-and-white components and sets come from abroad.As a result, more foreign companies are likely to set up assembly operations in this country.
Sony, for example is expected to buy a former Westinghouse tube plant to produce Trinitron sets. The net effect, therefore, would be little change in the market situation, according to Television Digest.
A more foreboding outlook is offered by the research firm of Frost & Sullivan. Conceding Japan's dominant and growing share of the market, for which minuscule gains are predicted in 1977, the report suggests that U.S. manufacturers can only survive over the next decade if they look to new markets in Latin America and Eastern Europe. It also advises U.S. manufacturers to branch out into security and fire detection systems but to stay away from video games, which will be taken over by my manufacturers. CAPTION: Picture, Little has changed in TV price wars. This local scene was in 1955 an advertised $369.50 television sets for $369.50 telelvision sets for $299.50, "in mahogany," black-and-white, of course.