The last TV I bought was a 43-inch smart TV that cost me roughly $500 in 2016; it’s no longer in my possession, but my old roommate is still using it to his great joy. This means that once again I am poking around online for a new TV. I’ve noticed something exciting but sort of crazy: I can purchase a bigger TV for less money, reflecting a broad trend of how high-quality TV got insanely cheap over the past decade.
It’s not like they started out particularly expensive — a 2011 New York Times story noted that TV prices had been trending downward in the previous few years, “a result of a huge increase in manufacturing capacity that has led to an oversupply and continued downward pressure on prices from low-cost manufacturers and online retailers.” But the pace of price decline has stayed consistent since then: The price of a 50-inch 4K HD television, the major new picture quality standard introduced in the last decade, declined by roughly 80 percent to $467 between 2012 and 2017, according to the market research firm Statista. Between 2018 and 2019, per the Bureau of Labor Statistics, the average price of TVs slipped almost 20 percent.
Conservative think tanks like the American Enterprise Institute have said that these price declines mean that we should reevaluate what poverty means (“How poor can you really be if you have a TV?”). Though this argument holds no water when you consider that plenty of more essential things such as health care have gotten more expensive, the falling price of TVs speaks to evolutions in both how people buy and use TVs — and how TV makers themselves actually make money. Both these shifts are representative of how the American economy as a whole has changed in the last decade.
There are a few immediate causes for the continued decline of TV prices. For one thing, there are a lot more companies that can now manufacture a lot more TVs; a few of the biggest manufacturers (Vizio, TCL) only exploded in popularity in the U.S. over the past 10 to 15 years. Additionally, you don’t actually need a TV to watch TV anymore; Nielsen data pretty consistently shows that people are watching more stuff on their phones and less stuff on their actual TV sets. With less demand for actual TVs, there’s less reason for manufacturers to price them even more highly.
But the most interesting and telling reason for why TVs are now so cheap is because TV manufacturers have found a new revenue stream: advertising. If you buy a new TV today, you’re most likely buying a “smart” TV with software from either the manufacturer itself or a third-party company like Roku. The cut of the advertising revenue from those pre-installed video channels is big business for actual TV makers, as is the business of selling user viewing data and other information to marketers.
Because only 37 percent of U.S. homes currently have a smart TV, according to the market researchers at Forrester, that means there’s a lot of revenue these companies have yet to squeeze. TV makers, understandably, are doubling down: This week Vizio announced that it was launching its own in-house advertising unit, looking to capture a bigger slice of the estimated $4.4 billion video-streaming ad market in 2020.
The story of the cheap HD television in the last decade is, in many ways, the story of the American economy writ large. Prices may be low, but so are most people’s wages. And although customers are getting a glut of new free content from TV products, that’s because customers are now themselves the products that TCL can sell to outside marketing companies.
For many big companies that make physical products, the business of making stuff isn’t sufficiently lucrative anymore. Automakers, for example, can now expect to see bigger profits from the loans they make on selling cars than from selling the actual cars. And like the TV manufacturers and car companies, even ad-unfriendly tech giants like Apple know that their real margins won’t come from hardware anymore — it’s why Cupertino is spending massively on content to shore up its growing “services” revenue.
The trade-offs for cheap TVs is that customers are themselves becoming the product for TV makers, which reflects the grandest Silicon Valley innovation of the last ten years: the digital ad business that catapulted Google and Facebook to their present-day stratospheric market valuations. It is, generally speaking, less labor-intensive and more exploitative of both workers and consumers. For something to be as cheap as a great TV, people have to give something up — whether they know it or not.