Ten years ago, in the spring of 2002, flat-screen televisions were one of the signs you'd "made it" in the post-911 world. The economy might still be shaky following the dot-com bust and people's nerves were shaky following the attacks on New York and Washington but if you had one of those big flat-screen TVs you were obviously doing better than most.
Now, flat-screen TVs are standard in most North American homes. They're expected in the rooms of any reputable hotel. They are the centrepiece in any home that has a "media room." The quality of the images and sound that flat-screen televisions produce is still impressive, and given the technology that goes into them and their ubiquity one would expect that the manufacturers of these devices are reaping huge profits.
But according to The Economist, http://www.economist.com/blogs/schumpeter/2012/01/flat-panel-displays-0, manufacturers, including Sony, Samsung, LG and Panasonic, are losing money on the flat-panel LCD screens they make for televisions and other devices, including smart phones and tablets. In fact, according to one brokerage, the industry lost a combined $13 billion between 2004 and 2010. And they continue to lose money, despite the fact consumers spent $115 billion on 220 million flat screen TVs last year.
This phenomenon of losing money in a business that sees high consumer demand is one of the puzzles in the rapidly changing business world of today.
Executives in traditional media companies are acutely aware of it, as they seek ways to stop declining revenues at the same time consumers are demanding more service and content at a faster pace than ever before. Print media — newspapers and magazines — are usually cited as the traditional media that are struggling most today, but social media and the erosion of the traditional model of selling advertising to support content (and providing content that draws advertising) are having an impact on radio and television too. Advertisers and newsmakers know they can bypass the traditional media and reach consumers directly with their own Tweets, websites and Facebook posts.
There isn't a lot of sympathy for the media empires that once dominated regions and even countries as they struggle to figure out a new sustainable business model. Like the manufacturers of flat-panel screens, they can't continue to lose money forever, but what consumers will be left with when the markets decide the winners and losers is unclear.
This period of rapid change and instability is by no means restricted to the manufacturers of television screens and media companies. For many industries the business model has changed drastically in the last five-10 years. The airline business is nothing like what it was before 9/11. The North American auto industry, once the domain of some of the largest companies in the world, had to be bailed out because many of the people leading it couldn't see the changes that were coming, or had already arrived. The telecommunications industry has generally grown more lucrative as technology has advanced and more services have become available to consumers. But increased competition has also pushed consumer prices down at the same time consumer demands — fuelled by technological advances — have increased. How long that can continue is unclear.
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