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We Control the Channel! (Well, We’re Trying)

March 1, 2012 | Author: Ibex Marketing

Are you old enough to remember the opening sequence of “The Outer Limits”?

There is nothing wrong with your television set. Do not attempt to adjust the picture. We are controlling transmission. If we wish to make it louder, we will bring up the volume. If we wish to make it softer, we will tune it to a whisper. We will control the horizontal. We will control the vertical. We can roll the image, make it flutter. We can change the focus to a soft blur or sharpen it to crystal clarity. For the next hour, sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. [Source: Wikipedia]

Well, it’s not science fiction, but the major television brands are trying to exert control of their own. Instead of trying to control the image, however, they hope to control the channel. And by this, I don’t mean the broadcast channel; they hope to reign in the retail channels.

Panasonic, Samsung, LG, and Sony each announced new pricing policies recently. The Minimum Advertised Price (MAP) has been a common fixture in consumer electronics in recent years, but retailers were free to set the actual selling price for most models. The manufacturers protected their higher-margin specialty vendors by having certain models that only they could sell. The high-end custom installer business has taken it on the chin in the past ten years, however, and it has become more or less a free-for-all in the market.

As a result, the manufacturers’ profits have been squeezed down to paper-thin margins. Now, they are trying to put the genie back in the bottle. The plans vary from one company to the next, but in general, they are setting minimum sale prices for specific models. In most cases, these apply only to the premium models in the product lines, though some mid-priced models are included as well. And the stick behind the policy is that any retailer who ignores these limits risks losing the right to purchase the products wholesale. If this works, both the manufacturers and the authorized retailers may see slightly better margins on these products with protected pricing.

We’ve seen this attempted before in other industries. I remember the early days of the personal computer when the major brands were facing competition from inexpensive brands. The result was a strong gray market for the “price controlled” products, where retailers would purchase more units than they needed in order to get a price break, and then would sell off the excess inventory to other unauthorized discounters.

Will the TV makers be able to make these new policies stick? My guess is that in the long run they can’t, but for now it could mean that finding a bargain on some models will become more difficult, and your manufacturer’s warranty may not be valid if you purchase from an unauthorized dealer. If you plan to purchase one of the top-of-the-line models from one of these brands, plan on spending a little extra care when you shop.