Small TVs got a boost last June when the government mandate to switch to digital broadcasting took effect, but a year later, amidst a stronger economy, sales of smaller TVs have slowed as consumers are exploring bigger screens and advanced features, according to leading market research company The NPD Group.

Sales of 19″ to 37″ flat-panel TVs in the U.S. were down 21% year-over-year in June according to NPD’s Retail Tracking Service.  The screen sizes that took the biggest hits were 19″ and 26″ showing 49% and 38% declines, respectively.

“As the analog cutoff approached, many less affluent consumers flocked to purchase inexpensive smaller digital TVs to receive digital broadcasts. This drove strong growth in the sub-32″ segment that the industry has not been able to maintain,” said Ross Rubin, executive director of industry analysis NPD.  “The scales have now tipped in favor of larger screen TVs as prices continue to drop and consumer interest turns to connected televisions, LED backlighting, and 3D — features that are more likely to be prominent in larger sets.”

Sales of flat-panel TVs 40″ to 65″ grew 26% in June compared to the prior year.  Some of the strongest growth came from the larger screen sizes as consumers traded up. The 55″, 60″, 63″, and 65″ flat-panels all experienced triple digit growth.  But large declines in average prices also helped boost sales of 42″, 46″, 50″, and 58″ flat-panel TVs.

[Source:  Retail Tracking Service.  The NPD Group. 18 Aug. 2010.  Web.  25 Aug. 2010.]

As the IPO market starts to show signs of life, investors and marketers will be closely watching what happens with Skype’s planned offering. The company filed its S-1 form earlier this month.  Skype is yet another player in the online universe with plans to make money by convincing consumers and businesses to upgrade from the free services they’ve been enjoying. In this case, it’s all about expanding its user base and getting them to pay for features such as ‘group video calling’.  And yes, there’s another plan to make money – advertising.

The company claims to have 560 million users globally. And in the first 6 months of 2010, Skype recorded $406.2 million in revenue. Assuming this growth rate continues, Skype would be approaching nearly $1 billion in annual revenue.  Currently, only 7% of users actually generate revenue for the firm.  So it makes sense that Skype is looking to other sources of revenue. According to the firm’s S-1 form, it generates “ a small portion of our net revenues through marketing services (such as advertising) and licensing, which we expect will grow as a percentage of our net revenues over time.” One revenue generating tool linked to advertising is named Click & Call  which “allows businesses to market their products or services selectively to our user base.”  A local advertiser paying for a highlighted phone number to appear in search results can receive calls placed by potential customers directly from their computers. Skype is also expecting to launch a display advertising product.

Writing for Fortune, Jessi Hempel estimates that Skype’s ad revenues could reach $200 million. She notes, “the real advertising play for Skype comes in new formats, many of which don’t yet exist.” As the Web 2.0 industry matures, competition for consumer attention will increase. Marketers may find that advertising via a company that provides a tangible service such as Skype may provide better returns than some of the other options out there.

[Sources: Hempel, Jessi. “Skype’s $200 million ad opportunity.” Tech.fortune.com. 11 Aug. 2010. Web. 27 Aug. 2010; United States. Securities and Exchange Commission. Skype: S-1.  Edgar Online. 2010. Web. 26 Apr. 2010]

The adoption of broadband internet access slowed dramatically over the last year. Two-thirds of American adults (66%) now have a broadband internet connection at home, a figure that is little changed from the 63% with a high-speed home connection at a similar point in 2009.

Most demographic groups experienced flat-to-modest broadband adoption growth over the last year. The notable exception to this trend came among African-Americans, who experienced 22% year-over-year broadband adoption growth.

• In 2009, 65% of whites and 46% of African-Americans were broadband users (a 19-point gap)
• In 2010, 67% of whites and 56% of African-Americans are broadband users (an 11-point gap)

By a 53%-41% margin, Americans say they do not believe that the spread of affordable broadband should be a major government priority. Contrary to what some might suspect, non-internet users are less likely than current users to say the government should place a high priority on the spread of high-speed connections.

The new Pew Internet Project survey found that Americans have mixed views about the problems non-broadband users face due to their lack of a high-speed internet connection. There is no major issue on which a majority of Americans think that lack of broadband access is a major disadvantage, although African-Americans, Latinos and young adults are more keenly attuned than average to the impact of a lack of broadband access.

• Job opportunities and career skills: 43% of Americans believe that lack of broadband is a “major disadvantage” when it comes to finding out about job opportunities or gaining new career skills. Some 23% think lack of access is a “minor disadvantage” and 28% think it is “not a disadvantage.”

• Health information: 34% of Americans believe that lack of broadband is a “major disadvantage” when it comes to getting health information. Some 28% think lack of access is a “minor disadvantage” and 35% think it is “not a disadvantage.”

• Learning new things to improve and enrich life: 31% of Americans believe that lack of broadband is a “major disadvantage” when it comes to learning new things that might enrich or improve their lives. Some 31% think lack of access is a “minor disadvantage” and 32% think it is “not a disadvantage.”

• Government services: 29% of Americans believe that lack of broadband is a “major disadvantage” when it comes to using government services. Some 27% think lack of access is a “minor disadvantage” and 37% think it is “not a disadvantage.”

• Keeping up with news and information: 23% of Americans believe that lack of broadband is a “major disadvantage” when it comes to keeping up with news and information. Some 27% think lack of access is a “minor disadvantage” and 47% think it is “not a disadvantage.”

• Keeping up with what is happening in their communities: 19% of Americans believe that lack of broadband is a “major disadvantage” when it comes to finding out about their local community. Some 32% think lack of access is a “minor disadvantage” and 45% think it is “not a disadvantage.”

[Source:  Internet & American Life Project.  Pew Research. 11 Aug. 2010.  Web.  17 Aug. 2010.]

Consumers continue to display great demand for the latest communications devices. But a  survey released by IBM indicates that marketers in the telcos industry should not take their good fortunes for granted. A continued economic downturn could force consumers to cut back. Almost 1/3^rd of survey participants said a long economic downturn could result in spending reductions of between 10%-20% when it comes to mobile communications.

And consumers have clear ideas about which communications and media expenditures they don’t want to cut from their budgets. Here’s a list of percentages associated with the devices they are least likely let go:

• Mobile phone 51%
• Broadband Internet access 26%
• Landline 26%
• Pay TV 12%
• Newspapers/magazines 11%

These results show a clear threat for telecos that specialize in landline services. And it’s not just consumer opinions that matter. Telco companies are facing competition from Internet firms, voice-over-IP (VoIP) operators and cable firms.  The new competitive and economic uncertainty clearly threatens smaller marketers. But IBM analysts believe that even larger players will be forced to take up new business models in the next 4 years to generate profits.

For example, IBM analysts predict that landline service will increasingly be offered as part of a more complete package. And operators may be forced to cut back on features like unlimited data plans.

On a macro-economic scale, here are 4 market models that IBM analysts believe could come to the telco industry depending on the course of the recovery currently underway:

Survivor Consolidation:  If the economic recovery stalls, surviving operators will merge to try to improve profitability as consumers cut costs.

Market Shakeout: If the economic recovery stalls, private investors may focus their efforts on large population areas and target consumers with premium services while government agencies may extend basic service to less profitable, rural areas.

Clash of Giants: If economic growth becomes robust, telcos will compete with over-the-top (OTT) providers by focusing on niches such as the smart grid or e-health. Consumers will choose providers with the best quality of service.

Generative Bazaar: If economic growth becomes robust, telecos will face more competition from smaller operators that “package connectivity with their own services.” Consumers may also be willing to use services from a variety of different providers.

Regardless of what happens, telco operators will continue to roll out new marketing plans to attract customers as the competitive nature of the industry changes.

[Source: Telco 2015: Five Telling Years, Four Future Scenarios. IBM Institute for Business Value. IBM.com. 2010. Web. 23 Aug. 2010]