Last Thursday was a difficult day for Susumu Kotani, president of Pioneer Corp. He’d only taken over as president in October. And now he had the unenviable job of announcing that the Japnese electronics giant was pulling out of the flatscreen TV market. “It hurts that we have to give up on a business we were leaders in,” he said. “But market conditions changed too suddenly and we couldn’t stay profitable.”

There’s a certain irony in this. Pioneer was not only one of the very first firms to sell flatscreen TVs, but its top-tier Kuro plasma models have been acclaimed as having the deepest black levels of any flatscreen TV. The company’s recent foray into LCD sets also brought it deserved praise.

Besides the global financial recession, the main problem was that Pioneer simply couldn’t close the gap on its competitors. Panasonic has 37 per cent of the flatscreen TV market, Samsung 23 per cent and LG 16 per cent. For the first nine months of 2008, Pioneer was hanging on to a measly 6 per cent and it simply wasn’t enough. So Pioneer called an immediate halt to in-house research and development of flatscreen TVs and said it would close its television manufacturing business altogether by March 2010. The company is to focus on its lucrative car audio business, plus home audio and professional DJ equipment.

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In recent weeks, another electrical giant, Panasonic, also announced the downsizing of its TV production by delaying the opening of a state-of-the-art plasma panel plant near Osaka in Japan – all in a bid to reduce costs. And, with other flatscreen TV makers such as Sony and Toshiba warning of losses, it’s clear that the TV market is far from a sure-fire enterprise.

Yet, only a short while ago, it looked like flatscreen manufacturers couldn’t fail. The boom began in the lead-up to the 2006 Football World Cup, with a flat-panel TV selling every 1.7 seconds in the UK. And when the tournament ended, there was no drop in demand. Sir Stuart Hampson, then the chairman of the John Lewis Partnership, said: “People are turning increasingly to flatscreens and then realising that their second TV in the bedroom looks big and ugly by comparison, so they come back to us and get another one.”

In January 2008, John Lewis reported that flatscreen sales were up 50 per cent on the year – with one 50-inch Samsung digital TV selling every six minutes, for £899.

Despite the downturn, demand is still high. Responding to the mantra that “staying in is the new going out”, many people are investing in home entertainment as the cheaper option to going to the pub or the cinema. The difference now, compared to 18 months ago, is that people want cheap flatscreen TVs. And this may in part be why Pioneer, which had long focused on high-end models, pulled out of the market. It knew it was beaten – especially now that low-cost flatscreens are flooding the market. Asda, for example, is selling a 28in LCD TV for £125 (although the word is that this model has “technical difficulties”). Argos and Tesco are both selling 15in flatscreen LCDs for around £100.

The question is: are cheap flatscreens a false economy? Not according to Sheffield-based Justin Smith of AerialsAndTV.com, who has been in the TV maintenance business for many years. “In my experience, the more expensive makes of TV aren’t that much more reliable, certainly not by a huge amount,” he says. “It’s also worth remembering that flatscreen TVs are far more expensive to repair than the old cathode ray tube sets. So it could even be argued that cheap flatscreens make more sense because they can be written off less painfully.”

Many consumers, however, believe that it’s wiser to spend more. Happy customer Mike Charters invested in a Pioneer Kuro last year, which set him back well over £1,000. “Pioneer makes some of the best TVs in the world,” he says. “Very expensive, but you get what you pay for.” Jim Hill, reviews editor at T3 Magazine, echoes this point. “The problem with going for low-cost flatscreens is that you could run into reliability issues,” he says. “The best bet is to go for a known brand and make sure that it is HD-ready, has a built-in Freeview tuner, and ideally is 1080p [definition rating] if you’re looking at a 40in or above screen size, ready to receive full high-definition signals."

To meet these specifications, you would need to pay about £500 for an LCD model and about £700 for a plasma – perhaps less if you can find a good deal online.

Although Pioneer had turned recently to making LCD sets, it mainly focused on making plasma TVs, which tend to be more expensive. The jury is out as to which is best. Some swear by plasma, others by LCD – which technology you choose is down to personal preference. LCDs are typically no larger than 52in (bigger sets are in development), and usually give a slightly clearer picture in smaller models. Plasma sets tend to be bigger than LCDs, with screens ranging up to about 71in, and typically have better contrast.

The real differences lie in how the two TVs work. LCD (liquid crystal display) sets use a network of hundreds of thousands of tiny LCD pixels to create the picture you see, while plasma TVs create images from plasma (xenon and neon gas), which is housed between two plates of glass.

Until the first flatscreens hit the market in 1997, TV sets had long used one system to produce the picture – the cathode ray tube (CRT), which was invented in 1897. The Scottish inventor John Logie Baird is credited with the first demonstration of television technology in 1925. CRTs reigned supreme up to the 21st century, but now they are going the way of the dinosaurs.

The problem is that CRT televisions are weighty and bulky. They can never be truly slimline. Flatscreens are lighter and are getting ever slimmer. Sony has just announced its latest Bravia LCD flatscreen – the ZX1, which is 9.9mm thick, one-sixtieth the depth of a typical 1950s CRT set.

But, as a Sony spokeswoman points out: “It’s not just worth having because it’s the thinnest. In terms of innovation and the technology used, it’s fantastic.” This is no exaggeration; the ZX1 is certainly cutting-edge. Not only does its image blur reduction technology provide a strikingly crisp, sharp picture, but it’s fully wireless so that you can forget about ugly cables and images can be streamed to the screen remotely from a set-top box. With a price tag of just under three grand, though, it’s hardly a budget buy. So if you’re planning on staying in over the coming months, follow our guide to get the most from your money when buying a flatscreen.

Picture this: A buyer’s guide

How big?

To work out the best size set for your room, you need to take your viewing distance into account. |If you sit too close to a large TV, the picture can appear fuzzy or grainy. Sit too far away and you’ll miss the fine details and won’t be able to read small text.

The general rule is that your TV should be one-third to |one-half the length of your viewing distance (don’t forget that TV screens are measured diagonally). Therefore, if you sit eight feet away from your TV, the ideal screen size is between 32in and 48in.

Full-screen or widescreen?

Most TVs today are widescreen , but some cheaper models still come as full-screen, a squarer shape more like CRT sets used to be.

These are fine for kitchen or bedroom use. Full-screen TVs have a width-to-height ratio of 4:3, or four inches of width for every three inches of height. Wide-screen TVs have a 16:9 ratio, which is the preferred size for super-sharp HDTV (high-definition television).

LCD or plasma?

The most popular types of TV today are LCD and plasma. The jury is out on which is best. But the simplest way to decide which to go for is by the size of TV set you need. Few plasmas are made smaller than 42in, while LCDs don’t usually come much bigger than 52in.

Other factors to consider

* In a darkened room, plasma TVs have better contrast and brightness than LCD screens. So if you plan |on watching movies regularly with family or friends, plasma might be your best bet. LCD TVs, on the other hand, generally reflect less light and glare, so they fare better in more normal light conditions.

* Plasma TVs are better for wider viewing angles. With LCDs, some brightness can be lost if you are sitting to the side of the screen.

* Plasma TVs are considered better for definition of movement – a key benefit for sports and |action-movie fans. Early LCDs suffered from motion-response lag, where individual pixels are slightly out of synchronisation with the image on screen, causing ghosting and trailing movement. But LCD technology has advanced greatly and now any difference is negligible.

* If you plan to use your TV with gaming consoles or as a computer monitor, LCD may be the best option. Plasma is not great with static images, whereas LCD displays them perfectly, with full colour detail, no flicker, and no risk of screen burn-in. But, again, technological improvements are making these differences far less pronounced.

* LCD TVs typically use less power than plasma screens – and use about 60 per cent less juice than traditional CRT televisions.

* If in doubt which technology to go for, get a TV store to run an LCD and plasma side by side, if possible in different lighting conditions, and then make your judgement.