Prices have continued to drop substantially this year. According to the research firm iSuppli, the average retail price of 42-inch HDTVs — one of the most popular sizes this year — has declined to $1,522 from $1,844 last Christmas, an 18 percent drop.

Prices will continue to fall, industry analysts say, because the retailers are powerless to prevent the declines. Not only is retail competition fierce, but flat- panel TV manufacturers, especially the Taiwanese contract manufacturers, continue to build new plants and expand production, which has created a glut in panels.

The price promotions by the minor makers propelled Vizio from the No. 4 L.C.D. television maker in the American market in the first quarter of 2007 to the best-selling maker in the second quarter of 2007. “Half the reason that consumers buy our sets is because of lower prices,” said William Wang, Vizio’s chief executive. “But our goal was never to compete on price only. We have a great product.”

While this is great news for consumers, it is not what retailers want to hear. The impact of the low, sometimes negative, profit margins has been devastating to many of them. For example, Tweeter increased its unit sales of televisions during last year’s Christmas selling season by 15 percent over the previous Christmas. Profit margin in the video category, said Mr. McGuire, was “down substantially on a year-over-year basis due to the intense competition in the category” and in June, the company sought protection from creditors in bankruptcy court. It was sold in July to Schultze Asset Management, an equity buyout firm.

Other chains were affected as well. At Circuit City, video sales dropped from 42 percent of overall sales in 2006, to 39 percent in its first quarter, ended May 31. To cut costs, the company laid off some of its higher-paid veterans in sales. “In some cases those people were not any more productive than lower-paid people,” said Bill Cimino, a Circuit City spokesman.