Bigger TVs and high-def DVDs.

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I grew up at a time when a TV screen covered about half as much area as the wood in which it was encased. (Insert your own joke here about the thrill of watching pictures in color for the first time.) The advent of HDTV, however, has led to a steady increase in screen sizes in the home. According to the Consumer Electronics Assn., about 42% of all TVs had screens at least 36’ in diagonal by the end of 2006; within five years, more than half of all TVs will be at least that big. The trend has been spurred by rapidly dropping prices for large sets; according to the CEA, the average price of a digital TV is expected to drop to $901 this year, down from $1,540 in 2002. The biggest drop has been in plasma sets, which fell from nearly $5,000 on average in 2002 to about $1,500 this year.

Already, the most popular size of plasma screen is 50’-59’, according to a new report by Quixel Research, a market research firm that focuses on flat-panel TV sets. (Plasmas make up about 20% of the market.) More than 55% of the plasma sets sold in the second quarter of this year were in that size range, and about two-thirds were that size or larger, Quixel found. That’s just stunning to me, although my colleague David Colker suggests it has more to do with LCD TVs’ growing dominance in the sub-50’ range than anything else.

At any rate, consumers’ appetite for ever-larger flat panels is good news for Hollywood and the consumer electronics industry as they struggle to establish a high-def beachhead in home video. The bigger the screen, the greater the difference between standard-def pictures and high-def ones. A standard-def DVD looks great on a 36’ or 42’ screen, which means there’s not much incentive for the owner to invest in a pricey Blu-ray or HD DVD player. On 50’ and above, however, the extra details and color depth are more apparent. Now if the studios and set-makers can just figure a way out of the format war between Blu-ray and HD DVD, maybe consumers with new big-screen TVs will get off the sidelines and buy a high-def disc player, increasing sales volumes, driving down prices and feeding the kind of virtuous cycle that turned DVD players into a juggernaut.

The image is of a Pioneer Kuro 50’ plasma TV, courtesy of Pioneer Corp.