Consumerscope : Home Audio Sales Better Than Expected
Improving digital sound drives revenueAugust 1, 2010 By Sean Murphy, Senior Account Manager, Market Research, CEA
The prospects for home audio seemed pretty bad about six months ago, following a trend over the last several years that didn't call for too much optimism. But the category is turning around for the better. According to CEA's Industry Forecast, prices are up 5 percent, while unit shipments are down only 1 percent. That's a dramatic improvement based on the 24 percent decline we anticipated in January.
Let's take a closer look at what has caused the change. It may have been understandable, even inevitable, that too many of us prematurely consigned home audio to the ash heap of irrelevance. The supporting plot line, which is certainly compelling, holds that the battle for shelf space and wallet share was decided as soon as consumers committed to video, rather than audio upgrades. And as stark as that assessment might sound, the storyline was even more unfavorable. Digital audio, along with increasingly affordable flat-panel technology, made up an irresistible combination that enticed consumer eyes and ears during the last 10 years. But now that displays and MP3 players have attained a near saturation point in the marketplace, shoppers are more likely to turn their attention to home audio enrichment.
A few years ago, most everyone seemed excited about the the iPod. Everyone, that is, except the majority home audio manufacturers. Their reluctance was somewhat understandable. For a while, it seemed as though the increasingly old-fashioned concept of listening to music through a set of speakers on a system powered by an amplified receiver was going the way of the raptor. The ease and affordablility (in many cases free, via piracy) of digital files played on an MP3 player or PC became the new normal. Home audio was in danger of becoming obsolete.
Or was it? A resurgence of LPs-fueled by nostalgia as well as a reaction to the often atrocious sound quality of audio files - kept the old-fashioned fire burning, while the death of the CD player may have been prematurely declared. It turns out, though, that the digital music revolution could be an ideal gateway to a home audio resurgence. Receivers incorporating MP3 player docks are more commonplace today, and it is conceivable that more consumers will begin embracing this practical-and convenient-remedy for underwhelming audio performance.
CEA's Industry Forecast anticipates home audio revenues of $915 million by the end of this year, a 4 percent year-over-year increase and a refreshing jump from the $863 million we forecasted in January. Home receivers with MP3 player docks look generate about $10 million by year's end, a 93 percent uptick from 2009.