Margins Getting Even Slimmer On Mobile Video

Mobile video prices are falling more rapidly than anticipated, bringing the category to a quick maturity, suppliers said.

Average prices have fallen by $100 in both in-dash monitors and headrest monitors and by about $150 in overhead pods since January, according to The NPD Group, Port Washington, N.Y.

Suppliers say the price erosion is due to high demand. "It's a natural progression in consumer electronics when you have a product with high appeal, that is easy to understand, where the value proposition is strong. So consumers want the product," said Alpine marketing VP Stephen Witt. " Manufacturers look for a way to capitalize on that demand."

Part of the category's rapid maturity has also been driven by the OEMs "quickly mobilizing factory-installed systems and dealer-installed accessory programs," he added.

Rosen Products president/CEO Tom Clements said, "The price pressure, this season has been particularly severe." He blamed the influx of off-shore products "that anyone can buy and put their name on, and so a number of small companies have done so."

Sales in mobile video continue to rack up 10 percent dollar gains (year to date), according to NPD, creating an oasis in an otherwise down market. But the low margins are stopping some suppliers from reaping the benefits.

Memphis Car Audio product manager Jeff Triplett said the company will not offer mobile video products. "There're just no margins for anybody. It's extremely competitive, to the point of being cutthroat. It's not a product line we wish to pursue," he said. JL Audio also said it had no plans for mobile video. Boston Acoustics said it has no plans at present, although it "it looks at all avenues of the market," said senior VP Rob Ain.

JBL says it is eyeing the market, as parent Harmon International builds OEM screens. But JBL brand marketing director, Chris Dragon said, "This category drove itself into maturity so fast it's not profitable. The average price of car video is $488, and that's being completely driven by bag systems."

Portable "video-in-a-bag" systems account for over half the market, according to one industry member. The average selling price is only about $300, compared with an average sale price of $1,339 for an in-dash video screen. Sales of "bag systems" are up 47 percent in dollars this year and 50 percent in units, according to NPD. By contrast, in-dash monitor sales are up five percent in dollars and 20 percent in units.

Not all suppliers have been deterred from the market. Kove Audio announced recently it will offer four new mobile video monitors. President Gary Kovner acknowledges the profitability dilemma, but says his customer base requested the products. "We feel by the addition of video, we sell more audio. If a person's buying a Kove audio system and wants a screen, he'll match it, and vice versa," he said.

The new Kove lineup will ship next month, led by a 7-inch headrest monitor at a suggested list of $399. Drop-down monitors will include 8-, 10.4- and 15.2-inch models at prices to be announced.