Good News, Bad News In The Component-Audio Market

The audio-component industry is ending the year with some good news and some bad news.

Consumer spending on audio components is rising once again after last year’s sharp downturn, but it’s not rising quickly enough to prevent another industry consolidation: the purchase by Amplifier Technologies of the brand name and key assets of B&K Components.

What accounts for this year’s turnaround? Coming off a miserable 2009 is one reason. Factory-level component-audio sales fell 25 percent in 2009 to $882 million, Consumer Electronics Association (CEA) statistics show. In its midyear forecast, CEA contends sales will rise 4 percent this year to $915 million to reverse two consecutive years of decline, although some suppliers believe sales are rising a little faster.

Other factors are also contributing to the upturn. For one thing, consumers are getting annoyed with ever-thinner flat-screen TVs whose speakers are challenged to deliver intelligible dialog. Another is that consumer

Consumers have updated their TVs, Blu-ray player and set top boxes and found their old components didn’t have the HDMI connections or the surround-sound decoders to deliver the best possible picture or audio quality. iPod connectivity, networking with PC-stored content, Internet radio, and other factors are also fueling the replacement cycle.

Rising consumer interest in quality two-channel audio is also delivering new sales, thanks in part of A/V specialists who have begun refocusing on their core business: the high-quality reproduction of music. Burnt by the custom-install collapse and chastened by low video margins, these dealers have been running “music matters” promotions in which consumers are invited to in-store events focused on music listening.

Perhaps through such events, audio-component retailers and suppliers could capture the interest of consumers who listen to iPods through headphones and through iPod-docking speaker systems. Capturing even a small percentage of those consumers could produce big gains, given that more people are listening to more music through portable players now than ever.

Hats off to Seattle’s Definitive Audio and Denver’s Listen Up for running these types of retail promotions.