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Outdoor TVs Offer 2013 Margin Potential

4/07/2013 08:00:00 PM Eastern

NEW YORK — In these dire economic times, watching TV in the great outdoors may not seem like a very big priority, but manufacturers of dedicated outdoor TVs said the niche product category is growing and poised for a takeoff.

The weather-resistant category has been embraced by the communities of the well-to-do for a few years now, and more recently has started knocking on the door of mainstream audiences.

A large reason for the success to date has been the more-or-less recession-resistant nature of the custom-installation business — still the primary distribution channel for outdoor sets — and the desire of more and more affluent customers to move their entertaining to the patio or the pool.

In the last two years, however, at least one vendor — SunBrite TV — has started delivering lines of lowercost weatherproof sets to regional A/V chains, in the hope that the middle class will also catch the bug.

Its competitors continue to cater to the custom channel but are watching from the wings, preparing to take the mainstream jump.

“The outdoor-TV market has significant potential,” observed Tamaryn Pratt, Quixel Research principal. “The overall U.S. TV market is slowly growing again, and we will also see more growth in the outdoor-TV segment, especially now that larger panels are available. The [limiting] issue is the lack of manufacturers large enough to have the economies of scale to supply a major new trend, but also nimble enough to take on this segment of the market.”

Pratt estimated that in 2013 the potential market is probably less than 50,000 units for outdoor or water-resistant TVs. But factory revenue from that business is close to $130 million due to higher average selling prices.

Gretchen Gilbertson, Séura CEO, agreed: “Information provided by the American Society of Landscape Architects stated outdoor living spaces received a 94.5 percent rating as somewhat or very popular. As much as one-third of renovation budgets are spent on outdoor spaces, and we are seeing homeowners devoting enormous amounts of money on high-end outdoor furniture, pools and appliances. We believe the industry has been showing growth because a great outdoor space is one of the most requested special spaces when designing or updating a new home.”

Adam Moldberger, Ciil Technologies product manager, said, “It would seem that people are beginning to believe in the idea of outdoor technology and the benefits of using our screens.”

Explaining the reluctance to move headlong into mainstream CE retailing and to stick solely with custom installers at this time, Moldberger said, “The reason is that their sales teams have the training and the knowledge to help the customer make an informed decision. Also, these dealers were the first to pick up on the potential of outdoor TVs. As more and more mainstream retailers, such as big-box stores, come online and train their people, we feel that we will see sales grow in those areas too.”

But Tom Dixon, SunBriteTV marketing VP, said his firm believed the time was right to expand beyond the custom channel using its affordably positioned Signature line.

“Since launching the Signature series, we have experienced exponential growth in consumer markets,” he added. “We have a number of key retailers that are enjoying strong success — PC Richard, Abt, Video Audio Center and High Definition Lifestyles immediately come to mind. In 2013 we expect to see strong growth with a number of regional retailers.”

Other vendors said they may soon begin taking a path similar SunBriteTV.

“It’s the consumer that has the largest growth potential, and Cinios plans to drive this into their hands more in the future,” offered Mike Kroll, Cinios president. “The DIY is already happening due to the substitution factor. We just need to introduce more friendly models.”

As awareness of outdoor A/V entertainment slowly catches on, outdoor-TV manufacturers said one of their largest hurdles is to convince consumers not to buy cheap and easily replaced indoor TVs for the purpose.

“When a designer or consumer sees the difference in picture quality between an outdoor TV and a regular TV, the choice is obvious,” said Gilbertson. “Beyond just the picture quality, seeing an outdoor TV in person really allows the end user to see the durability of the product through its distinct design and features. There’s such a noticeable difference over a conventional flat-panel TV, and it really needs to be seen on display to appreciate it.”

According to vendors, the sweet spot for outdoor TVs ranges between brands.

Within the SunBriteTV Signature line, Dixon said 32- and 46- inch models have generated the most business to date, hitting key price points of $1,495 and $2,795, respectively.

Séura’s Storm series of outdoor TVs is offered in 42-, 47- and 55- inch screen sizes, offering strong imager performance and ample margins ($4,999 to $9,999 suggested retails). Gilbertson said the 42-inch Storm is popular for multipurpose spaces such as an outdoor kitchen or bar while the 55-inch has been popular mounted above fireplaces as well as outdoor lounge areas.

Ciil Tech’s 42- and 46-inch models are “the sweet spot” of the outdoor line, but sales have steadily increased for the 55-inch model more recently.

The biggest sellers in the Cinios Hurricane line are the midrange sizes, with 42 inches at the top and 55-inch next,” Kroll said. “When going outdoors, the viewing distance is greater than the bedroom or small living room, basically alienating use of 32 inches. Yet greater than 55 inches becomes a logistic issue for consumers not only for mounting hardware, but also to find a suitable location in the backyard.”

Quixel’s Pratt observed that while P.C. Richard, Abt and others have done a great job with the category, “other strong regional and national retailers have not jumped on board because they view this as a risky proposition. From an inventory point of view, most retailers consider it prudent to offer several low-priced models and let consumers replace them each year, or move them inside after each use.”

Dixon said that SunBriteTV will continue to challenge the notion that outdoor TVs are still the exclusive domain of custom installers.

“From the consumer’s perspective, the outdoor TV is simply another outdoor appliance,” Dixon said. “So we are seeing consumers looking outside of the traditional A/V space in purchasing outdoor products. We still see custom installers as an integral part of the process, but not in the early part of the purchase cycle.”

For those A/V chains and specialty dealers looking to get into outdoor TV, Dixon said the most successful dealers general merchandise multiple SunBriteTV models on retail floors.

“The retailer margin potential on SunBriteTVs is far superior to indoor televisions,” Dixon pointed out. “One retail buyer told us ‘Our margins are fantastic — it’s like turning back the clock to the margins we made [on flat-panel TV] back in 2003.’ ”

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