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Home Theater Demand At All-Time High

Demand for home theater-quality video products is running at an all-time high, but falling prices are significantly eroding the revenue benefit for manufacturers, according to unit sales figures reported by CEMA

Factory sales of home theater video products (direct-view color 25″ & over, projection TV, Hi-Fi VCRs and DVD players) rose 16.3% in the second quarter to $1.87 billion. When combined with a 3.5% increase in related audio products to $176 million, the value of electronics sales for the home theater market was $2.04 billion, up 15.1%, CEMA said.

For the first half the total market was up 6.4% to $3.86 billion. Video hardware sales rose 7.8% to $3.51 billion, despite a decline in revenue from direct-view color and Hi-Fi VCRs.

Audio product sales fell 5.9% to $348 million, as a rising demand for quality amps, separates and surround-sound amps failed to offset the impact of a drop in revenue from sales of speakers. CEMA said the dollar value of sales of surround amps was up 5% for the half to $196 million.

As for price erosion, available data shows the average factory price of a projection TV sold in the second quarter was $1,357. That was down by $124, or 8.5%, from the same period last year and followed a first-quarter pricing drop of 7.8%, or $118, to $1,403.

DVD player pricing has had an even more dramatic decline. The pricing average for the second quarter was $275. That was down by $114, or 29.2%, from the same year-earlier period and came in the wake of a 27%, or $121, drop in the first quarter’s pricing average to $329.