NEW YORK – Sales of HTiB systems are plummeting, cannibalized more than expected by rising sales of soundbars, marketers and analysts said.
HTiBs consist mostly of models with integrated Blu-ray player, but they also include receiver/speaker packages without Blu-ray player. HTiB sales peaked in 2003 at a factory-level $961 million, but 2014 sales fell an estimated 62.7 percent to $205 million, and they’re forecast to fall another 22 percent in 2015 to a mere $160 million, according to CEA’s January 2015 CE Sales and Forecasts.
“HTiB sales are being severely undermined by soundbars,” said Futuresource analyst Jack Wetherill. “Initially, they were introduced as an additional option for those who wanted to improve the sound of their flat-panel TVs, appealing to those who did not fancy the wiring and space implications involved in HTiBs and component home theater systems.”
Now, however, soundbars are eating into HTiB sales for multiple reasons, Wetherill said.
The growth of audio/video streaming through smart TVs and settop media streamers has “seriously undermined” the need for Blu-ray-equipped HTiBs, he said. Soundbars have also gained in performance and functionality, gaining much of the functionality of HTiBs, such as built-in audio/video streaming, Bluetooth streaming, wireless multiroom-audio capability, and HDMI video switching, he and others said.
Perhaps just as important, “soundbars are a good example of where consumers are prepared to sacrifice quality for convenience,” Wetherill said. “Many soundbars do not match the surround-sound experience offered by HTiBs, but they’re good enough for many consumers, especially now that discs are fading away.”
An LG spokesperson agreed. “Many are willing to sacrifice ‘true’ surround sound for the convenience and sleek form factor of these other solutions as long as the performance is satisfying to them.”
A Samsung spokesman agreed that soundbar growth “accounts for a large portion of HTiB’s decline,” in large part because of their simplicity. In addition, the spokesman said, “As soundbar sound quality has improved, and we’ve been able to offer more flexible solutions with features such as wireless connectivity to the subwoofer and select TVs, the HTiB segment has been impacted.”
In 2014, Futuresource expect soundbars to outsell HTiBs by more than 6:1 in units.
Some of the HTiB decline was selfinflicted. “Retailers latched onto soundbars, and it became much harder to find HTiBs at retail,” Wetherill said. “Brands responded by scaling back their HTiB activities.”
Robert Goedken, general manager of Yamaha Corp. of America A/V division, agreed that suppliers have scaled back. “Retailers reduced the floor space that they allotted to the plethora of HTiBs as soundbar sales increased. So, as time went on, with limited floor space, the weaker HTiB manufacturers were not able to place an HTiB at retail if the sellthrough wasn’t there.”
HTiB’s rapid decline, however, “has mainly come from the rise in soundbar sales,” Goedken said. “There has been a pretty direct correlation between these changes in the two markets over many years.” Soundbars gained because they “offer ease of installation with virtual surround that resonates with customers who initially don’t want the hassle of installing rear speakers and are willing to sacrifice the performance that a component system would provide,” he said. “The benefits of soundbars, including the soundbar form factor that better matches to TVs, fewer wires, etc. are certainly contributors.”
LG’s spokesman agreed. “HTiB’s decline is due to a variety of factors,” he said. “The most important factor is probably the influx of supplementary sound products such as sound bars and Sound Plates, which come in at similar price ranges and offer enough audio performance for that target audience. LG has numerous products in each of those categories, even some that include streaming services. “
HTiB sales will be further impacted by soundbars that can be used with wireless surround speakers such as LG’s MusicFlow wireless multiroom-audio speakers, LG added. MusicFlow speakers, which let users slowly build a full surround sound system by adding supplementary speakers over time, “are going to further encroach on the HTiB market because of the additional flexibility they provide,” LG said.
Despite the HTiB decline, Goedken isn’t sure HTiBs will become extinct. “The market could settle down and could go forward indefinitely, just on a smaller scale,” he said. “In fact, Yamaha has taken an approach where we are now taking Yamaha soundbar technologies and implementing them into our HTiBs (receiver/speaker packages) so that customers get the best of both worlds – simple all-in-front speaker placement with the performance of a component system.” Yamaha’s Virtual Cinema Front technology enables all five speakers to be placed in front “while still offering a very good surround experience,” he said.
Wetherill also believes HTiBs “will hang in there for a while to come.”
Bridge Too Far?
If so, HTiBs will remain a potential gateway for consumers to step up to full-blown component-based home theater systems, Wetherill said. “There may be a concern that – if the HTiB market disappears altogether – there’ll be a gulf between soundbars and component systems that will be hard to bridge for the consumer,” Wetherill explained.
Yamaha’s Goedken, however, believes soundbars will be a gateway to component systems. “We still see that the ‘gateway’ applies even to soundbars, meaning soundbar customers do upgrade to AVRs,” he said. “Many soundbar customers come to realize that there are better sounding systems out there and do upgrade.”
Before The Bar Battle
Sales of HTiBs were already on the decline before the soundbar explosion, CEA statistics show, but the soundbar uptake accelerated the decline. Factory-level unit sales of HTiBs fell every year but one since 2005, well before the soundbar onslaught began. Soundbars sales didn’t come into their own until 2010, when sales jumped 325 percent to 670,000 units. After that, the HTiB decline accelerated, the statistics show.
Before the soundbar explosion, HTiB sales started to slide in part due to market maturity, given the high household penetration rate of surround-sound systems of any type. A November 2014 survey by Loudhouse (Loudhouse.co.uk) found that 52 percent of U.S. consumers ages 18 to 65 own a surround-sound system.
Practical objections by consumers, however, also played a role in the slowdown, marketers said. Many rooms aren’t laid out to accommodate multiple speakers in the locations that deliver optimum surround sound. Many consumers also don’t want to clutter up a room with five or more speakers, or they find it impractical to run speaker cables around a room to surround speakers. Wireless surround speakers didn’t seem to help much.
In the beginning, HTiBs were hailed as expanding the appeal of surround-sound systems to more consumers because of a simplified purchasing decision. Consumers had to shop for only product instead of separately buying and matching an A/V receiver, 5.1 speakers and a DVD or Blu-ray player.
But soundbar purchases are just as simple, and the cosmetic appeal and simplicity of setup seems to be strong enough to lure many consumers away from HTiBs.
And lure away suppliers.
Reflecting lower consumer and retailer demand, suppliers scaled back their HTiB selections at International CES to concentrate more on soundbars. Many suppliers are limiting their Blu-ray-integrated HTiB selections to systems at prices of $599 or less. Samsung, for instance, will top out its 2015 HTiB line at $599, and Panasonic’s web site shows models that top out at $349.
At CES, Samsung scaled back its HTiB selection to three from five with the launch of two new models and a planned carryover, but the company expanded its soundbar selection to 10 SKUs from seven with carryovers. LG expanded its soundbar selection to six from four, but LG’s HTiB selection went to three from four with the launch of two new models joining a carryover. Its line will top out at $699
For its part, P&F has introduced some Philips-brand home theater products that reflect market shifts. They include the HTiB-like $399 Zenit CSS5530 system, which lacks integrated Blu-ray player but features barlike console with embedded center-channel speaker, separate left-right speakers, wireless surround speakers, wireless subwoofer, Dolby Digital and DTS 5.1 decoding, and one HDMI input and output. P&F also launched a Fidelio-series soundbar with surround decoding and detachable wireless surround speakers. The $899 B5 features three speaker channels embedded in the main bar and two Bluetooth wireless speakers that detach from the main bar for use as discrete surround speakers.
Both products underscore the changes in the market for home-theater audio.