How Home Theater Can Open The Disposable Income Floodgates

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One of the best services a column like this can provide for consumer electronics retailers is to point out new trends — especially if identifying those new trends can lead to new revenue streams.

With the industry descending on the Custom Electronics Designers and Installers Association (CEDIA) Expo this week, an examination of trends and opportunities within the high-end home theater arena is particularly appropriate.

The current profusion of new programs and applications is tracking nicely with the development of new display technologies and devices. It's a strong marriage of content and technology.

What that means for the consumer is an introduction to new forms of display, from bigger and clearer screens to better audio, be it in the home, automobile or office.. The days of mere TVs and VCRs are gone, as are the days of soundless computers. Even 100 video channel systems are quickly vanishing as well.

In their place, especially in the home but also in the vehicle and office spaces, are devices and content that are truly revolutionizing the way Americans receive and display information and entertainment. At home, where Americans spend so much time in front of traditional TVs, think of the added dedication that will come from consumers who can also show their still pictures and home movies on HDTV-quality screens with CD-quality surround-sound speakers.

Two key peripheral trends — one permanent and one that will likely be short- to mid-term in duration — are creating exciting opportunities for CE dealers in the high-end home theater sub-sector.

The first, likely to last at least several more quarters, is the effect of a flat or slightly moving economy. When the price of an evening out for a family of four is double the monthly basic cable or satellite bill, people will make do with good audio and video at home, especially in a down economy.

The second trend, and the real driver in home entertainment, is the impact of some prime video ancillary devices, including DBS, DVD, HDTV, personal video recorders, cable set-top boxes, and video on demand (VOD). Similarly, a prime driver in audio is expected to be Dolby Digital 5.1.

When one talks about home theater, the primary focus is on TV. And now that DBS has opened the way for the other developments to follow, look for HDTV to push the home theatre envelope. The trend should snowball as more and more consumers discover the quantum leap that a superior picture and widescreen 16:9 format represents.

Next in line will be DVDs, which allow higher quality sound and images, more content (including directors' cuts) and generally more enjoyment and quality for the price than any prior recording device. PVRs are an additional driver, although they will be generally much less important than DVDs.

Finally, the impact of cable VOD and, in a couple of years, mass distribution of cable set-top boxes at retail, will mean another wave of progress for high-end home theater.

On the audio side of home theater, the impact of five speakers and a deep-bass sub-woofer to shake, rattle and roll the room will be one of the key features that sells the entire concept at retail. A crucial development here is the Dolby Digital 5.1-enhanced audio receiver, featuring those five speaker outputs for the center, front, rear and sub-woofer.

Supporting these product innovations is a positive demographic trend: A huge bubble of tens of millions of so-called Baby Boomers (those born between the late 1940s and early 1960s), whose hearing is waning and whose desire to go out nightly is also on the decline. These are people who will watch more TV, and spend more time at home doing it.

This large population will have amassed a sizeable share of wealth, and as positive word-of-mouth spreads about home theater, they will see the value of investing in a room in their homes where most will spend more time than in their automobiles.

The message is clear: Market that home theatre experience to them now. Get them into your stores now. It's a revenue stream waiting to happen, from an audience that can't wait to learn what it's all about it and what it can do to enhance their lives.

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