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Home Theater Hardware - US - December 2010

Despite recession-driven cutbacks in spending, the market for home theater hardware has continued to grow, thanks to game-changing technologies that vastly improve the home viewing experience. However, hardware sales face increasing competition from alternative content sources. Furthermore, evolving means of content distribution threaten to make some types of hardware redundant.

In this exclusive report, Mintel takes a look at the innovations and consumer attitudes that will shape the home theater hardware industry for years to come.

Analysis and insights offered include:

  • Which types of hardware are accelerating in adoption
  • Which alternatives reduce the need for home theater purchases
  • Which innovations are differentiating new products
  • How major players are approaching the battle for internet TV
  • What percentage of respondents have access to the newest technologies
  • How many consumers are still resistant to the Blu-ray upgrade
  • How many consumers prefer digital transmission over physical discs
  • What barriers prevent further adoption of internet TV
  • Which demographics place importance on high quality home theater audio

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Market growth driven by increasing adoption of new technologies
                        • Blu-ray and digital media adapters see momentum despite low consumer confidence
                          • Alternative content sources and viewing platforms offer competition
                            • Positive brand perceptions translate to greater ownership
                              • Chain electronic stores and mass merchandisers dominate distribution
                                • Recent marketing focuses on 3D technology and consumer education
                                  • Innovations continue in Blu-ray features and DMA launches
                                    • Penetration of Blu-ray and DMAs remains low
                                      • Significant minority feels that Blu-ray is unnecessary
                                        • Preference of digitally-transmitted movies over discs is limited
                                          • Low perceived value prevents increased adoption of digital transmission
                                            • Males, higher-earners, and families show more interest in home audio
                                              • Asian respondents show stronger interest in and usage of most types of hardware
                                              • Insights and Opportunities

                                                • Reaching dads is key to tapping family demographic
                                                  • Some consumers want it made easy
                                                    • Internet TV services face barriers in competing with Blu-ray
                                                      • More internet viewing may create demand for better desktop audio
                                                      • Inspire Insights

                                                          • Trend—Decline of Deference
                                                          • Competitive Context

                                                            • Alternative sources of content challenge need for Blu-ray
                                                              • TVs with built-in functionality
                                                                • Gaming systems
                                                                  • Cable providers increase content but are threatened by DMA services
                                                                    • Internet and cinema technologies draw viewers away from the television
                                                                      • Watching on the computer
                                                                        • 3D movies at the cinema
                                                                        • Market Size and Forecast

                                                                          • Game-changing technologies drive market forward despite recession
                                                                            • Sales and forecast of market
                                                                              • Figure 1: U.S. factory sales and forecast of home theater hardware, at current prices, 2006-14
                                                                              • Figure 2: U.S. factory sales and forecast of home theater hardware, at inflation-adjusted prices, 2006-14
                                                                            • Fan-chart forecast
                                                                                • Figure 3: Fan-chart forecast for home theater hardware, 2006-2014
                                                                            • Market Drivers

                                                                              • Adoption of innovations not deterred by low consumer confidence
                                                                                • HDTV penetration and Blu-ray content explode
                                                                                    • Figure 4: Ownership of and intent to buy HDTVs and Blu-ray players, September 2010
                                                                                  • HTIB grows at the expense of components
                                                                                    • Figure 5: Trends in ownership of home theater audio hardware, 2006-09
                                                                                  • Significant minority of consumers happy with “good enough”
                                                                                    • Digitally transmitted content services add extra functionality to hardware
                                                                                    • Segment Performance

                                                                                      • Blu-ray surpasses standard definition DVD in dollar factory sales
                                                                                        • Sales by segment
                                                                                          • Figure 6: U.S. factory sales of home theater hardware, segmented by type, 2008 and 2010
                                                                                          • Figure 7: U.S. factory sales of home theater hardware, by segment, 2006-14
                                                                                      • Segment Performance—Blu-ray Players

                                                                                        • Unit sales of Blu-ray players increase fourfold in two years as prices decline
                                                                                          • Blu-ray sales and forecast
                                                                                            • Figure 8: U.S. factory sales and forecast of Blu-ray players*, at current prices, 2006-14
                                                                                            • Figure 9: U.S. factory unit sales of Blu-ray players*, at current prices, 2006-10
                                                                                        • Segment Performance—DVD Players/Recorders

                                                                                          • Standard definition DVD exhibits slow decline
                                                                                            • Standard definition DVD sales and forecast
                                                                                              • Figure 10: U.S. factory sales and forecast of DVD players/recorders, at current prices, 2006-14
                                                                                              • Figure 11: U.S. factory unit sales of DVD players/recorders, at current prices, 2006-10
                                                                                          • Segment Performance—Separate Audio Components

                                                                                            • Soundbars drive growth of an otherwise stagnant segment
                                                                                              • Separate audio components sales and forecast
                                                                                                • Figure 12: U.S. factory sales and forecast of separate audio components, at current prices, 2006-14
                                                                                            • Segment Performance—Home-Theater-in-a-Box

                                                                                              • HTIB sales erratic as consumers cutback on extra purchases
                                                                                                • HTIB sales and forecast
                                                                                                  • Figure 13: U.S. factory sales and forecast of home-theater-in-a-box systems, at current prices, 2006-14
                                                                                                  • Figure 14: U.S. factory unit sales of home-theater-in-a-box systems, at current prices, 2006-10
                                                                                              • Segment Performance—Digital Media Adapters

                                                                                                • Appeal of internet TV drives rapid growth of DMA unit sales
                                                                                                  • DMA sales and forecast
                                                                                                    • Figure 15: U.S. factory sales and forecast of digital media adapters, at current prices, 2006-14
                                                                                                    • Figure 16: U.S. factory unit sales of digital media adapters, at current prices, 2006-10
                                                                                                • Leading Brands

                                                                                                  • Sony and Bose are the most positively perceived brands
                                                                                                    • Figure 17: Ownership and perceptions of home theater brands, by gender, September 2010
                                                                                                  • Under-35s more likely to buy Sony, Samsung, and LG
                                                                                                    • Figure 18: Ownership of home theater brands, by household income, September 2010
                                                                                                • Retail Distribution

                                                                                                  • Chain electronics stores and mass merchandisers dominate distribution
                                                                                                    • Figure 19: Where home theater hardware is purchased, September 2010
                                                                                                  • Men more likely to buy hardware online
                                                                                                    • Figure 20: Where home theater hardware is purchased, by gender, September 2010
                                                                                                  • Higher earners more likely to buy at chain electronics stores and online mass merchandisers
                                                                                                    • Figure 21: Where home theater hardware is purchased, by household income, September 2010
                                                                                                • Marketing Strategies

                                                                                                  • Overview
                                                                                                    • Figure 22: Adspend of leading home theater hardware brands, 2008-09
                                                                                                  • Television advertising
                                                                                                    • Samsung
                                                                                                      • Sony
                                                                                                        • Figure 23: Sony 3D Products, television ad, June 2010
                                                                                                        • Figure 24: Sony Google TV, television ad, October 2010
                                                                                                      • Bose
                                                                                                        • Figure 25: Bose CineMate GS, television ad, October 2009
                                                                                                      • Online advertising
                                                                                                        • Major manufacturers incorporate visual sophistication and social media
                                                                                                          • DMA websites educate consumers and highlight points of differentiation
                                                                                                          • Innovation and Innovators

                                                                                                            • Blu-ray players—New features differentiate home theater options
                                                                                                              • Home audio—Bose launches first built-in home theater system
                                                                                                                • Internet TV—Innovation in web integration drive DMA sales
                                                                                                                  • Roku
                                                                                                                    • Apple TV (iTV)
                                                                                                                      • Google TV
                                                                                                                        • Boxee
                                                                                                                          • Figure 26: Comparison of content sources accessible via internet TV platforms, October 2010
                                                                                                                      • Device Ownership

                                                                                                                        • Blu-ray—Next generation technology carries high awareness and intent to buy
                                                                                                                          • Figure 27: Ownership of physical disc players, September 2010
                                                                                                                        • Home audio—HTIB shows higher intent to buy than components
                                                                                                                          • Figure 28: Ownership of home audio hardware, September 2010
                                                                                                                        • Digital media adapters—Roughly half of respondents not aware of most brands
                                                                                                                          • Figure 29: Ownership of digital media adapters and other internet streaming hardware, September 2010
                                                                                                                        • Under-45s more likely to adopt new home theater technologies
                                                                                                                          • Figure 30: Ownership of home theater hardware, by age, September 2010
                                                                                                                          • Figure 31: Average number of set-top boxes owned, by age, September 2010
                                                                                                                        • Presence of children is a strong driver for home theater ownership
                                                                                                                          • Figure 32: Ownership of home theater hardware, by presence of children in the household, September 2010
                                                                                                                          • Figure 33: Average number of set-top boxes, by household size, September 2010
                                                                                                                      • Attitudes Toward Blu-ray

                                                                                                                        • Unmatched video quality and disc collecting favor continued Blu-ray growth
                                                                                                                          • Figure 34: Usage of and attitudes toward Blu-ray, September 2010
                                                                                                                        • Under-45s more likely to use Blu-ray and collect movies on disc
                                                                                                                          • Figure 35: Usage of and attitudes toward Blu-ray, by age, September 2010
                                                                                                                      • Digital Movie Transmission

                                                                                                                        • 25-44 year-olds are earliest adopters of third-party video services
                                                                                                                          • Figure 36: Usage of digital movie transmission services, by age, September 2010
                                                                                                                        • Only small minority favor digital transmission over physical discs
                                                                                                                          • Figure 37: Attitudes toward digital movie transmission services, by age, September 2010
                                                                                                                      • Barriers to Digital Adoption

                                                                                                                        • Low perceived value is greatest barrier to digital movie services
                                                                                                                          • Figure 38: Reasons movies are not ordered digitally, by gender, September 2010
                                                                                                                        • Movie selection and video quality more of a concern for younger users
                                                                                                                          • Figure 39: Reasons movies are not ordered digitally, by age, September 2010
                                                                                                                        • Low perceived value expressed by respondents of all income levels
                                                                                                                          • Figure 40: Reasons movies are not ordered digitally, by household income, September 2010
                                                                                                                      • Home Audio

                                                                                                                        • Component audio and soundbar systems may benefit from better positioning
                                                                                                                          • Figure 41: Attitudes toward home audio, by gender, September 2010
                                                                                                                        • Under-45s more likely to store digital media
                                                                                                                          • Figure 42: Attitudes toward home audio, by age, September 2010
                                                                                                                        • Higher-earners more likely to value high-quality sound and component systems
                                                                                                                          • Figure 43: Attitudes toward home audio, by household income, September 2010
                                                                                                                        • Respondents with children more likely to value high-quality sound and media storage
                                                                                                                          • Figure 44: Attitudes toward home audio, by household size, September 2010
                                                                                                                        • Under-35s more likely to value MP3 capability on home theater systems
                                                                                                                          • Figure 45: Using audio inputs with home theater systems, by age, September 2010
                                                                                                                      • Impact of Race and Hispanic Origin

                                                                                                                        • Key points
                                                                                                                          • Asian respondents more likely to be early adopters
                                                                                                                            • Ownership and usage
                                                                                                                              • Figure 46: Ownership of home theater hardware, by race and Hispanic origin, September 2010
                                                                                                                              • Figure 47: Average number of set-top boxes, by race and Hispanic origin, September 2010
                                                                                                                            • Attitudes toward Blu-ray
                                                                                                                              • Figure 48: Usage of and attitudes toward Blu-ray, by race and Hispanic origin, September 2010
                                                                                                                            • Digital movie transmission
                                                                                                                              • Figure 49: Usage of digital movie transmission services, by race and Hispanic origin, September 2010
                                                                                                                              • Figure 50: Attitudes toward digital movie transmission services, by race and Hispanic origin, September 2010
                                                                                                                            • Home audio
                                                                                                                              • Figure 51: Attitudes toward home audio, by race and Hispanic origin, September 2010
                                                                                                                          • Cluster Analysis

                                                                                                                              • Hi-Qualities
                                                                                                                                • Demographics
                                                                                                                                  • Characteristics
                                                                                                                                    • Opportunity
                                                                                                                                      • Lo-Qualities
                                                                                                                                        • Demographics
                                                                                                                                          • Characteristics
                                                                                                                                            • Opportunity
                                                                                                                                              • Moderates
                                                                                                                                                • Demographics
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Cluster characteristics
                                                                                                                                                        • Figure 52: Home theater clusters, September 2010
                                                                                                                                                        • Figure 53: Ownership of home entertainment hardware, part 1, by home theater clusters, September 2010
                                                                                                                                                        • Figure 54: Ownership of home entertainment hardware, part 2, by home theater clusters, September 2010
                                                                                                                                                        • Figure 55: Average number of set-top boxes, by home theater clusters, September 2010
                                                                                                                                                        • Figure 56: Usage of and attitudes toward Blu-ray, by home theater clusters, September 2010
                                                                                                                                                        • Figure 57: Usage of and attitudes toward digital movie transmission services, by home theater clusters, September 2010
                                                                                                                                                        • Figure 58: Attitudes toward home audio, by home theater clusters, September 2010
                                                                                                                                                      • Cluster demographics
                                                                                                                                                        • Figure 59: Home theater clusters, by gender, September 2010
                                                                                                                                                        • Figure 60: Home theater clusters, by age, September 2010
                                                                                                                                                        • Figure 61: Home theater clusters, by household income, September 2010
                                                                                                                                                        • Figure 62: Home theater clusters, by race, September 2010
                                                                                                                                                        • Figure 63: Home theater clusters, by Hispanic origin, September 2010
                                                                                                                                                      • Cluster methodology
                                                                                                                                                      • Custom Consumer Groups

                                                                                                                                                        • Within family households, dads make a better target than moms
                                                                                                                                                            • Figure 64: Ownership of home audio hardware, by gender and presence of children in the household, September 2010
                                                                                                                                                            • Figure 65: Average number of set-top boxes, by gender and presence of children in the household, September 2010
                                                                                                                                                            • Figure 66: Usage of and attitudes toward Blu-ray, by gender and presence of children in the household, September 2010
                                                                                                                                                            • Figure 67: Attitudes toward digital movie transmission services, by gender and presence of children in the household, September 2010
                                                                                                                                                            • Figure 68: Attitudes toward home audio, by gender and presence of children in the household, September 2010
                                                                                                                                                        • Appendix—Other Useful Consumer Tables

                                                                                                                                                          • Retail distribution
                                                                                                                                                            • Figure 69: Where home theater hardware is purchased, by age, September 2010
                                                                                                                                                          • Attitudes toward Blu-ray
                                                                                                                                                            • Figure 70: Usage of and attitudes toward Blu-ray players, by household income, September 2010
                                                                                                                                                            • Figure 71: Usage of and attitudes toward Blu-ray players, by gender, September 2010
                                                                                                                                                        • Appendix—Trade Associations

                                                                                                                                                          Companies Covered

                                                                                                                                                          • Amazon North America
                                                                                                                                                          • Apple, Inc
                                                                                                                                                          • Bose Ltd
                                                                                                                                                          • Consumer Electronics Association
                                                                                                                                                          • Custom Electronic Design & Installation Association
                                                                                                                                                          • Cyber Security Industry Alliance
                                                                                                                                                          • DEG: The Digital Entertainment Group
                                                                                                                                                          • Dell Inc.
                                                                                                                                                          • Electronic Industries Alliance
                                                                                                                                                          • Facebook, Inc.
                                                                                                                                                          • Google, Inc.
                                                                                                                                                          • Harmon Kardon
                                                                                                                                                          • LG Electronics
                                                                                                                                                          • Logitech Inc.
                                                                                                                                                          • Microsoft Corporation
                                                                                                                                                          • Motion Picture Association of America
                                                                                                                                                          • National Association of Theater Owners (NATO)
                                                                                                                                                          • National Basketball Association
                                                                                                                                                          • Netflix, Inc.
                                                                                                                                                          • Nintendo of America Inc.
                                                                                                                                                          • Panasonic Corporation of North America
                                                                                                                                                          • Pioneer Corporation
                                                                                                                                                          • Samsung Electronics (UK) Ltd
                                                                                                                                                          • Sony Corporation of America
                                                                                                                                                          • The New York Times Company
                                                                                                                                                          • TiVo Inc
                                                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                                                          • US Department of Commerce
                                                                                                                                                          • Viacom Inc.
                                                                                                                                                          • Vizio, Inc.

                                                                                                                                                          Home Theater Hardware - US - December 2010

                                                                                                                                                          £3,277.28 (Excl.Tax)