Home Theater Getting Cheaper?

Home theaters are becoming ever more affordable according to new data just released by the Consumer Electronics Manufacturers Association (CEMA). In 1997, dollar sales of home-theater products reached $8.2 billion---a slight drop from the $8.3 billion generated in the previous year---but many of the essential components of home-theater systems sold more units than ever before. Overall unit sales of home-theater products rose 5%.

Home-theater products are defined as direct-view color TVs 25" and larger; projection TVs; DVD and laserdisc players; Hi-Fi stereo VCRs; surround-sound processors, amps, and receivers; subwoofers, center-channel speakers, and surround speakers sold as separate units or as multi-speaker packages; and home-theater-in-a-box.

Showing an impressive 14% increase, the number of home-theater households continued to expand from 13 million in 1996 to 14.8 million in 1997. CEMA predicts another 1.8 million households will buy a home-theater system in 1998. As home-theater families begin to replace their analog components with new digital-video products, CEMA estimates that the home-theater market should reach more than $11 billion in sales by the year 2000.

While dollar sales of home-theater video products fell 3% in 1997, unit sales of these products rose 7%. For example, stereo VCR prices fell dramatically in response to the new presence of DVD players, which were introduced in March 1997. Consequently, unit sales of stereo VCRs shot up 19%. Even after the price erosion, VCR dollar sales still managed to grow 2% to $1.4 billion. Prices also dropped for projection TVs, which fell 4% in dollar sales but increased 3% in unit sales in 1997. Sales of audio-related home-theater products topped $1 billion, growing 7% for 1997 solely on the strength of home-theater-in-a-box shipments, which generated $282 million in revenues.