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Home Theater: Tuning In To New Technologies; Latest Survey by The NPD Group Reports on Consumers' Ownership and Purchasing Intent of Home Theater Systems (2/11/2005)

Americans seem to be tuning in to get more out of their home theaters according to The NPD Group report, "Home Theater: Capturing the Digital Entertainment Center." The report, based on a recent online consumer survey, examines consumers' ownership, purchase intent and attitudes towards home theater products and technologies.

The importance of sound quality is something that came through loud and clear among respondents. The NPD Group found that of the home theater owners surveyed, more than half connected separate component speakers, while 30 percent opted for Home Theater in a Box (HTIB) systems and 10 percent connected their televisions to stereo systems.

The study also reports that traditional audio, while still the leading technology for home theaters, is experiencing increased competition from its non-traditional counterparts as consumers increasingly turn to MP3 players and satellite radio receivers for their home audio needs. One in ten home theater owners say they plan to add a portable MP3 player or satellite radio receiver to their home theater set-up, while 10 percent of respondents say they already have satellite radio hooked up, and more than four percent are currently connected to an MP3 player device.

"This is good news for audio component manufacturers looking for opportunities to integrate music from diverse sources as it reaches far beyond the confines of the compact disc," said Ross Rubin, director of industry analysis for The NPD Group.

Video components, which have been the primary driver behind home theater sales over the past several years, continue to perform well. According to the report, the traditional DVD player still remains dominant among 62 percent of home theater owners surveyed, while 22 percent have DVD/VCR combos and 12 percent have DVD recorders. But the latter numbers have great potential to grow, with 12 percent of respondents expressing an interest in adding a DVR to their existing home theater and 15 percent wanting to add a DVD recorder.

However, not all video components stand to fare as well in the coming months. For example, while over 30 percent of home theater owners have video game consoles connected to their home theaters, only six percent plan to add one in the next 12 months, despite the tremendous publicity surrounding next-generation video game consoles.

"Americans are continually looking to upgrade their home theater systems in order to take advantage of the latest technologies," said Ross Rubin. "The biggest challenge for manufacturers in the coming year is going to be satisfying the needs of consumers by expanding the types of audio and video components. "

That challenge doesn't apply to just winning over home theater owners, said Rubin. "There's a large, untapped market of consumers who don't have home theaters and may need some convincing to get them to make the purchase."

According to the report, over 50 percent of respondents claim some physical limitation as a reason for not installing a home theater system, with 26 percent stating small room size was a factor, 23 percent stating aesthetic reasons such as exposed cables and wires, and nine percent stating they had no desire to reconstruct and/or remodel their homes to accommodate a new system.

"These type of physical limitations should provide a good opportunity for manufacturers to expand their product lines and their consumer base by catering to the needs of the potential buyer and altering the current designs," said Rubin.

Methodology

"Home Theater: Capturing the Digital Entertainment Center", was an online survey conducted among members of The NPD Group's online consumer panel. A nationally balanced sample of 5,419 adults completed the survey between September 9 and September 16, 2005. The survey looked at three groups of consumers; those with a home theater, those planning to install one in the next 12 months, and those not interested.

www.npd.com