Making Room for Home Theaters

Consumers are beginning to butter their popcorn at home as digital theaters and surround sound systems make their way into family media rooms. Home theater set-ups typically include a DVD player and speakers, but many also feature digital recorders, and high definition television (HDTV) sets, spurring growth to this fledgling market.

As a result of the increased adoption of home entertainment systems in online households, Jupiter Research (a unit of this site’s corporate parent) has launched the Home Theater Watch Weblog, which will act as a companion to new research initiative that is slated to debut in August 2004.

Jupiter Research Senior Analyst Avi Greengart elaborates on the market share the new division is expected to capture. “According to the CEA [Consumer Electronics Association], over 30 percent of households have home theater systems. Our research backs that up, but ‘home theater system’ is a loose term, so we refined it. When we asked about ‘digital surround sound systems (ex: at least five speakers and a subwoofer)’ we got nearly 22 percent of the online population,” he says. “This is an interesting finding in and of itself – 8 percent of people say they have a home theater without the surround sound.”

The increasingly high-tech home entertainment centers are likely to be DVD-focused, but a switch from player units to recorder units is underway. In-Stat/MDR found that worldwide DVD player shipments in 2003 were 98 million units, and will top 100 million in 2004, before losing measurable market share to DVD recorder units. An expected DVD recorder price drop to below $199 for the 2004 holiday season, will propel growth to 32 million units in 2006 and over 50 million in 2007.

The CEA projects that consumer enthusiasm for HDTV will propel sales of digital television units to 9.4 million in 2005, 15.6 million in 2006 and 23.0 million in 2007, as consumers begin replacing older television sets with HDTV units. Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. (LRG) says that it will be many years before massive adoption, but dropping prices on HDTV sets and increased awareness are likely to be the motivating factors for purchase.