There’s been a pretty massive reordering of application priorities for new homes in the wake of the COVID pandemic. For the previous 3-5 years, there had been a decided shift from AV and Networking to Smart Home Security as top of the list. Now the tables are turned.
Homeowners are stuck at home, sometimes using their AV for Work-From-Home and Learn From Home applications and certainly to view movies, TV, concerts and live streamed events. Much of the interactive and entertainment content is streaming from the internet making robust, reliable connectivity a must. But to bottom line it, video displays and component audio equipment have been selling like crazy. We talked to three of the major manufacturers in the last couple of months, and they concede they are seeing record sales – a full year’s worth in three months is the way one put it. Likewise for audio receivers—you just can’t get them.
So what are the trends and what’s the play for the builder?
- With video displays, it’s almost always about bigger and better. “Bigger” is obvious, though there is only so big you can and should go based on room size and viewing distance. “Better” is about resolution and color saturation (Ultra High Definition (or 4K) is now the norm with 8K coming soon) but it’s also increasingly about smarts, internet connectivity and seamless play from apps or even mobile devices.
- Video displays are in increasing demand outside, with better weather-proofing and glare reduction features coming online.
- Video displays for more than just critical viewing. For example, Samsung’s Frame and LG’s Gallery series serve as artwork when they aren’t pulling duty for TV watching.
- Audio paired with video tends to be of the multi-channel variety with varying levels of immersive effects. Think 1.1, 3.1, 5.1, 7.1, 9.1 systems–.1 stands for the subwoofer and the preceding number for the number left, center, right, rear, above and below speakers. Sound processing formats from ingredient tech/reference companies like Dolby and DTS put the right sounds in the right places.
- Multi-room audio for the middle market is a category increasingly dominated by after-market table-top/bookshelf networked smart speakers. Architectural in-wall and in-ceiling options are also available for the middle market and dominate the semi-custom and luxury markets. Important trends in that realm include bevel-less design for high-end aesthetics and more small speakers to create a more even distribution of sound at comfortable sound pressure levels.
- According to Marketing Matters principal, Coleen Sterns Leith, who sits on the Consumer Technology Association’s Audio and Smart Home Division Boards, seamless interface with streaming services and voice control are keys success factors for home audio.
- Builders are never going to realize huge margins on video displays. There just isn’t much margin to share. However, video paired with quality audio brings a room to life and invites homebuyers to sit down, lean back, enjoy the room and envision life in the home. It gets them experiencing instead of inspecting. That’s why we think it definitely makes sense to showcase one or two high-performance AV zones per home, depending on the source of supply (manufacturer direct, distributor or integrator) there will be some margin to share on the display and considerably more on the audio side of the equation, especially with higher performance speakers. High-performance zones also typically come with higher margin accessory products like lighting and shade controls.
- In the luxury market, consider video and sound scaping–using displays like the Frame and Gallery combined with high-end architectural audio and the right tracks and playlists to create immersive experiences from calming to exhilarating. That’s a wow factor you can deliver now along with the tradition home cinema type experience to luxury buyers.
AV is an easily understood and sold home technology for the builder, because like other finishes, simple sensory experience of AV is often all that’s needed to present and make the sale. So now it’s a matter of negotiation with your source of supply to get you to a margin that works for your business. It’s not going to be the 50 points you get on flooring upgrades but it could get to the 25-35% range with audio and accessories margins leading the way up. That’s nothing to sneeze at it may be a feature that gets home shoppers to stop, dream about what it would be like to live in your home and tip to a buy.