Making Audio Work
"Flat-panel is exploding due to lower pricing," says Mihir Mody, CEO of Houston-based Home Theater Store. "Before, it was $7,000 or $8,000 for a flat panel and now, it's $5,000 - a 30 percent drop, opening up more of the revenue stream to us for audio. And our audio business is through the roof." David Wexler, president of Chicago-area-based The Little Guys, whose audio numbers, he says, are up almost 10 percent over 2005 on sales of higher-ticket components, comments, "Lower pricing on flat panels gives people a little bit bigger budget to invest in audio. We try not to 'grant permission' to buy a flat panel without having the audio. And if all you do is put TVs all over the place, they you're telling people that it's OK for them to just buy TVs."
"The selection of flat screens is overwhelming in most retail locations," concurs Noel Lee, principal of Monster Cable. "And the absence of audio is a message to consumers that it's not important. There have to be more audio vignettes and presentations. Audio demos should be required, not elective, as part of video demonstrations."
But Lee, and others, for various reasons, don't think freed-up flat-panel dollars are automatically being funneled to audio. "Flat-screen price drops have made it harder to sell audio, I feel, because the customer's expectation of what he needs for home theater just gets lower, the lower the price of the panel," Lee says.
"The customer spending more money for a higher-quality panel," Lee argues, "is a better target for high-end home audio. They're more predisposed to being introduced to higher-ticket audio as part of a complete presentation. If a flat panel goes for $5,000, I might spend $2,000 on my audio. And if I spend $2,000 for my screen, how much will I spend for my audio?"