Making home theater part of the blueprint

DSN Retailing Today, May 3, 2004 by Doug Desjardins

Ever since television sets turned into an integral part of American homes in the early 1950s, living rooms have been built and arranged around the TV. But the arrival of flat panel plasma TVs that can be placed virtually anywhere in a room has revolutionized home theater designs, making them more elaborate.

The trend has been a boon for high-end consumer electronics retailers who are putting in more custom installs than ever before, often even before a new home is built. Industry leader Tweeter Home Entertainment, a 174-store chain based in Canton, Mass., has its own team of electricians, carpenters and contractors to handle a fast-growing sector of its business.

"It used to be that people would buy their own components, piece by piece, and build their own home theaters," said Tweeter Home Entertainment spokeswoman Kate MacKinnon. "But now that there are so many alternatives, especially with plasma sets, people want someone else to create the home theater experience for them."

MacKinnon said Tweeter's home theater installation business increased 10% in 2003 to $22 million in revenue compared to $20 million in 2002. And that business is likely to grow even more this year with home remodels still on the rise and prices on plasma TVs beginning to fall.

One popular design alternative is to place the plasma TV over a fireplace, which is no easy feat for even the most ambitious weekend warrior. "If you're getting a plasma installed above a fireplace, we send our installers in to put some strong bracketing on the wall and our electricians to run the wiring up the chimney," MacKinnon said.

Though living rooms are the primary area for custom installations, new lightweight screens are making kitchens a more popular area. "We do a lot of jobs where screens are installed underneath the cupboard so they're only flipped down when they're being used," MacKinnon said.

The flexibility plasma TVs have given to designers has prompted many new homebuilders to design their home theater systems before construction begins. MacKinnon said 15% of Tweeter's customers make their home theater part of the architectural blueprint. "A lot of times, we become part of the process from the start and work and hand-in-hand with the contractor."

While plasma TVs are still considered a luxury item for high-end consumers, prices are falling steadily, which could generate more business from mid-tier customers. The Consumer Electronics Association (CEA) reports that suppliers shipped 82,000 plasma TVs to retailers the first two months of this year compared to only 31,000 in January and February of 2003.

The increase in demand seems to be driven mainly by price. CEA analyst Sean Wargo notes the average price of plasma TVs has fallen from $5,100 in 2003 to $3,550 as of mid-April and should continue to fall throughout the year.

"They're really beginning to ramp up, but at those prices, the market is still being driven by early adopters," said Wargo.