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| MP92078 |
| MAPS HOME ENTERTAINMENT MARCH 1998 |
| Overview |
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Table of Contents Executive Summary
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The UK market for home entertainment has been growing and has shown positive turnovers in recent years. The market reached a total value of £9.3 billion in 1997. The most stimulating factors for the market were recent windfall shares by building societies, which excelerated consumer spending drastically and constant price cuts.
Sales rose constantly since 1993, when the market stood at £6.8 billion.
The home entertainment market and its growth depend on technical innovations, which are constantly introduced to improve visual and sound quality. 3D sound for television, stereo sound for video recorder, 3D video cards and ever faster processors for home computer are just some of the popular innovations. The possibility to receive digital television programs is seen as the most potential growth factor for the future.
Strong competition has lead to prices of home entertainment products being cut down constantly. The large multiple stores contribute strongly to such price slashes and eventually the smaller and independent stores have to follow.
In addition, the market is closely linked to a number of products that have a strong influence on the home entertainment hardware market. That is the software market for personal computers, audio products, video machines and game consoles. Unlike a radio that operates on its own, these products are only fully useably when the right game, video, cassette or CD is played. Thus the home entertainment products are merely means to another end.
The fast changing personal computer market is the main sector contributing to the overall market, worth £4.7 billion. This market has expanded rapidly over the past years. It lives strongly of the fast speed of innovation and the need to constantly update equipment.
The TV market is second, accounting for sales of £1.3 billion. Strong growth areas are NICAM and larger screen TV, particularly in the budget price sectors. This has allowed even younger consumers to purchase such a product. Even though, most household posses a TV set, many bought a second one or an updated model to enjoy the technical improvements in terms of screen size and sound quality.
Game consoles account for £800m and are promising for positive growth. The Video Recorder market accounts for £725m and has reflected a strong turnover. First time buyers and buyers who update equipment are equally attracted by the low prices for a video recorder. NICAM video recorders feature strongly in the sales figures as they match the growing number of NICAM TVs.
The Audio system market occupies the next position. When buying a new system consumers tend to go for a complete solution which are often available at budget prices. The market accounted for £589m in 1997, up from £557m in the previous year.
The audio separates market was worth £387m in 1997m, up from £360m the year before. This male dominated market is influenced by the purchase of high end product for the taste of hi-fi enthusiasts who may posses an expert knowledge of the products. Thus sales value outnumbers volume figures.
The future of the market is likely to follow some clear trend: digitalisation of the market and products, particularly in the TV sector; the combination of more and more functions into less space, so that eventually only one machine may be necessary to enjoy all-round home entertainment.
Prices are likely to fall due to the pressure of the competition and of eventually occurring market saturation. Such a saturation of the market can only be avoided through the constant efforts of technical innovations.
It remains seen if the positive effects of the windfall taxes continue to stimulate the market for much longer, already there is talk of an imminent market stagnation. However, prospects for the medium future are positive for all the market sectors.
Text © 1998 MAPS
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Last updated by Duncan Nottage 9th February 1999