The home audio market is poised to reset to a new normal, which, going forward in a post COVID-19 era, will be continuously redefined and redesigned.
As more brands enter the competitive television category, they are offering more and better features at a lower price to gain market share. The improved
sound quality offered by newer televisions, and growth in sales of wireless speakers, which are compact and portable, while offering good quality audio, have impacted sales of audio separates, which were previously often used to enhance the sound quality of televisions.
In the Asia-Pacific region, the volume of the home audio equipment industry has grown significantly, and it is expected to show the highest growth rate as a result of an increase in manufacturing and the adoption of technology across regions.
Countries such as China, Japan, Thailand, and Korea manufacture large quantities of commercial and industrial products. The adoption rate of home audio equipment in China and India is high because of large-scale distribution in the manufacturing sector.
Internet retailing platforms like Amazon, Flipkart, and Snapdeal have started to capture retail sales of home audio in India. Their growth is attributable to the availability of a wide array of options online and the deals, discounts, and easy finance options provided by retailers.
The market valuation in 1H19
Between January and June 2019, the total sales were USD 9.36 billion for the global audio devices market, excluding North America. Compared to the first half of 2018, this is an increase of 15 percent. Headphones and headsets are the key drivers of growth, together with portable Bluetooth speakers and loudspeakers for the home.
In-ear headphones saw a steady sales value growth of 55 percent, and accounted with a sales volume of nearly USD 3.52 billion for 70 percent of the total headphones turnover. China by far is the largest market, followed by the Western European and developed Asian countries.
Devices that wirelessly connect headphones to the music source witnessed considerable turnover growth and are becoming the worldwide standard, with a market share of close to 80 percent for over-ear headphones. Just as for true-wireless in-ear headphones, more players are entering the market, increasing pressure on price.
Sales of multiroom devices, which play different songs in different rooms, increased by 4 percent in the first half of 2019. With more brands in the market than ever before, the technology is becoming more affordable for the mass market.
Manufacturers are increasingly equipping their devices with one or even more smart assistants. This not only allows users to control the device via their voice, but also to integrate it into their in-home smart device ecosystem. This capability has increased consumers’ willingness to invest in these devices. As a result, turnover for multiroom devices with a built-in smart assistant grew by more than 100 percent and the average sales price increased by 67 percent.
For the first time in 2019, the advent of smart displays has been witnessed as a new form factor for digital home assistants. Although the idea has been around for some time, the chance of it becoming a reality has been accelerated as more manufacturers have entered the market. With the most common voice artificial intelligence (AIs) on board, the displays could evolve into the central control hub for the user’s smart home devices.
For consumers, who are in general satisfied with the image quality on their newly purchased TV, sound quality scores below-average on the sentiment score. This creates an opportunity for external speaker systems. So, while on the one hand consumers are spending less on their TV sets and average sales prices are decreasing, on the other, they are increasingly conscious about sound quality and are spending that saved budget on soundbars.
Over the next 5 years, the global home audio market will register a 3.7 percent CAGR in terms of revenue, and the market size will reach USD 11.86 billion by 2025. The home audio equipment market is expected to grow owing to the growing penetration of IoT technology across the globe. With the introduction of IoT, consumers are increasingly demanding the devices compatible with multiple other devices to increase convenience and enhance experience. The demand for audio devices that perform such functions is expected to propel the home audio equipment market growth.
With advancements in technology, customers can buy speakers without complicated racks and components that deliver the desired quality of sound. Growing focus on wireless capabilities in these devices is gaining consumer attention and the manufacturers in the industry are developing products that appeal to the customers. According to BestBuy, the number of wireless-networked soundbars sold has increased two-fold in the last few years.
Wireless technology-enabled gadgets are expected to gain substantial share in the home audio equipment market, on the back of increasing operability and compatibility of these devices with other devices like other speakers, smartphones, and tablets. High degree of standardization offered in wireless protocols is expected to benefit the wireless home audio equipment market growth. In 2011, Wireless Speaker and Audio Association was formed to address wireless applications in home-based theater environment. Growing popularity of technologically advanced products, such as voice-enabled speakers, are expected to challenge the traditional speakers and soundbars. Companies in the traditional audio device segment are swiftly upgrading to voice-enabled devices to remain in the competition.
Mid-price home audio equipment market segment is expected to grow at a significant rate over the future, owing to the rising adoption in Asia-Pacific. The region is experiencing economic growth, leading to rising disposable income that is leading to increased spending in leisure products, including personal and home audio electronics. Moreover, customers in the region are replacing the low-priced devices with the average-pricing products, and the traditional systems with the wireless Hi-Fi systems, thus propelling the home audio equipment market growth.
The demand for wireless receivers is expected to witness considerable increase, owing to increasing availability of high-resolution products, such as 4K UHD TV. Furthermore, the growth is propelled by the growing demand for the connected music systems that use A/V receivers.
The manufacturers of home theater systems are investing in developing latest advanced technology products. Development of technologies like SED displays, XBOX 360, holographic front projection, carbon nanotube displays, and enhanced interactive television are gaining consumer focus as they offer enhanced entertainment experience, thus fueling the home audio equipment market growth.
The market valuation of soundbars will reach USD 6.5 billion by 2026. The soundbar market growth is attributed to changing consumer preferences to adopt IoT-enabled soundbars. The integration of voice assistants with the device offers consumers a hands-free soundbar operation experience. Proliferation in sales of smart TVs, coupled with availability of streaming content, such as music, movies, and web series, is being witnessed.
The online distribution channel segment in the soundbars market is witnessing high adoption owing to evolving consumer behavior related to browsing of e-commerce websites. Social media, webinar, blogs/online publications, email, web search, online advertising, and groups/online conferences are the prominent marketing strategies adopted by market players to drive the sales. AI chatbots and cloud computing technology are used by the online distribution channel to offer a personalized and seamless customer experience at every touchpoint.
7.1 channel-based soundbars are estimated to observe a growth of over 7 percent timespan propelled by shift in consumer preferences toward high-quality cinematic audio experience in homes. The 7.1 channel soundbars include features like Dolby Atmos high-definition surround sound, built-in voice assistant for hands-free experience, and wireless connectivity.
The Europe soundbars market will register a steady growth from 2020 to 2026, led by increase in sales of smart TVs predominantly in the UK, Germany, and France. Rapid adoption of smart homes and availability of high-speed internet and wireless devices are also driving the market demand in the region. Brand awareness among consumers is challenging new entrants to establish their market positions. New players are focusing on product innovation strategies to penetrate the Europe market.
Hi-Fi systems market
The global Hi-Fi systems market is expected to grow from USD 13.6 billion in 2020 to USD 17.5 billion by 2025, at a CAGR of 5.2 percent. The market growth can be attributed to several factors, such as a rise in demand for infotainment services, high spending on R&D by OEMs, innovations in wireless audio technology, and increasing adoption of portable devices. However, issues related to operating frequency compliance for wireless Hi-Fi systems, and health issues about prolonged use of audio devices, are expected to hamper the growth of the market.
The rising adoption of wireless audio systems is expected to drive the market for Hi-Fi systems. The growth of this segment can be attributed to the initiatives undertaken by manufacturers to increase the throughput of wireless audio devices, equipped with various advanced technologies that are used in consumer electronics. Wireless technologies have started gaining momentum in the market as they do not require renovation or reconstruction, and minimize the requirement of wires.
The growing demand for wireless Hi-Fi systems and the concept of smart homes is expected to drive the market for residential application. The rise in global demand for smartphones, computers, and tablets equipped with wireless headphones and headsets is also contributing toward the growth of the residential application.
APAC held the largest share of the Hi-Fi system market in 2019 in terms of revenue, and the trend is expected to continue during the forecast period. Vast customer base and growing purchasing power of consumers are the major factors contributing toward the growth of the market in APAC. The growing popularity of wireless-connectivity technology and the increasing requirement for mobility are also driving the market for Hi-Fi systems in this region. The region is witnessing increased demand for consumer electronics, such as smartphones and tablets, thereby leading to the growth of the Hi-Fi system market in the region.
Reset to new normal
An unusual period in history, the COVID-19 pandemic has unleashed a series of unprecedented events affecting every industry. Amid the COVID-19 crisis and the looming economic recession, the home audio equipment market worldwide will grow by a revised CAGR of 14. 6 percent.
The home audio market will be reset to a new normal, which going forward in a post COVID-19 era, will be continuously redefined and redesigned. Staying on top of trends and accurate analysis is paramount now more than ever to manage uncertainty, change, and continuously adapt to new and evolving market conditions.
As a part of the new emerging geographic scenario, the United States is forecast to readjust to a 11.9 percent CAGR. Within Europe, the region worst hit by the pandemic, Germany will add over USD 1.1 billion to the region’s size over the next 7 to 8 years. In addition, over USD 1-billion worth of projected demand in the region will come from rest of the European markets. In Japan, the home audio systems segment will reach a market size of USD 785.7 million by the close of the analysis period.
Blamed for the pandemic, significant political and economic challenges confront China. Amid the growing push for decoupling and economic distancing, the changing relationship between China and the rest of the world will influence competition and opportunities in the home audio equipment market.
Against this backdrop and the changing geopolitical, business, and consumer sentiments, the world’s second-largest economy will grow at 21.9 percent over the next couple of years and add approximately USD 8.5 billion in terms of addressable market opportunity.
Continuous monitoring for emerging signs of a possible new world order post-COVID-19 crisis is a must for aspiring businesses and their astute leaders seeking to find success in the now changing home audio equipment market landscape. TVJ Bureau