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2005 Audio-Video Predictions Print E-mail
Thursday, 30 December 2004

With my Howard Stern to Sirius prediction (on 2/27/04) making me look like “Jerry The Greek,” I am back with some more insight as to what is likely to happen in 2005 in the world of audio/video and home theater. Consumers Will Be Chomping at the Bit To Buy HDTV on a Disc:
2005 will see one (or both) of the two HDTV formats work its way into the hands of consumers. I am not ready to predict if Blu-Ray or HD-DVD will win out at this early point, but I can say with 100 percent certainty that Hollywood is going to jump on board with one or both of these formats so that they can sell all of their movie titles all over again. The business model is very tasty when you consider how easy it is for a studio to put out a title in HDTV. In order to get the video into 720p or 1080i, all a studio has to do is downconvert it from the D5 master tape that was originally used to archive the film. Most modern movies already have surround sound mixes made for the theater and/or DVD. Even with a little sweetening by a home video mastering specialist, a movie on an HD-ready disc format is a relatively easy and inexpensive process, when you consider how time-consuming and difficult it is to take a classic album originally mixed for stereo and rerelease it in 5.1 surround. Expect Hollywood to come out of the gate far more strongly when they launch these new formats late in 2005.

Flat TVs Will Continue To Break Sales Records in 2005:
By late 2004 and powered by consumer demand for flat TVs, DTVs sold more than 1,000,000 units in a given month (October 2004 – source: CEA report). I predict larger and lower-priced LCD sets in stores in 2005 will help the monthly sales numbers go as high as 2,000,000 sets per month. If an HDTV disc format hits with enough titles to catch consumers’ attention, this number could jump even higher.

Stick A Fork in DVD-Audio, SACD and Maybe DualDisc in 2005:
According to the RIAA’s sales numbers in the first quarter of 2004, SACD and DVD-Audio sold a total of 600,000 records. That’s barely a gold record for thousands of titles on both formats. Even the geekiest audiophiles can appreciate that vinyl singles outsold DVD-Audio and SACD by as much as four times in the same time period. This is not to say that DVD-Audio or SACD were lame formats, but it is easy to observe that their marketing efforts left something to be desired.

DVD-Audio and SACD releases dried up in 2004 with the threat of the hybrid CD-DVD DualDisc format on the horizon. DualDisc came late in 2004 and nobody noticed, other than the people who had to return their Donna’s DualDisc because of a glitch in the mastering – ironically, on the CD side. Americans love two-for-one sales. How the record industry couldn’t figure out that they should put a CD bundled with DVD for every title they sell is beyond me. I guess this is the vision you get from leaders who sue their own customers in the process of taking their sales from 30 billion dollars per year to 18 billion dollars in just four years.

Expect the format that Hollywood jumps onto for HDTV movies on disc to be the one the record business adopts, too. If the music business wants to solve their problems in the short term, they should stop worrying about people doing file sharing on peer-to-peer networks, because they can’t ever put the genie back in the bottle and they are losing any loyalty from younger music consumers. The short-term solution for the record business is to sell two discs for a lower price and get those offerings – at, say, $11.95 retail – into the CD bins by the thousands. Start with reworked versions of every DVD-Audio and SACD title. Then add in thousands more. Even when Blu-Ray and/or HD-DVD takes off, these titles will still be easily convertible to the new formats and will be ready for sale again to every early adopter on the planet.

The Future of High-End AV For 2005:
Much of high-end audio is in big trouble. The established players who have adapted to multi-channel AV will still thrive, including the likes of Meridian, Linn, Krell, Lexicon, Sunfire, Anthem, Rotel and a good number of others. Mark Levinson will be back with enough new products for the AV market, despite the fact that this company is slowly retooling their entire line. I predict they will still have the A-list reputation that they had before Proceed blew up and the Mark Levinson brand was merged with Harman Specialty Group. I expect Classe’ to make a run in 2005 at being the best high-end AV electronics company, along with Mark Levinson, Linn, Meridian and Krell. Look for audiophile-oriented brand Halcro to make a move more towards home theater products at the ultimate level. Look for Carver to relaunch in 2005 and make a big splash – ironically, without Bob Carver, who now runs the already successful brand Sunfire. In the world of high end speakers, players on the rise include pro-audio oriented, Genelec, with their powered speakers as well as Aerial Acoustics.

The high-end video market will continue to develop at a blistering speed. Projectors, plasmas and other high-resolution devices will continue drop in price and will improve in performance, as we have seen them do over the past few years. Video, along with control systems like Crestron, AMX and Elan, will successfully compete for AV consumer dollars. These same dollars are the ones that used to exclusively go to high-end audio. Now the fight for the high end will get even tougher.

Improved AV Reliability Will Be a Strong Theme In 2005:
The brands that thrive will not necessarily be the ones who build “the best mouse traps,” as was the rule in the heyday of high-end audio in the late 1970s and 1980s. The companies that will thrive in the consumer world will be the ones who make high-performance gear that is rock-solid in terms of reliability. Too many good components break down to some extent, leaving well-heeled clients wishing they had invested their home theater budgets in a Mercedes, a few Brioni suits or a Patek Philippe watch. The real competition for the audio/video industry is other luxury items like expensive kitchens, lavish vacations, diamonds, exotic cars and beyond. No longer is Krell fighting for Mark Levinson sales. In 2005, it will be Classe’ dealers angling for money that could just as easily be spent at Tiffany’s. While this paradigm shift is large-scale, it is also good for the savvy home theater consumer, because it will make the market demand higher-performance, lower-priced and more stable gear – and I predict in 2005, we will get it.

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