|Can The AV Industry Sell High End Gear To Generation Y?|
|Home Theater News Industry-Trade News|
|Written by Scott Selter|
|Thursday, 17 May 2007|
Recently I was sitting by the pool at a Runco dealer-rep-press event and the topic of conversation among a prominent editor, one of the most prolific salespeople in the industry and myself was the future of high-end AV. Runco represents the pinnacle of consumer video equipment and, in many cases, as you might expect, comes packed with a price tag to match. Baby Boomers and well-heeled members of Generation X line up to invest in these projectors and plasmas that go beyond the mass market standards and include the new, lofty THX video standard, as well as professional calibration. They see the performance benefits of what a few hundred or thousand dollars gets you. But will the Generation Y with their “whatever” attitude ever feel the same way?
Roughly speaking, Generation Y’ers are in college now or fresh out of school. They have never known a world without music downloads, high-intensity video games and the Internet. Paying for software isn’t always the highest priority, the way it was with Boomers and X’ers, who remember shopping for LPs, CDs, Laserdiscs and DVDs as collectors not just consumers. While the age difference is slight between Generation X and Y (as little as 10 years), the buying attitude is radically different. In general, Generation Y’ers are drawn to convenience over performance. This poses a frightening conundrum for true high-end audio and video companies. Baby Boomers would have sold one of their kidneys to get a McIntosh amp or JBL speakers for their dorm rooms to listen to the latest from Led Zeppelin, Jimi Hendrix and the Doors during the late 1960s. Today, Generation Y’ers are barely willing to part with $300 for an iPod without boo-hooing about price.
The good news about Generation Y is that they love AV stimulation. As the recent boom in attention deficit disorder drugs suggests, they might love stimulation too much to ever have the patience to sit down and watch a film with subtitles and or attentively listen to complex yet delicate orchestral arrangements. However, if you show them an all-out good time, they can be impressed. The video game industry understands this value proposition better than anyone. Video games sell for upwards of $50 and kids who are bitter about a hardware investment of $300 for an iPod will line up to buy this year’s version of Madden Football from EA Sports in ways no one band or movie star can sell their wares on a disc of any kind.
In terms of audio stimulation, stereo is just never going to be good enough for Generation Y, yet the know-it-all geniuses who took a $33,000,000,000 domestic music business from the early 1990s and turned it into the stinker it is today ($9 billion in CD sales, $3 billion in downloads and $3 billion in ring tone sales) screwed up SACD and DVD-Audio to the point of no return. This same group of industry visionaries hasn’t released a single audio-only title on Blu-ray or HD DVD. Just a quick note to the powers that be – more than 85 percent of the $33,000,000,000 in sales from the early 1990s consisted of back catalogue sales. Perhaps if you tried selling your music to kids in a higher-resolution format, with surround sound and video (think: like a video game with amazing audio and video), there might be hope. For the music business, I think it will take having the sorry-looking 60-year-olds, who drive their Ferrari F430 Sypders so their salt and pepper ponytails can blow in the breeze of Hollywood Boulevard, finally retire. Younger executives will need to realize the vast problems the music industry has and will need to craft more creative solutions than the lowest-lying-fruit answer known as downloads. Music in high-resolution surround sound, video in HD, supplements that compete with video games and prices lower than that of a movie on a disc will get college kids racking up credit card debt to buy high-resolution music.
The story is a little more upbeat when it comes to video. The video industry has basically thrown Moore's Law out the window when it comes to how fast technology changes and how affordable it has gotten. Boomers, X’ers and Y’ers alike see a $2,900 60-inch plasma with an HD movie or sporting event on it and they have the “I need this in my life” urge. Thanks to the price points on flat HDTVs now, college kids can afford topnotch video. For the future, them getting into video this early is really good news. Many of them will want to become enthusiasts. They will buy calibration discs and learn the surprisingly complicated basics of video and, as they earn more money, will invest more in video. We have never seen a smarter, more tech-savvy generation than Generation Y. They will learn to love what HD video has to offer and will push the envelope on the low end as well as the high end for decades to come. Also note: it is no coincidence that Hollywood studios, video game companies and television networks alike are creating hundreds of hours a week of unique HD content for consumption via cable, satellite and HD disc formats like HD DVD and Blu-ray. The music industry should take note, but they won’t.
I fear for the high end, especially the world of specialty audio, when the likes of Apple is selling downloads as “high-definition” when they are really closer to one-fourth the resolution of CDs – a technology that is pushing 25 years old. I remain optimistic about the future of the high-end AV world. The music industry has a long way to go to find itself, yet the movie studios, video game companies and TV networks seem to have their fingers on the pulse of the consumers of America and the world as they create high-quality content in high-definition formats. One trip to a Best Buy or even a Costco will tell you Boomers and Generation X’ers are on board with what they are doing, as you see them loading their carts with huge HDTVs. Generation Y’ers, as starved for a thrill as they are, are just a little too early to the game. Give them five to 10 years to establish their careers and increase their incomes and they will start to seek the bigger and better things that the world has to offer. Right now, their iPods seem like fine wine, but when they see the best the AV world has to offer, they will realize the convenience is unbeatable but the taste is like “two-buck Chuck” from Trader Joe’s. Once you taste the good stuff, it’s hard to go back. Generation Y will realize this and, in 10 to 15 years, will help the high-end AV market grow to even bigger levels than today.