Home Technology Trend I – Home Theater/Media Systems
by Germaine Palangdao

Studies by the Consumer Electronics Association (CEA) show that consumer electronics are projected to hit a seven percent growth, or $155 billion in 2007. A key finding in this study was that home technologies have a positive impact on builders’ profit margins, with about 40% of builders believing that home technology offerings increased their revenues in 2006.

While NAHB noted that nationwide housing starts declined 10.2% in September 2007, the tech-savvy home dweller’s appetite for residential technologies is remarkably fueled. Home buyers have grown accustomed to a lifestyle of automation, connectivity, and convenience. Builders who provide homes that meet homebuyer technology-driven lifestyles, both current and future, have a distinct advantage in the marketplace.  

According to Utz Baldwin, president of the Custom Electronic Design Installation Association (CEDIA), home theater is among the top “must-have” technologies that builders should include in their home packages. Let’s take a look at this technology trend, supporting research and the profit opportunities that exist for builders and remodelers who adjust their businesses, re-tool their home packages, maximize their bottom line, and meet the demands of their customer.    

Home Theater/Media Systems 

• More than 73% of builders offered home theatres in 2006, a 14% increase from 2005  
• More than 46% of builders in 2006 cited that home theater offerings boosted profit potential  
• A CEA study found that 23% of home buyers who did not purchase a home theater system regretted that decision  
• Only 60% of home automation systems and 43% of home theater systems were installed during new home construction  
• A Parks Associate survey of builders found that more than half offered electronics for home theaters and installed them in 46% of the homes they sold  
• CEA projects that display technologies will account for $26 billion in revenues in 2007  
• Flat panel displays are expected to comprise a combined 19 million units in 2007  

The home theater experience is a top homebuyer desire and can include breathtaking sound from high-performance, unobtrusive, built-in ceiling speakers. Smart components and controls enable a consumer to plug a movie into the DVD player and watch a movie from any room in the house from a single keypad. The ideal movie-watching environment can be created from any source – DVDs, satellite, or CATV. 

What does this trend mean for the building industry? While the current housing correction is still running its course, it’s important the industry looks to additional revenue streams that home buyers are willing to financially support. More than 84% of builders note home technologies are key in marketing new homes and the number of builders offering home technologies is at its highest level.

Conclusion from the 2007 5^th Annual State of the Builder Technology Market Study: 

While the skill of selling homes have improved, profit opportunities for builders are missed in the area of home technologies because builders are not in the forefront of marketing efforts and promotional campaigns.

Builder Benefits: 

•  Increased profit margins – revenue is maximized as home technology installations are expected to expand to a $9.6 billion business in 2007  
•  Improved customer service for homebuyers  
  • Better product offerings– tech-savvy homebuyers are offered products and services that meets and improves their technology-driven lifestyle  
  • Homebuyer technology training– the Electronic Systems Contractor (ESC) can provide home technology training to the homeowner  
  • Technology services after move-in - ESC/homebuyer agreements enable ESCs to directly provide technology services to the homebuyer after settlement  
  • Future proofing – offering structured wiring in every room before drywall provides the capability for future technologies and expansion – no one wants to tell the client they can’t have something because they didn’t plan for it before the walls went up 
• Decreased worry about technology services after settlement– builders can work with the ESC to create agreements directly between the ESC and homebuyer (product warranties, service, etc.)  
• Differentiation– homebuyers will likely buy from the builder that offers new and exciting tech toys and an automated, connected, and convenient home lifestyle  

How Builders Can Maximize Profit Margins: 

1. Work with architects, designers and ESCs early during the design process.Home technologies have space and location issues; timing and scheduling are important.    
2. Review current home offerings.Are you making available all home products that the today’s homebuyer wants and needs?     
3. Find qualified Electronic Systems Contractors (ESCs.) Partner with ESCs on home theater/media system options – they specialize in low-voltage wiring.   
4. Product technology selection – don’t sweat it.You don’t need to be an expert on home theaters – (ESCs) specialize in product technologies and can help in product selections that fit your customer needs and budget.  
5. Create structured wiring packages.Work with the ESC to create structured wiring packages that support the infrastructure of technology products.  
6.  Update home packages. Home technology packages can be tailored as standard new home offerings or upgrades. Incorporate home technologies and structured wiring services in sales packages.  
7. Create ESC and homebuyer agreements – decrease your technology service worries.Work with the ESC to create agreements between the ESC and the homebuyer (includes product and customer service warranties after the homebuyer moves in).    
8. Directly market home technologies to homebuyers.Work with the ESC to market and sell technologies in the home buying process. Provide demos and include technologies in model homes.  
9. Arrange homebuyer technology product training – builders don’t do the training. Make arrangements with the ESC to provide homebuyer product technology training – customers can schedule directly with the ESC.  

Sources: CEDIA (Custom Electronic Design Installation Association), CEA (Consumer Electronics Association), Home Technology Alliance (HTA), Parks Associates, NAHB

ABOUT HTA:The Home Technology Alliance (HTA) is a partnership between NAHB and the Custom Electronic Design Installation Association (CEDIA) that was formed to position the housing industry to effectively meet the growing consumer demand for home technology and provide the maximum return on investment in the new home building and remodeling process.

ABOUT CEDIA:CEDIAis the Founding Sponsor for HTA and an international trade association of companies that specialize in designing and installing electronic systems for the home. The association was founded in September 1989 and has more than 3,500 member companies worldwide. CEDIA members are established and insured businesses with bona fide qualifications and experience in this specialized field. For more information on CEDIA, visit the association’s website at  www.cedia.org.

 

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