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A Look Inside the $14B Home Technology Industry

April 1, 2015 | Comments

The market for custom installation in the United States is alive and well, with 8,500 system integration firms operating in a growing market valued at more than $14 billion, according to the findings of CEDIA's annual Size and Scope of the Residential Electronic Systems Market study. Even more impressive, the typical CEDIA member company has been in business for around 16 years and completes more than 50 home technology projects a year.

Audio/video entertainment and control systems figure prominently in the vast majority of these projects, a trend that is expected to continue well into the future. And with annual growth in the custom market running above 10 percent, it's clear that Americans have an increasing appetite for technology - especially entertainment.

"The industry had a 10 to 12 increase in 2013 and is expected to show about the same when numbers are in for 2014," noted Dave Pedigo, CEDIA's senior director of learning and emerging technologies. "It's a significant increase and it means people are back to spending more money on high-performance entertainment."

Pedigo believes a renewed emphasis on innovation is one of the key factors driving consumer spending in this area. "During the economic downturn there was less innovation, particularly in the home entertainment space. Between 2008 and 2012, the big innovation was in tablets and phones."

But the tide is turning. "We're starting to see more steam going back into high-performance audio and video," Pedigo observes, noting an increase in the sales of video projectors - a staple of high-end home theater - and new higher resolution 4K Ultra HD TVs. "Our members reported that 11 percent of their flat panel TV sales were 4K Ultra HD in 2013. This year we're projecting that 4K Ultra HD will account for 25 percent of all flat panels sold in 2014."

Although the average price of 4K Ultra HD TVs is coming down, Pedigo believes interest in 4K UHD is being driven not by price but by greater awareness as well as a desire for higher performance. "With 3D, there was a blip where we thought, well, maybe 3D is the next big thing. But 3D was always a gimmick, and people don't want to wear glasses. 4K [which offers four times more pixels than standard HDTV] is the next big thing and there's a lot of energy, time and effort being put into it."

Other factors play into the growth of 4K Ultra HD TV. One is content, which is now available via Netflix and Amazon with other streaming services expected to follow. "Amazon just announced that its Prime members will be able to get 4K UHD content at no additional cost," Pedigo noted.

The other is the relatively low barrier to entry. "In the early days of the digital transition, when we were going from analog TV to digital television, flat panels - especially plasma TVs - were extremely expensive, so there was a lot of hesitation among regular adopters and the laggards - basically anyone who wasn't an early adopter," Pedigo explains. "With 4K Ultra HD, that barrier is not going to be nearly as vast or as significant so I think we'll see a much more rapid adoption of 4K Ultra HD in the home."

But as good as 4K UHD is, it will get even better in the near future thanks to new technological advancements on the horizon.

"The extra pixels are wonderful," Pedigo says, "but the convergence of two new technologies will create an even more incredible viewing experience." The first is HDR, for High Dynamic Range, which will allow bright details to pop in a more realistic way. "Dolby and Technicolor are invested in creating content that will give us significantly greater contrast ratios than we have now. The difference is really dramatic. I anticipate seeing some HDR displays at CEDIA EXPO 2015 next October.

"The second advancement is better, deeper color," Pedigo continues. "The industry is moving to a new color space, referred to as REC 2020, which has a significantly wider color gamut than what is used in current HDTV technology." In layman's terms, the difference is a more vivid picture with color that is more lifelike.

"Coke has a patent on the highly refined red color it uses," he explains. "If you were to take a Coke can and put it up against your TV when a coke commercial is on the screen, the red on your TV and the actual red on the can would not look the same because there are still many, many subtleties of color that cannot be accurately reproduced on today's video displays. The new REC 2020 standard will get us closer to that."

Add these technologies on top of Ultra HD's extra pixels and you have the potential for an awesome picture. "2015 is going to be a revolutionary year," Pedigo says. "Part of the reason people are investing in home theaters and entertainment spaces is because they're getting excited about content again and they want to have a better experience."

To learn more about home entertainment and automation/control technology, consult a CEDIA professional. Click here for a list of CEDIA-member home technology professionals in your area.