How lucrative is the market for DVD home-theater?
How lucrative is the market for DVD home-theater?
Ari Prastowati, Contributor, Jakarta
Recently quite a number of electronics manufacturers have
launched various integrated products that combine both high-tech
audio and video features: the DVD home-theater. Consumers are
really pampered by the abundant range, from the low-end up to the
super premium types that contain the latest features.
The audio features, consisting of up-to-date formats of dolby
pro logic, dolby digital and DTS (Digital Theater System), are
similar to those used in classy cinemas and concert halls. Hence,
today, your home can easily be transformed into a modern cinema
or concert hall that is equipped with a high-quality sound
system.
Unfortunately, leading brands are quite expensive, even though
today some with just standard features that previously sold for
Rp 7 million still cost about Rp 5 million. At these prices,
these products are categorized as premium electronic products.
This segment is dominated by several leading brands, such as
Sharp and Sony from Japan, Korea's LG and Samsung as well as
Philips from Holland. These manufacturers have a solid research-
and-development department, because it is supported with about 5
percent of the previous year's sales revenue.
It is not too surprising, therefore, that these leading
manufacturers have come up with various audio-and-video
integrated products, such as a portable DVD player that includes
a compo or even one that is a total combination of a DVD player,
flat screen TV, VCR and CD players, a radio plus a multi-function
remote control that can rotate the position of the television to
any desired position.
Sidney Choi, advisor of PT Samsung Elektronik Indonesia, said
that this kind of product combining is a growing trend in
developed countries and is enjoying high sales. Last month,
Samsung launched various types of CD-DVD tapes and DVD-Compo for
the European and U.S. markets. Sidney remarked that the prospects
are very good, based on the sales figure of DVD-Compo in the U.S.
that are close to one billion per year.
"The trend is yet to grow here in Indonesia, because most
consumers still prefer lower-priced products, while such combined
products are naturally more expensive. Price still seems to be
the obstacle," Sidney said.
Similarly, Darmadi, a marketing observer of IBII Consultants,
said though there was an increase in quality entertainment
products, this segment had not grown, unlike the DVD player,
which enjoys a high growth every year due to its affordable
price. One of the ways to speed up its growth, according to him,
is an aggressive advertising and promotional campaign to increase
consumers' awareness of the products' superior features thereby
also creating an increased desire for the products.
Though acknowledging that DVD home-theater products are still
quite expensive, Sung Khiun, marketing manager of PT LG
Electronics Indonesia, said its company would continuously try to
reduce its prices. One example is its recent innovation of a new
series of DVD home-theater products with lower price tags. The
launch is slated for February, 2003, and the price is around the
Rp 5 million mark. Sung Khiun added that in the coming months
other models with lower prices, between Rp 3 million and Rp 4
million, would also be introduced to the market.
Targeting the middle-income segment, Sung Khiun agreed that
this was a small segment. That is one of the reasons why LG does
not expect huge sales and has set a reasonable number for the
sales in the initial or introductory stage.
He was also confident that this product category had a bright
future due to its upper-middle and upper class consumers, who
seem to be relatively unaffected by the country's macro economic
condition. The increased prices of cinema tickets is also another
factor that will boost its sales and create a desire in cinema-
goers to have their own theaters in the comfort of their homes.
Ujang Sumarwan, an observer on consumer behavior from the
Bogor Institute of Agriculture had another suggestion. He said
one of the ways to attract customers would be to provide them
with educational information in the advertising, so that they are
more familiar with the features in order to get the optimum
results from the related features.
"So far, very few companies have endeavored to educate their
customers on the ideal or most effective way to install the
equipment in small and medium-sized houses in densely populated
locations. This particular segment -- quite large in number --
are potential buyers income wise," he said.
As we all know, most home-theater equipment has been designed
with a relatively large space in mind. Hence, potential consumers
with smaller houses are rather reluctant to purchase them as they
fear the result will be poor and may not even come close in
matching their needs.
However, Darmadi observed, there are still many opportunities
for the product to succeed, as marketing efforts have to be
tailored to match the consumers in each segment. Obviously, the
current market is still the country's major cities, such as
Jakarta, Bandung, Semarang and Surabaya, while among Sumatra's
cities, Medan is currently the potential market.
The rapid growth in the country's audio and video (AV) market
has also lured foreign AV specialists such as Surios High-End
Audio, a specialist consultant in high-end theater and
entertainment system of the Unite States.
Surios helps audio and video enthusiasts to create the best
home theater and entertainment system in their houses. "We will
guide from the room layout, room design, choosing the best
speakers, projectors, screen, amplifiers, electricity cleaner,
cables, to surround sound controller, while stay within your
budget," one of the company's executives said.