Boston, Denon, Marantz Partnering on Specialty Audio Road Show

With low-ticket soundbar systems comprising 75 percent of Boston Acoustics’ U.S. revenue, the company is hoping to boost sales of its higher margin products through a renewed commitment to the specialty channel for high-end products and in-store demo kiosks for a mid-priced system, company executives said Thursday at a New York press event.

Worldwide, soundbars represent about 50 percent of Boston revenue, and the company hopes its new flagship M series keeps the revenue ratio of speakers to soundbars at 50-50 over the next few years, said Mitchell Nollman, general manager of Boston Acoustics. Nollman’s hope is that “we're no worse than 40 percent loudspeakers,” he said. “We're investing significantly in loudspeakers and trying to drive new product development and excitement for the category,” Nollman said, calling speakers “an important category for retailers and hi-fi enthusiasts that gives the best possible performance."

At the event, Boston highlighted its recently launched flagship line, the M series, which executives said comprises seven models. Models include the M350 ($2,499/pair), M340($1,999/pair) and M250 ($1,499/pair) floorstanding speakers, bookshelf M25 ($799/pair), center-channel MCenter ($599) MSurround($748/pair), and the MSubwoofer ($1,199), the company said.

Boston “took our eye off” the traditional speaker business in terms of “choices we made in distribution, choices we made in some of the product,” and the M series offers a way to reverse the course, Nollman said. The M series launched in spring in Europe and at CEDIA in September for the U.S. market, the company said. The M series speakers are sold through specialty AV dealers as well as direct from Boston’s own website.

In the U.S. over the past few years, Boston “lost revenue,” in the traditional speaker category, “and now we're back,” Nollman said. The company has some rebuilding to do in terms of goodwill with specialty dealers because “we ignored them,” Nollman said. “We went to Circuit City a long time ago, and we can do better,” he said. The company has a “completely changed-over” product line and management team, “and now we're going to see how we can rebuild our business,” he said. Boston plans “selective distribution” with the M series, and “we want to support a small number of dealers and provide value,” he said. The goal for distribution is brick-and-mortar sales, he said, although some of the dealers “can do a good job online.” Andrew Clark, product manager, said the strategy is to sell at dealers where “a demo is key to the sale. “It’s really difficult for a customer to buy online and really understand what they're buying,” Clark said.

Calling Boston products a “best-kept secret” in audio, Nollman said the company is working with sister companies Denon and Marantz to spread the word about the value of quality audio through a 10-12-city roadshow that will run through the end of January. “Denon and Marantz have done a phenomenal job with retail programs and support,” and Boston can benefit from that, Nollman said. On the tour, the company has been showing the M series and dock products from Boston, Marantz and Denon, he said.

The soundbar category, meanwhile, doubled in sales last year and nearly doubled the prior year, Nollman said, citing NPD figures. In the near term, soundbar sales, one of the few bright spots in the overall audio category, will continue to grow in the 30-50 percent range annually -- versus loudspeakers that are “relatively flat” -- but they probably won’t repeat triple-digit growth levels, Nollman said. Soundbars sales are directly linked to the thinning of TVs cabinets, which have less and less room for speaker components as bezel real estate shrinks, Nollman said. As TV sound has deteriorated, “people are aware there’s a problem,” he said, and “soundbars are the solution."

Boston recently began shipping the 30-watt TVee 10 ($199.99) standalone soundbar and TVee26 with a wireless subwoofer ($349.00). Boston hopes its audio legacy -- both in reputation and in acoustic design -- sets it apart from the increasingly crowded soundbar market. “Anybody can go to China and pick up a product,” Nollman said. “We spend a lot of time tuning the product and making sure it sounds good,” he said.

On the challenge facing a retail salesperson trying to sell a TV and then trying to sell a soundbar to make up for the TV’s audio deficiencies, Nollman said the attachment sale is a plus for retailers in the margin-strapped TV business. “If I'm a retailer and making very little money on a TV, which is a tough business, you can probably make more dollars on a $300-$400 soundbar in profit than you can on a $1,000 TV,” he said. On how customers react to having to spend more money just to get reasonable sound, Nollman said consumers are starting to hear the difference between TV sound and TV sound through a soundbar, which can be easily demonstrated at retail. His estimated consumers are willing to spend half of what they spend on a TV on a soundbar to accompany it. While there are premium soundbars in the $1,000 and higher range, the highest volume category is $200-$300, he said.

Regarding other speaker categories being impacted by soundbars’ success, Nollman acknowledged that home-theater-in-a-box is one category that has felt the competition. Stephen Shenefield, Boston’s director-product development, said flat TVs have created a new audio customer. “Many of the people who buy soundbars wouldn’t ever have bought a home theater; they may never have heard one,” Shenefield said. “We know what a home theater is but that’s not what reality is for most people” who “just want to watch TV,” Shenefield said. “So we're trying to keep the message straightforward so it means something to a broader group of people.” Boston is also targeting secondary room TVs with soundbars where people want better sound but don’t want a roomful of speakers, Nollman added.

Some retailers, including Best Buy and warehouse clubs, have begun offering demo spaces where customers can hear the difference that a soundbar makes in the overall sound. Boston has put together its own demo station for its $499.99 Digital Cinema system, an alternative for people “who don’t want to put a soundbar in front of their TV,” Nollman said. The system includes a pair of tiny cube speakers and a subwoofer. The demo station’s styrene enclosure serves as product stage, branding showpiece and demo unit, Nollman said. Consumers can run their own demos with the Sub/Sat system, which shows a loop of licensed music clips from known and less familiar artists. They can also hit a Bluetooth button and follow a three-step process to wirelessly connect their smartphone and listen to stored or streamed music through the Boston system.

The demo station, currently in P.C. Richard, Best Buy and Fry’s Electronics stores in the U.S., is configured to be a four-foot-wide endcap display at retail but can be downsized to two-foot widths to fit on a shelf, Nollman showed us. The demo material was developed in a way that allows retailers to pause the loop and talk about the system, he said. The kiosk is employed in a “major retailer” in France, he said, and plans call for taking it to Asian retailers as well.