HTSA Dealers Say They're Slowly Embracing High-End Soundbars

Soundbar factory sales revenue accounted for 30 percent of all loudspeaker sales in January 2012, according to CEA figures, and the number more than doubled to 64 percent by the end of the year. The soundbar category may account for half of all home speaker dollars by 2015, said Kerry Moyer, CEA senior director-retail membership, in a presentation on U.S. retail trends.

"It’s a real market you can’t ignore,” Tim Valters, president of Paradigm parent company SVI Holdings, told us. Paradigm bowed its first soundbar last fall at $799, Valters said, and the company is readying a $1,400 model for launch in September. Soundbars have taken share from $999 home-theater-in-a-box systems, he said, an area Paradigm doesn’t play in, but the company so far hasn’t adjusted its surround-sound speaker mix to favor the growing soundbar business, he said.

The soundbar trend poses a challenge for speaker companies with roots in high-quality audio performance. Paradigm’s upcoming model for fall will have Bluetooth connectivity to accept music streams from smartphones and tablets but will still deliver the “price/value” equation the company is known for, Valters said. “You won’t see a $399 soundbar from Paradigm,” he said. But “technology moves rapidly, and we need to stay in step,” he said.

Specialty dealer Gramophone in Timonium, Md., was reluctant to move into the soundbar business due to the category’s “dumbed down” reputation as an audio-for-video solution, owner Brian Hudkins told us. Hudkins compared selling a soundbar that replaced separate surround-sound speakers to selling dual-well cassette decks or CD changers back in the day -- a mass-merchant approach to audio versus audiophile-grade solutions Gramophone is known for.

But like other specialists, Gramophone is moving carefully into the soundbar world, supported by vendors that know they need to have a presence in the expanding market. “Soundbars are a very strong, growing business,” Hudkins told us, “but we're not going to sell one for $299.” Gramophone will sell a customized version from Leon Speakers for four figures that can be tailored to customers’ wishes in size and finish, for instance. The retailer is also selling a $1,000 model from GoldenEar Technology and the widely distributed $699 Sonos Playbar that even Sears showed on its website last week. The Playbar is “opening eyes,” Hudkins said.

"We have dealers who have brushed aside the soundbar category, and that’s a mistake,” said Jack Shafton, vice president-sales and marketing for GoldenEar. GoldenEar launched its first soundbar, the SuperCinema 3D Array, last fall with a public coming-out at CES 2013, and in that time the product has already become the second-highest selling product in the GoldenEar line, Shafton said.

Shafton said soundbars can be a viable category for specialty dealers “if approached properly.” The category has “opened new doors for dealers,” he said, adding that GoldenEar dealers should use the popularity of the category to sell against more mainstream product. “No one has to suffer because of the soundbar,” he said. GoldenEar offers a high-end soundbar with high-end electronics, he said. “It’s important to embrace it if consumers are embracing it."

On the loss of multiple surround-sound speaker sales because of the integrated soundbar approach, Shafton adopted an adapt-or-die view. He conceded potential loss of some left, center and right speaker business but said customers who want a soundbar solution versus a multiple speaker setup will find their solution elsewhere if GoldenEar doesn’t offer it. “Embrace it or lose the business,” is the message GoldenEar is sending to its dealers. Shafton cited one dealer who was adamant about trying to convince customers not to go the soundbar route and instead adopt the 5.1-channel speaker configuration for a higher performance solution. “I cautioned him those customers will just leave and buy somewhere else,” he said. When the dealer finally agreed to take on the high-end GoldenEar soundbar, he sold 20 models in the first 30 days, Shafton said.

The ascent of the soundbar category doesn’t have to violate specialty audio principles, Shafton and other speaker makers told us. There’s still the opportunity for add-on sales that specialty dealers are used to delivering, he said. “Ours isn’t a plug-and-play solution,” he said. Dealers can supplement a soundbar sale with a powered subwoofer, remote control and installation, he said.

One dealer, who asked not to be quoted by name, said Sonos is the big winner in the soundbar space. Sonos only recently launched its $699 Playbar, but the speaker has taken off, the dealer said. Specialty dealers will always push for the multiple-speakers setup in primary home theater areas where high-end sound quality is a priority, but that leaves a lot of secondary rooms where a one-box surround-sound speaker system fits the bill, he said. On why he endorses the Sonos solution, the dealer told us, “because it’s good, it’s easy and the interface is great."

At high-end speaker company Bowers & Wilkins, the soundbar business is “awesome for us,” said Doug Henderson, president of B&W Group North America. As a single product, the soundbar has become a “very big component in our overall speaker business -- almost without a lot of push,” Henderson said. While the company designs “a very nice product” for $2,200, “the consumer has driven that,” Henderson said. “It’s what they want and we were smart enough to have one fairly early on so we got a jump in the premium space,” he said.

Panorama, a nine-driver system with Dolby Digital and DTS, launched two and a half years ago and was just replaced by Panorama 2, which adds HDMI and on-screen display for setup, Henderson said. Panorama has been “very successful” for the company in general, Henderson said, conceding that it’s been less successful among custom dealers who prefer “more evolved solutions wherever they can get it.” He said some dealers have “missed the fact that there are secondary applications” in guest bedrooms and children’s rooms where they can also link to a house-wide music system with Panorama. Soundbars and surround speakers “serve different purposes and could be a different part of the custom installation world,” he said. Henderson said he can envision future B&W soundbars above and below the $2,200 Panorama 2. On whether B&W is looking at a streaming Bluetooth soundbar, he said, “Yes, I would say we are,” but he didn’t provide details on future products.

"The soundbar market will expand substantially from here,” Henderson said, checking himself about speaking publicly for fear of “bringing in more competitors. The fact is flat screens don’t have much in the way of sound in them, and people want simple solutions,” he said. In addition, the TV has become a multi-source device with streaming apps for movies and music, he noted. For many customers, “the television with a soundbar is all they need.”

The soundbar is here to stay, Henderson said, and B&W is hoping to elevate the category from a “cheap and cheerful solution to something with reasonable high fidelity.” On the loss of a multiple surround-sound speaker sale to a soundbar, Henderson is “quite convinced that a high percentage of Panoramas go to people who otherwise would have just bought a television,” he said. “Whether we like it or not, a lot of people have decided that the complexity, cost and physical space requirements of a standard AV system are not very appealing.” The challenge for manufacturers is to make a soundbar a “consequential enough purchase that the trade-off isn’t onerous,” he said. If dealers lose a five-speaker, subwoofer and receiver sale to a $500 soundbar, “you're going out of business,” Henderson said. “But at $2,200, perhaps at even at a higher price point, with a reasonable margin structure, it’s commercially viable to sell that product,” he said.

Dealers have reported success with Leon Speakers’ customizable approach to the soundbar, which gives dealers a competitive edge over mainstream versions. Jon Robbins, CEO of Hi-Fi House, Broomall, Pa., said Leon’s approach is a big reason the retailer finally embraced the soundbar category. Leon Speakers offers soundbars that it will match by color and size to the TV it’s paired with, he noted. Speakers can be specified according to driver complement, too, with a range of products that span the $1,000 to $5,000 spectrum. The Leon soundbars can be left-center-right speaker replacements or left and right speakers only, he said.

When soundbars first came on the scene “we were suspect,” Robbins told us. But the store now offers a menu of solutions, including the GoldenEar product and Paradigm’s $699 Soundtrack system that combines a soundbar and subwoofer. “We still make the argument for true surround sound,” Robbins said, “but there are customers who don’t want floorstanding speakers and are more interested in how a speaker looks,” he said. On selling one soundbar versus an entire speaker array, he said, “It’s a whole lot better than selling none."

HTSA Meeting Notebook

A year and a half into his tenure as HTSA’s managing director, Bob Hana sees the group as “less and less of the traditional buying group” as it was first established and “more of a group that coordinates efforts in marketing to drive demand,” he said. Consumers’ buying habits have shifted, Hana told us, and most HTSA members’ customers are no longer coming into stores or showrooms to buy “transactionally,” he said. “So we have to find unique ways of seeking them out,” he said, referring to trade events such as CEA’s Demo Days or special events sponsored by manufacturers. Hana is encouraging more marketing coordination among vendors and between vendors and dealers to communicate the message about what specialty technology dealers do, he said: “If you were to talk to 100 folks in a restaurant, four or five might know what we really do, but 70 or 80 of them -- if they understood the kind of experience they could have with their iPhones working as remotes and talking to their shades -- they'd be very interested in it.” HTSA membership stands at 65 retail accounts, including three new members announced at the spring meeting. “Some level of reasonable growth” is on the group’s roadmap, Hana said. “The group will evolve,” he said, with some geographical locations lacking representation. But “we won’t be in the hundreds,” he said, adding that “in the 80s or 90s would be a very manageable group.” HTSA’s buying power in 2012 “was a little north of $450 million,” he said, declining to provide 2011 figures for comparison.

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A surprising number CEA put forth at the HTSA meeting showed a 75 percent increase in unit sales of non-surround-sound receivers in 2012 compared with a year earlier. Some dealers have reported solid two-channel receiver business, but that’s not enough for one old-school receiver maker to add to the mix, Doug Henderson, president of B&W Group North America, told us, citing his company’s Rotel brand. “We're not looking at a stereo receiver in the sense of having on-board sources,” Henderson said. On the way the world is moving, he said, “looking at my iPad, I have so many sources, why would I replicate them in a more cumbersome way in a ‘receiver,’ when I can stream from my iPad via something like a Sonos Connect or an Apple TV?” Rotel products have Bluetooth connectivity, allowing the pairing of an iPad to Rotel wirelessly, which is a “much more elegant and powerful interface than anything we could do,” he said. Other than retaining a CD player as a legacy device, “I don’t frankly see us in the source business,” he said. Instead, the company will focus on amplification, digital-to-analog conversion and home theater processing, he said: “Sources, like it or not, have gone away. Sources are now software.”