There’s more to home theater, however, than just a pretty picture. Consumers are eager to add an aural assault to the video assault on their senses, and they’ve taken a liking to home theater audio systems. These systems unlock surround sound information encoded on prerecorded VHS tapes and DVD-Video discs and in soundtracks delivered by local TV stations, cable operators and satellite TV services.

Marketers generally attribute the popularity of home theater audio equipment to the unprecedented growth of DVD hardware and software sales.

What Surround Sound Does
On disc or tape, even first-generation surround sound – Dolby Surround – puts you in the center of the action, enveloping you with the background sound of a driving rainstorm or thunderous earthquake.

Dolby Surround also enhances dialog intelligibility by channeling dialog to a single TV-top center-channel speaker. The center channel ensures that the voices of on-screen actors come from the same direction as their images — even when you're sitting off to one side of the room. The left/right speakers, freed from the task of producing dialog, concentrate on widening and deepening the sound stage.

Surround speakers, in turn, envelop listeners with the sounds of explosions, rainstorms and other ambient sounds that further enhance the illusion of being there.

Getting Surrounded
Dolby Surround is available on many prerecorded VHS tapes and DVD discs. Local analog TV stations, cable operators and satellite TV operators also deliver Dolby Surround and other matrix-surround formats to homes.

Hundreds of the nation’s roughly 1,750 full-power analog TV stations (commercial and public) are broadcasting a stereo signal and therefore are capable of delivering matrix surround to homes. The number of households capable of enjoying the stations’ over-the-air surround broadcasts also rose. By January 2006, 76 percent of all households were equipped with stereo-capable color TVs, CEA said. That’s up from 65 percent in January 2000.

Digital Surround – What’s Available?
To further enhance realism, two 5.1-channel digital surround formats – Dolby Digital 5.1 and DTS Digital Surround – arrived on the scene in the 1990s. In consumer products, Dolby Digital decoders appeared in 1995 after inventor Dolby Labs introduced the technology to the movie theater and film industries. Consumer products equipped with DTS, developed by Digital Theater Systems, soon followed. Today, both formats appear on many DVD discs. Dolby Digital 5.1 also is delivered by digital cable operators, satellite TV providers and local digital TV (DTV) stations delivering standard-definition (SD) or high-definition (HD) pictures.

Dolby Digital and DTS deliver five discrete (fully separate) channels of full-range (20 Hz-20 kHz) audio to ramp up the realism and drama, while a separate low-frequency-effects channel (the 0.1 in 5.1) delivers the deepest bone-crunching bass. The effects channel can be delivered by a dedicated subwoofer or diverted to a system’s five full-range speakers.

Dolby Surround, in contrast, delivers a four-channel “matrix” surround experience. A Dolby Surround mix tucks center-channel information and a limited-bandwidth (100 kHz-7 kHz) mono surround channel into two full-bandwidth stereo left-right channels. A Dolby Surround decoder extracts the hidden channels to deliver dialog to a center-channel speaker. The surround channel is split between two surround speakers.

Compared to Dolby Surround, 5.1-channel surround delivers surround effects with greater depth, localization and realism, in large part by bringing full-range stereo to the surround speakers. You can follow the sound of a jet flying over your head or a rocket-propelled grenade hissing past your shoulder.

Other 5.1-channel benefits include greater channel separation to deliver unprecedented spatial imaging, improved dialog intelligibility, enhanced resolution and greater dynamic range.

Back to Surround Future
Some of the benefits of discrete 5.1-channel surround are now coming to homes that subscribe to analog cable service or get their TV programs over the air from local analog TV stations. Home audio products equipped with Dolby Pro Logic II decoders extract a five-channel-like surround experience from stereo and matrix-surround sources. That format also works its magic on stereo CDs, FM stereo broadcasts and stereo satellite-radio broadcasts – as does the rival SRS Circle Surround format.

The effect is impressive, but when Pro Logic II and Circle Surround II decoders detect matrix-surround content encoded in either format, the surround experience achieves a higher level of realism and more closely approximates the Dolby Digital 5.1-channel mixes available to DTV viewers. Circle Surround II decoders also will deliver a 6.1-channel experience through home theater systems that add a back-center channel behind the listener. Dolby Pro Logic II’s successor, Dolby Pro Logic IIx, delivers 6.1- and 7.1-channel experiences from stereo and IIx-encoded material to add two back-center channels to a home theater.

Like Dolby Surround, Circle Surround and Dolby Pro Logic II are matrix technologies, but they fold three channels – not two – of additional information into a stereo signal: a center channel, a left-surround channel and a right-surround channel. As a result, any cable operator, TV station, satellite TV service or radio station that broadcasts stereo signals – even in analog – can deliver content encoded in Dolby Pro Logic II or Circle Surround. Consumers who subscribe to analog cable service, or who get analog TV broadcasts over the air, thus can enjoy a 5.1-channel experience just like their digital neighbors.

In 2005, cable operators and local TV stations delivered a growing amount of Pro Logic II and Circle Surround content with their analog and digital video programs, said Circle Surround inventor SRS Labs. Content providers delivering Circle Surround include ABC, ESPN 2, ESPN HD and Fox. Some of these TV networks also provide soundtracks in Dolby Pro Logic II.

For technical reasons, some DTV programs, usually live events such as sports, are delivered to consumers with matrix 5.1-channel soundtracks rather than discrete 5.1 soundtracks, SRS notes. That’s because some broadcasters don’t have sufficient bandwidth to transmit a discrete 5.1-channel soundtrack from the event site to their broadcast center. Some broadcast centers also don’t have the infrastructure to handle discrete 5.1 soundtracks, although they’re fully equipped to handle stereo and matrix-encoded stereo soundtracks, SRS said.

In some cases, the soundtracks of live events and other programs are delivered simultaneously in discrete and matrix 5.1 to terrestrial DTV stations. That’s because some terrestrial DTV stations are equipped to pass through a matrix stereo signal but not a discrete 5.1 signal.

Hollywood’s High 5.1
At first, discrete 5.1-channel soundtracks could be heard only in movie theaters, but the technology has filtered down from theatrical releases playing in movie theaters to DVDs in home theater systems.

By February 2006, the number of 5.1-channel U.S.-market DVDs discs grew to 13,700 out of almost 75,000 titles available, according to Muze, which compiles databases of entertainment product information for retailers. That’s up from 10,200 5.1-channel titles in February 2005 out of 46,000 discs available and up dramatically from more than 5,300 5.1 discs out of more than 29,000 discs available in March 2004, Muze said. In February 2000, only 940 5.1-channel DVDs were available in the U.S. These numbers include multiple versions of the same title: widescreen, full-screen and special editions.

For households lacking discrete-5.1 decoders, many DVDs contain stereo or matrix-surround soundtracks. DVD players, however, also will down mix a discrete 5.1-channel soundtrack into stereo-compatible, matrix-surround signal for these households.

5.1 SDTV, HDTV Sources
The amount of video content available in discrete 5.1-channel surround sound also is expanding through digital cable operators, satellite TV operators and local DTV stations. Their discrete 5.1-channel soundtracks accompany digital standard-definition TV (SDTV) programs and high-definition TV (HDTV) programs, and they’re down mixed to a stereo-compatible matrix surround signal by digital cable boxes, satellite TV receivers and DTV sets for homes lacking a multi-speaker home theater system.

In the satellite realm, DirecTV became the first satellite broadcaster to offer 5.1-channel surround in mid-1998 for its SDTV programs. Today, DirecTV and rival, Dish Network, deliver 5.1 with many SDTV and HDTV programs to a combined subscriber base that exceeded 27 million households at the end of 2005. Among those subscribers, the number of homes subscribing to satellite HD service rose to 1.8 million at the end of 2005, Kagan Research said.

About as many people get their 5.1 fix through digital cable systems. As of September 2005, almost 38 percent of U.S. cable households, or about 27.6 million homes, subscribed to digital cable service, according to the National Cable and Telecommunications Association (NCTA). That’s up almost 14 percent from the year-ago period and up 185 percent from year-end 2000’s 9.7 million.

NCTA’s digital subscriber numbers include HD subscriptions. Although NCTA doesn’t break out HD subscribers separately, Kagan Research estimates the number of HD cable subscribers grew 65 percent to 3.8 million at the end of 2005.

Cable Expands SD, HD Footprint
Digital cable’s potential is far greater than the subscriber numbers indicate, given that digital cable is available to almost every home passed by cable service. As of September 2005, almost all of the 110.8 million U.S. households could subscribe to digital cable service if they wanted to, NCTA statistics show.

As of September 2005, more than 110.5 million households, or 99 percent of all 110.8 million households passed by cable, were passed by a broadband-cable service that offers digital cable, video-on-demand (VOD) and high-speed Internet access, NCTA said.

For years, digital cable's standard-definition (SD) footprint was bigger than digital cable’s high-definition (HD) footprint by a wide margin, but that has changed. HD cable went on-line for the first time in 2002 in a limited number of markets, and by September 2005, HD cable service was passing 96 million households, representing 87 percent of all households passed by analog and digital cable, NCTA said. That’s up from 65 percent at the end of 2004.

HD cable service was available in the top 100 cable markets and 198 of all 210 cable markets in September 2005, NCTA said. That’s up from 177 cable markets in September 2004 and 143 at the end of 2003.

Cable, Satellite SD 5.1 Content
What are cable and satellite subscribers hearing in discrete 5.1 surround? Plenty.

Over their digital SD feeds to cable and satellite operators, multiple content providers deliver a growing amount of discrete 5.1 programming. The providers include Home Box Office, Showtime Networks and the Starz Encore Group. At HBO, discrete-5.1 broadcasts over the company’s main HBO channel accounted for 54 percent of the channel’s total airtime between July and December 2005 and 33 percent of the channel’s total titles.

Starting in early 2005, HBO also delivered 5.1 through its SD Cinemax on Demand channel but not over its eight Cinemax-branded SD channels, including MoreMax and ThrillerMax.

Discrete 5.1 also can be heard through many SD channels delivered by Starz Encore, Showtime Networks and others.

Besides delivering digital SD video in discrete 5.1, digital cable and satellite operators are dramatically increasing the amount of HD content that they deliver in discrete 5.1.

Only six HD channels were available to cable and satellite operators in 2002, but as of early 2006, 38 more HD channels had debuted, and the total number was expected to grow to about 50 by the end of 2006, according to Kagan Research. Those numbers exclude HD programs broadcast by the seven over-the-air TV networks.

HD channels available exclusively to cable and satellite operators include Animania HD, Cinemax HD, Comcast SportsNet HD, Discovery HD Theater, Encore HD, Equator HD, ESPN HD, ESPN2 HD, FSN HD, Gallery HD, Guy TV HD, HBO HD, HDNet, HDNet Movies, INHD, INHD2, Majestic HD, Monsters HD, MSG Networks in HD, MTV’s MHD, NBA TV, NFL Network HD, Rave HD, Rush HD, Showtime HD, Starz! HD, The Movie Channel HD, TNT HD, Ultra HD and Universal HD.

Among premium content providers, HBO was first to launch HD service in March 1999, and Showtime was first to offer 5.1 with HD service beginning in 2000. Today, most providers of HD content to satellite and cable TV operators have made a major commitment to the 5.1-channel audio format.

Showtime, for example, claims that most of its HD content is delivered in discrete 5.1. For its part, HBO said 78 percent of its Cinemax HD airtime was delivered in discrete 5.1 during the July-December 2005 period, up from 49 percent during the year-ago period. That airtime accounted for 56 percent of its total titles, up from 23 percent during the year-ago period. During the same time, HBO HD delivered 78 percent of its airtime in 5.1, up from 51 percent. The airtime accounted for 59 percent of HBO HD’s titles, up from 29 percent during the year-ago period.

In 2005, Discovery HD Theater delivered 66 percent of its programming hours in discrete 5.1, up from 45 percent in 2003. Discovery’s SD digital and analog channels are delivered in stereo without matrix-surround encoding.

Other HD channels available in discrete 5.1 include Starz! HD, Encore HD, INHD, INHD2, and MTV’s MHD.

In 2006, EchoStar raised the number of national HD channels that it offers to 25 from 18. If the HD channel is delivered to EchoStar in discrete 5.1, it’s delivered to subscribers in 5.1. EchoStar’s 25 HD channels don’t include the local HDTV channels that it is rebroadcasting in select markets.

Local Carriage
In select markets, it’s common to get local TV stations through satellite dishes, just like it’s possible to get local TV stations through local cable networks. As a result, if the rebroadcast local station is a DTV station delivering 5.1-channel surround, then consumers can use their digital cable box or satellite dish to listen to the station’s programming in 5.1.

As of year-end 2005, local cable operators were carrying the digital signal of 681 different local over-the-air DTV stations, up from 504 at the beginning of the year and up six-fold from January 2003, when only 92 local DTV stations were carried by cable operators, NCTA said. Most of those stations were delivering HD, and if they were broadcasting in 5.1, the cable operators were passing the 5.1 signal through to their subscribers, the NCTA said.

Satellite providers DirecTV and EchoStar also deliver local TV stations to subscribers, with DirecTV offering local stations to more than 92 percent of the nation’s households at the end of 2005, some of them in HD.

For its part, EchoStar plans in 2006 to rebroadcast local HD channels in as many as 50 markets to reach more than 50 percent of U.S. TV households. Markets such as Boston, Chicago, Los Angeles and New York went online in early 2006.

Terrestrial DTV in Majority
Even if households don’t subscribe to digital cable or satellite services, they can enjoy digital SD and HD content through a growing number of local digital TV (DTV) stations, many of which deliver digital 5.1-channel surround.

By February 2005, the overwhelming majority of local full-power commercial and public TV stations were broadcasting DTV signals in either SD or HD resolution, the National Association of Broadcasters (NAB) said. Out of 1,730 stations, the number of local TV stations that made the digital transition hit 1,550 in 211 markets that serve 99.95 percent of the country’s more than 106 million TV households, NAB said. That’s up from 1,344 in 211 markets in January 2005 and only 768 stations in 184 markets in February 2003, the organization said.

A total of 92 percent of TV households could receive DTV broadcasts from five or more stations in January 2006, and 75 percent of those households could receive digital broadcasts from eight or more stations, NAB added. Most DTV stations, NAB believes, are delivering HD video.

At least 700 terrestrial DTV stations were passing through discrete 5.1-channel soundtracks in the Dolby Digital format in early 2006, according to Dolby Labs. DTV stations that aren’t transmitting discrete 5.1 can transmit matrix surround and stereo if they receive programs in those formats.

TV Networks Add 5.1 HD
The TV networks, meantime, are delivering more discrete 5.1 content to local DTV stations.

In the 2004-2005 season, CBS, Fox and NBC added discrete 5.1 soundtracks to their regularly scheduled HD episodic programs. They joined ABC, which began in the 2001-2002 season to deliver all HD programming in discrete 5.1.

PBS delivers all of its HD programming in discrete 5.1, and The WB Network delivered most of its HD program in matrix 5.1 in the 2005-2006 season.

Here’s what each network is doing:

ABC: In the 2001-2002 seasons, ABC began delivering all HD programs in discrete 5.1, and in the 2005-2006 seasons, it expected to broadcast more than 700 hours of HD programs in discrete 5.1, including all of its scripted primetime comedies, dramas, theatrical movies, NFL Monday Night Football, “Good Morning America” and special events.

In primetime in early 2006, ABC was broadcasting 13.5 hours per week in HD and discrete 5.1 to its affiliates.

In turn, a growing number of ABC’s 225 affiliates are transmitting the network’s HD 5.1 programs, ABC reported. As of January 2006, 82 of 137 HDTV affiliates were delivering discrete 5.1 to viewers, up from January’s 2005’s 64 of 132 HDTV affiliates. In November 2003, only 50 of 112 HDTV affiliates delivered 5.1.

As of January 2006, ABC’s 36 SD affiliates delivered HD programming in stereo and matrix surround, a spokesperson noted. ABC delivers all of its digital programs with 7.1 channels of audio: one discrete 5.1 soundtrack and a duplicate two-channel soundtrack that carries matrix surround.

CBS: The network added discrete 5.1 to select HD programs for the first time in 2003, when it delivered 5.1 with the Grammy Awards, college basketball and football, the U.S. Open, and select pro football games.

The network began delivering discrete 5.1 with prime-time HD programs during the 2004-2005 season. During the 2005-2006 season, all prime-time comedies and dramas were delivered in HD, and all but two were broadcast in discrete 5.1. All HD sporting events and specials also were delivered in 5.1, including the Grammies, the U.S. Open Tennis, NCAA football, NFL football, the NFL playoffs, the AFC Championship, NCAA basketball, Final Four and The Masters.

“The Late Show with David Letterman” went HD in the fall of 2005 and was expected to transition to discrete 5.1, perhaps in 2006. Other HD programs not delivered in discrete 5.1 include the soap opera “The Young and the Restless”. HD programs not delivered in discrete 5.1 are delivered in matrix surround, in some cases in 5.1-channel matrix Dolby Pro Logic II, depending on the show’s producer, said Engineering VP Robert Seidel.

CBS also transmits metadata that enables home theater systems to switch automatically between mono, stereo, matrix-surround and Dolby Digital 5.1.

A total of 222 CBS-owned and -affiliated stations were on the air with DTV in early 2006, reaching 100 percent of U.S. households, Seidel said. That’s up from 175 in January 2004.

In early 2006, CBS had not updated a two-year-old survey to determine how many affiliates were broadcasting in HD and discrete 5.1. In early 2004, however, almost half of CBS’s 175 DTV affiliates passed 5.1-channel soundtracks through to their viewers.

Fox: For the 2004-2005 season, the network dramatically increased the amount of discrete 5.1-channel programming and delivered HD video for the first time, having previously delivered programs only in digital SD.

In the 2005-2006 season, as in the previous season, almost all scripted and live-action programs were produced in HD, and many of them were in discrete 5.1, the company said. The rest are in matrix surround. More than 100 regular season NFL games and NASCAR races are in HD and discrete 5.1.

Among Fox’s 182 affiliates, about 165 were delivering Fox’s HD signal in early 2006, and all of them delivered discrete 5.1.

The network launched 5.1 with select SD programs in the 2002-2003 season following its 5.1-channel broadcast of the 2002 Super Bowl.

NBC: The network went 5.1 in a big way during the 2004-2005 season, when 14 out of 14 of the network's scripted HD series were delivered with discrete 5.1, as were occasional HD movies and HD sports specials.

During the 2005-2006 season, all scripted series delivered in HD are being delivered  in discrete 5.1. In addition, “Saturday Night Live” went HD and discrete 5.1, and numerous specials got the discrete-5.1 HD treatment, including the 2006 Winter Olympics, the Macy's parade, the Rockefeller Center Christmas tree lighting ceremony, the Eagles Farewell concert and Elton John's Red Piano concerts. NASCAR went HD and discrete 5.1 in July 2005, and NFL Sunday Night Football is expected to go HD and discrete 5.1 in fall 2006. “Late Night with Conan O’Brien” went HD in April of 2005 with audio delivered in matrix Dolby Pro Logic II. Some NHL Hockey went HD in January 2006 with stereo audio.

For analog and DTV affiliates that broadcast in stereo but aren't equipped to deliver Dolby Digital 5.1, NBC delivers matrix 5.1-channel Dolby Pro Logic II soundtracks.

By January 2006, 152 of about 213 NBC-owned and -affiliated stations delivered HD. And based on a June 2005 survey, NBC said 74 of its owned and affiliated stations delivered 5.1. In late 2004, in contrast, 135 of about 213 NBC affiliates delivered HD. Of the 135, 69 delivered 5.1.

PBS: The public network delivers all of its HD programs in 5.1 if created in 5.1.

UPN: The network, which in early 2006 announced plans to merge with The WB Network, launched HD service in the 2003-2004 season. In the 2005-2006 season, it ramped up its HD schedule by offering ten series and select Sunday afternoon movies in HD. The ten series account for more than half of UPN’s prime-time line-up and all the network’s scripted series.

All HD programs, however, are delivered in matrix four-channel Dolby Pro Logic. The network had 35 HD affiliates by early 2006.

WB: The WB network launched HD in the 2002-2003 season and began delivering select HD programs in discrete 5.1 and matrix surround in the 2004-2005 season.

For the 2005-2006 season, more than 14 regular series were available in HD, representing 12 of the 15 hours of the network’s weekly HD programming. Only one regularly scheduled HD program, however, was featured in discrete 5.1. The others were delivered in a proprietary matrix 5.1-channel format compatible with Dolby Pro Logic II and Circle Surround II decoders in consumers’ home theater systems.

By early 2006, more than 75 percent of WB affiliates in the top 100 markets delivered HD signals, and more than 50 percent of all WB affiliates in those markets were capable of transmitting discrete 5.1 audio.

Next-generation Surround
As part of its ongoing effort to advance the state of the art, the audio industry developed two new digital surround formats that deliver 6.1 channels. The formats are Dolby Digital Surround EX (Extended), which appeared on DVD for the first time in late 1999, and DTS ES (Extended Surround), which appeared on DVD for the first time in 2000. The DVD releases followed the two formats’ movie-theater debuts.

Both 6.1 formats add a back-center channel to a 5.1-channel home theater system, letting content providers accurately place sound effects behind you, not just to the sides and front. This allows for true “fly-over” and fly-around” effects in which jets sound as if they’re flying over your head or circling a full 360-degrees around you. One to two speakers behind the viewers deliver the sixth channel, complementing the two traditional surround speakers to the viewer’s left and right.

As of February 2006, consumers with 6.1-channel home theater systems could enjoy 166 DVD releases in the Dolby Digital EX or DTS ES 6.1-channel surround formats, Muze noted. DVD, however, isn’t the only source of 6.1-channel soundtracks for playback in the home. In an historic first for the U.S. TV industry, ESPN aired the first program in 6.1-channel surround in early 2005, SRS Labs said. ESPN used SRS’s Circle Surround technology to deliver the Espy Awards in matrix 6.1-channel surround, which was available through analog and digital cable networks.

Dolby Digital EX also can be delivered by local DTV stations, digital cable operators, and digital satellite operators if the content is mixed in EX. Because EX combines elements of discrete and matrix technology, however, it can’t be delivered by analog cable networks or analog TV stations.

However they’re delivered, 6.1-channel soundtracks are backward-compatible with existing 5.1-channel surround sound decoders, but you’ll need a 6.1-channel decoder or receiver (and at least one extra speaker) to reproduce the sixth channel.

In 1999, the first high-end preamplifier/processors that decoded 6.1 discrete channels of surround sound hit the market, and in 2000, the first high-end audio/video (A/V) receivers appeared with that capability. In 2006, A/V receivers with 6.1-channel decoding are commonplace and available at less than $200.

At the mid- and high-ends of the market, many processors and AV receivers deliver back-surround effects through two back-channel speakers rather than one to further enhance the surround experience. These systems, with a total of seven full-range speakers and a subwoofer, reduce the potential for so-called “combing” effects that reinforce certain frequencies when only one back-channel speaker is used. The additional speakers also make it easier to distinguish whether a particular sound is coming from the front-center-channel speaker or a back-center-channel speaker. Some seven-speaker systems use additional processing to enhance the seamlessness of sounds panned around you.

In 2006, a handful of suppliers were expected to offer home-theater-in-a-box (HTiB) systems equipped with EX/ES at opening prices of less than $179.

HTiB Defined
HTiB systems are all-in-one systems that come with all the audio components and cables needed to reproduce home theater surround sound.

HTiB systems come in three basic types. One type consists of a component A/V receiver, five satellite speakers, a powered subwoofer and sometimes a separate DVD-Video player, thus delivering every audio and video component needed to build a home theater except for the TV. A second type integrates the receiver and DVD player into a single component called a DVD-receiver. A third type moves all amplification and most electronics into the subwoofer enclosure, allowing for a diminutive main control unit.

HTiB solutions appeal to consumers who lack the time to shop for separate components – such as A/V receivers and component speakers – or are intimidated by too many choices. Some low-powered HTiBs with DVD-receivers sell for less than $99.

To further reduce component clutter, the industry began in late 2002 to offer a limited number of HTiBs with combination DVD/VCR-receivers. These options are still available.

Clutter Cutters
Growth in sales of home theater audio systems, whether HTiB- or component-based, hit a wall in 2005 and actually declined, according to CEA statistics. This is perhaps because many homes simply do not have room layouts that accommodate five or more speakers in the spots needed to deliver surround sound to its fullest potential. Many consumers also harbor aesthetic objections to cluttering a room with five or more speakers or running wires to speakers arrayed around the room.

Those conclusions are supported by CEA’s Five Consumers to Watch survey, which found that consumers want products that are easy to set up and don’t visually overpower a room. A total of 61 percent of consumers put a high priority on décor-friendly products that don’t take up a lot of space, and 74 percent want systems with as few wires and connections as possible, CEA found.

A September 2005 consumer survey, conducted by the NPD Group, supports some of these conclusions. The survey found that 58 percent of consumers claimed physical room limitations as the reason for not owning a home theater system. A total of 26 percent, for example, said their room was too small, and 23 percent objected to running exposed speaker wires to a home theater system’s five or more speakers.

With these preferences in mind, HTiB suppliers are:

1.    Delivering surround sound through two speakers instead of five or six. These systems use virtual surround technologies to deliver five-speaker surround sound through only two or three front speakers, eliminating surround-channel speakers that would otherwise be placed on each side of the main seating position. In 2006, more than a half-dozen suppliers planned to offer such systems at prices expected to start at around $449. Many of these systems rely on combination front/surround speakers that use angled drivers and digital signal processing (DSP) to project surround information to the left and right of viewers.

2.   Delivering surround sound through one speaker enclosure. Taking the two-speaker surround sound concept a step farther, at least two companies in 2006 planned to pack five speakers into a single TV-top enclosure to deliver surround sound. The systems, starting at around $359, are ideal for small living rooms as well as for secondary rooms such as bedrooms.

        The companies use angled drivers and digital surround processing to deliver surround effects. One of the companies reduces the number of components to two: a set-top enclosure with all speakers, amplifier and surround processor, and a separate floor standing subwoofer. Just supply your own DVD player and TV. Another company offers three-piece systems featuring one set-top speaker enclosure, a separate amplifier/surround processor and a separate subwoofer.

        A third company throws everything into one box: speakers, DVD/CD player and AM/FM tuner, but this product delivers movie soundtracks only in stereo.

3.   Offering wireless surround speakers. These HTiBs use wireless radio-frequency (RF) technology in lieu of speaker cables to stream sound from the system’s main unit to surround speakers on the other end of the living room. At least eight companies plan to offer wireless-surround systems in 2006 at prices starting at about $299. For select “wireless-ready” HTiBs, consumers can buy wireless kits to cut the surround-speaker cord. The kits start at around $149, and wireless-ready HTiBs start at about $199.

4.   Unleashing HTiBs that cosmetically match popular flat-panel TVs. These systems blend with popular flat-panel plasma and LCD displays. Their main units are slender and unobtrusive, and their similarly slim speakers often can be mounted on the wall next to wall-mounted, flat-panel displays.

5.   Minimizing back-panel video-cable connections to the TV. Setting up an HTiB often requires the connection of multiple types of video cables from video source components to an HTiB, and multiple video cables from the HTiB to the TV. There’s a composite-video cable for a VCR, an S-video cable for the DVD player and perhaps a component-video cable or digital HDMI (High-definition Multimedia Interface) cable for a HD digital cable box or satellite TV tuner. Now, through a process called upconversion (or transcoding), video signals from multiple sources can be routed from the HTiB to the TV through the single video cable that delivers the best performance for all video sources.

To add even more value to HTiBs, suppliers are adding such features as DVD-recorders, digital video recorders (DVRs), and satellite-radio connections to reproduce music received by optional palm-sized satellite-radio tuners with integrated antenna.

Custom Solution
Another decor-friendly home theater option is the custom-installation option. Many speaker suppliers dramatically have improved the sound quality of their in-wall and in-ceiling speakers, giving custom installers the confidence to use in-wall and in-ceiling speakers in a home’s primary home theater system. The speakers don’t take up floor space, and when painted to match the walls or ceiling, they almost disappear.

Custom installers often use custom-made cabinetry to conceal the video display and associated electronics. In some sophisticated installs, hitting a single button on a remote controller turns on all of the components in a home theater system, activates a motorized projection screen that drops from the ceiling, and activates motorized in-ceiling surround speakers that tilt down to direct sound to the listeners.

Custom-installation sales are soaring, driven as much by consumer demand for convenience as by record decade-long growth in new-home construction. Custom systems are typically installed in homes while they’re being built, although many also are installed when homes are remodeled extensively.

The custom market’s rapid upward climb roughly coincided with the longest uninterrupted string of million-plus single-family housing starts in U.S. history. That string continued for 14 years through 2005, when the number of single-family housing starts rose an estimated 6.3 percent to an all-time high of 1.71 million, according to the National Association of Home Builders.

Other drivers of custom-installation growth include home-centric lifestyles, demand for bigger homes with more amenities, and growing awareness by consumers, builders, architects and interior designers. Other positive factors include growing demand by baby boomers who have entered their peak earning years and are no longer are paying for college tuition. High housing prices also have encouraged consumers to reinvest in their homes by remodeling and adding new amenities.

Surveyed builders who offer home technologies installed home theaters in 11 percent of the home they built in 2005, up from the previous year’s eight percent, according to the latest study completed jointly by the CEA and the NAHB.

The organizations’ State of the Builder Technology Market study, based on surveys of hundreds of builders nationwide in early 2006, also found that 69 percent of builders who offered home technology in 2005 offered home theater systems, up from 2004’s 59 percent.

HTiB Popularity Poll
By far, the custom option is the most expensive route to take. That’s why the overwhelming majority of home theater purchasers turn to HTiBs. More than 3.81 million HTiBs were sold at the factory level in 2005, accounting for $730 million in factory-level sales, CEA statistics show. 

Though 2005’s volume was impressive, HTiB sales actually declined in units from their 2004 peak of 4.7 million and in dollars from their 2003 peak of $961 million. Until 2003, dollar sales had grown swiftly for five consecutive years from a mere $229 million in 1998, CEA statistics show.

Despite their decline, HTiBs are still more popular than component-based home theater audio systems. Only 1.65 million receivers, the core of most component-based home theater systems, were sold at the factory-level in 2005, said CEA.

Home Theater in-a-Box Factory Sales
Unit Sales       Dollar Sales        Average                (Thousands)        (Millions)         Unit Price
2001             2,304                 $794                 $345
2002             2,793                 $896                 $321
2003             3,622                 $961                 $265
2004             4,702                 $931                 $198
2005             3,617                 $695                 $192
2006p           3,592                 $680                 $189
Source: CEA Market Research

Component Audio Option
In years past, consumers’ growing preference for simple HTiB solutions contributed to startling declines in sales of traditional full-size audio components, which include receivers, separate speakers, preamplifier processors and separate amplifiers.

Since their peak in 1990 at $1.93 billion, factory-level component sales have declined almost every year with the exception of slight blips upward in 1993, 1994, 1995 and 2000.

In 2005, factory-level component-audio sales were flat at $1.14 billion, far below the industry’s 1990 peak of $1.93 billion, CEA statistics show. The forecast for 2006 is for more of the same.

Among home components, receivers took a particularly hard hit. Factory-level sales fell 18 percent in dollars to $435 million and 19 percent in units to 1.65 million, according to CEA statistics. A /V receivers, the core component of most component-based home theater systems, are equipped with AM/FM radio, five or more amplifier channels, and surround sound decoders. Today’s A/V receivers are priced at less than $199 to $6,000.

Although receivers are on the skids, one component segment – speakers – performed admirably in 2005. Although unit sales of component speakers fell one percent at the factory level, dollar volume soared 16 percent to $516.1 million, CEA statistics show. Marketers cite rising demand for pricier speakers with improved aesthetics, smaller footprints and enhanced performance. Better sounding, visually-appealing speakers overcome some consumers’ objections to filling up a living room with multiple speakers to enjoy surround sound.

Makers of high-fidelity component speakers are trying to live down their 1970’s wide-necktie, bigger-is-better image with new design techniques that enhance clarity, imaging and bass response while reducing a speaker’s dimensions. Their goal is to deliver big-speaker sound from a slim package that doesn’t visually dominate a room.

The push for appealing design has inspired the speaker industry to dramatically increase the selection of high-performance flat speakers that can be hung on a wall or mounted on pedestals next to flat-panel plasma and LCD TVs. The speakers are as graceful and slim as their companion displays. The enhanced styling, suppliers contend, will help eliminate aesthetic objections from consumers who are attracted to flat-panel displays as much for their striking cosmetics as for their picture quality.

For particularly picky consumers, at least three component-audio companies in 2006 offer a single front speaker that delivers five-speaker surround, in some cases by using sophisticated digital signal processing and built-in amplifiers and surround processors. Some solutions use passive designs that require the purchase of a separate A/V receiver. All of these virtual surround solutions eliminate the need to run wires around the room to surround speakers.

A/V Receiver Updates
Many receiver makers also are laboring to give consumers more compelling reasons to upgrade from lower price HTiB systems. Their efforts include the development of:

·  Receivers that simplify the connection of all the pieces in a home theater system, including the TV. These receivers simplify the integration of TV sets with multiple video sources, including over-the-air and cable HDTV tuners, DVRs, satellite TV tuners and DVD players. Most of these receivers reduce the number of video-cable connections in home theaters. These receivers accept multiple types of video cables (from a VCR’s composite-video output, for example, or from the S-video outputs of DVD players and satellite TV set-top boxes). Then the receivers “upconvert” or “transcode” the composite and S-video signals to analog component video or to digital HDMI (High-definition Multimedia Interface) video. All video signals then are routed to a single HD-capable component-video output or HDMI output. From the back of the receiver, consumers connect only one video cable to the HDTV set instead of multiple video cables.

·  Receivers that upgrade the video performance of a home theater system. At least four suppliers plan in 2006 to offer receivers with sophisticated video processors that turn an SD digital-video source into an HD spectacle. The video source can be a DVD player or SD digital cable or satellite signal.

·  Receivers that automatically adjust frequency-response to suit a room’s acoustics. These products incorporate advanced DSP to compensate automatically for the frequency-response peaks and dips caused by a room’s acoustic characteristics and by less-than-ideal speaker placement. A room’s size, shape, furniture and window treatments distort sound by exaggerating some frequencies and muffling others. Receivers with room-acoustics compensation start at around $300 in 2006.

Also to simplify the set-up of component-based home theater systems, many A/V receivers automate the selection of volume levels and digital delay times for each speaker in a multi-speaker system to deliver the most realistic effects.

Despite the proliferation of intelligent component designs, component sales haven’t moved forward in recent years despite greater merchandising efforts by many electronics specialty stores. Many of the new A/V receiver features have only just begun to become widely available, some only in top-end models costing more than $1,000. Suppliers hope sales will grow once again when the value-added features become widespread and more affordable.

Multi-channel Upconversion
Whether you mix and match individual home theater audio components or buy a prepackaged HTiB system, you can get a 5.1- or 6.1-channel surround experience from any video source – including dusty VHS Hi-Fi tapes and plan old analog TV broadcasts. All you need is a receiver, preamp/processor or HTiB that incorporates such decoding technologies as Dolby Pro Logic II, DTS’s Neo:6 or SRS Labs’s Circle Surround.

All three technologies create a full-frequency 5.1-channel experience from matrix Dolby Surround soundtracks and from stereo sources. Neo:6 and Circle Surround also upconvert stereo and Dolby Surround sources to 6.1 channels. Circle Surround even purports to upconvert mono to 6.1.

In 2003, Dolby Labs took upconversion technology to the next level with the launch of the first audio components equipped with Dolby Pro Logic IIx. These products create a 6.1- and 7.1-channel sound field from stereo, Dolby Surround and 5.1-channel sources. In 2004, IIx technology appeared for the first time in HTiBs.

With IIx and its competing technologies, old movies and TV shows don’t sound so old anymore.