All-in-one compact stereo systems and home-theater-in-a-box (HTiB) systems appeal to one type of convenience-oriented consumer. Another type of convenience customer opts for custom-installed distributed-audio systems.

These systems are built around a central audio system that distributes music through in-wall and in-ceiling speakers to multiple rooms in a house and through outdoor speakers to patios and poolside. With the most sophisticated systems, consumers use in-wall or tabletop controllers in each room or a handheld remote to turn on the central sound system, select a song for playback from a CD changer or hard disc drive (HDD) music jukebox, or tune to local radio stations or satellite radio channels.

With a custom-installed distributed-audio system, consumers don’t have to clutter up every room with an audio-component stack or an all-in-one music system, nor do they have to lug their CDs from one room to another to hear them.

Custom-installers who sell these systems also install custom home-theater systems, often using custom-made cabinetry to conceal the video display, associated electronics and front speakers. 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.

Soar Point:
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. 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 13 years through 2004, when the number of single-family housing starts rose 7.3 percent to an all-time high of 1.608 million, according to a National Association of Home Builder (NAHB) forecast.

During the next 10 years, demographic changes support even stronger new-home growth, according to the NAHB (www.NAHB.org) and the National Association of Realtors (www.realtor.org). The changes include immigration and a growing number of baby-boomers’ “echo-boom” children entering into their home-buying years.

Other drivers of custom-installation growth include:

•  Home-centric lifestyles,
•  Demand for bigger homes with more amenities,
•  Growing consumer awareness,
•  Growing availability as a standard feature or option through new-home builders, and
•  Declining distributed-audio costs.

That list is according to a variety of authoritative sources, including CEA, NAHB and a 2000 Frost & Sullivan analysis prepared for the Custom Electronic Design and Installation Association, (www.CEDIA.org)

All of these factors combined in 2003 to deliver 19 percent growth in installer-level residential-installation revenues to $5.1 billion, according to an estimate by Parks Associates, which based its conclusions in part on installer surveys. That volume includes product sales ($2 billion) and installers’ installation and design fees ($3.1 billion).

Home­centric Lifestyles:
It’s no mystery that consumers’ lifestyles are more hectic than ever. “Due to the increased stress and lifestyle pressures, consumers are wanting to nest and spend more leisure time at home without needing to go out,” Frost & Sullivan said. “In addition, people also are entertaining more at home to spend time with their friends and family in a casual and comfortable environment.”

Demand for Bigger Homes, More Amenities:
New homes today are larger and have more amenities than ever before, according to an NAHB report. In 1970, for example, the median new-home size was 1,385 square feet. In 2003, the projected median home was 2,123 square feet. In 2003, 19 percent of new homes were at least 3,000 square feet, up from 7 percent in 1986, Census Bureau statistics show. Amenities in demand range from central air conditioning and security systems to whole-house audio and video systems.

Growing Consumer, Builder Interest:
While consumers buy new homes at historic rates, their awareness of distributed-audio has grown because of efforts by CEA and NAHB to educate home builders, architects and interior designers. Many new home builders, for example, offer custom-installed A/V options, and a growing percentage of new homes are sold with such systems, according to the second annual CEA/NAHB State of the Builder Technology Market.

A total of 454 builders were surveyed randomly in February 2004 about their 2003 business practices. A similar number were surveyed in early 2003 about their 2002 practices. In many cases, buyers and architects are asking for distributed audio, the 2004 survey found.

“Builders have found that by offering the option of distributed-sound wiring or home theater room installation in their home packages, they can expand their competitive stance in the real estate business,” Frost & Sullivan said.

A growing number of second- and third-time buyers also is stimulating sales, according to CEDIA.

Declining Costs:
To drive down costs and open up the market to a broader consumer base, suppliers are introducing new product configurations and new technologies, including wireless and Internet Protocol-based systems.

New product configurations include stereo and surround sound receivers that incorporate custom-installation functions previously requiring multiple components, including multizone controllers, separate amplifiers and separate AM/FM tuner.

Open-source, IP-based communication and control make it possible to leverage existing economies of scale to build systems that require less programming and installation effort while delivering higher reliability.

Wireless technology also has begun to appear in custom-installed systems, mainly for controlling systems rather than distributing content. As more robust, wide-bandwidth wireless technologies emerge, however, high-performance audio and high-definition video will be transported wirelessly around the house from a central audio-video server. Wireless promises to broaden the market to the millions of owners of existing homes who would prefer not to tear down sheetrock to install new wires.  

Graphical User Interfaces:
The growing use of GUIs on TVs and touch-screen controllers is expanding custom’s potential customer base, Frost & Sullivan contends. “Using icons on a screen and giving users the ability to select their music, lighting or other parameters with a single touch [macros] has made the use of these multi-room systems much less complicated.” Consumers “typically don’t want 10 different remotes in the household but would rather have a touch-panel that can provide system control from variety of locations throughout the residence...”

Source Proliferation:
Another factor driving distributed audio sales and distributed video sales is the proliferation of audio and video sources in the home, Frost & Sullivan said. “With the advent of multiple sources such as DVD, CDs, satellite systems and dishes, HDTV, along with cable TV and even the Internet (downloadable audio), consumers are demanding that different sources, regardless of their input locations, be able to be funneled to a variety of locations throughout the home.” These sources have expanded in recent years to include satellite radio and Internet radio.

Market Immaturity:
Despite years of significant growth in sales and awareness, the distributed-audio market is far from mature. Only 5 percent of surveyed consumers own a distributed-audio system, according to CEA’s October 2003 Distributed Audio Interest and Awareness Study. The survey defined distributed-audio as allowing “consumers to listen to music in multiple rooms of the house without the need to physically move either the player or the content to the listening room.”

A lot more consumers, however, are interested in what distributed-audio offers. A total of 27 percent of non-owners said they are very/somewhat interested in purchasing at some point. That leaves plenty of opportunity for custom installers, although their businesses might not look anything like they do now.

Changing Business Model:
At the installer level, the business model is changing. Some custom installers have begun to install computer Ethernet networks to distribute broadband Internet access throughout the home. Others have diversified into lighting and phone systems to become one-stop solutions for homebuilders and homeowners.

Many installers also have begun to integrate the control of multiple home systems – such as security, lighting, climate-control systems and distributed-audio systems. Integration enables a single control panel to control all household systems, eliminating control-pad clutter. Just as important, the operation of different systems can be coordinated. Pressing a single button on a remote control, for example, can fire up a home theater system, close the curtains and dim the lights.

These changes are occurring for multiple reasons, including growing competition that is driving down profit margins. The competition is coming in part from large A/V chains, lighting contractors, electricians, security installers and commercial-audio installers attracted to the market’s potential.