HTiB Defined
Home-theater-in-a-box (HTiB) systems are all-in-one systems that come with all the audio components and cabling needed to reproduce home theater surround sound. These HTiBs usually package an AM/FM surround sound receiver with five satellite speakers and a subwoofer, which reproduces the deepest bass with thunderous impact. HTiB solutions appeal to consumers who lack the time to shop for separate components or are intimidated by too many choices.

Today, most HTiBs also include a DVD player or changer, thus delivering every audio and video component needed to build a home theater except for the TV.

The vast majority if HTiBs come with a stand-alone DVD player or integrated DVD-receiver, according to NPD Group, which tracks sales through online and brick-and-mortar retailers.

During the January-September 2004 period, HTiBs equipped with DVD players and changers accounted for 78.9 percent of all HTiBs sold at retail, up from the year-prior 74.2 percent, NPD found. In 1999, in contrast, only a handful of HTiBs incorporated DVD players or changers.

Cutting Clutter
Many DVD-equipped HTiBs consist of a separate receiver and separate DVD player. The vast majority, however, integrate the receiver and DVD player into a single compact component called a DVD-receiver. These systems further simplify the buying decision and appeal to consumers who don’t want to clutter up a room with multiple components.

To further reduce component clutter, in late 2002 the industry began to offer a limited number of HTiBs with combination DVD/VCR-receivers. These systems have grown more common and will continue to proliferate in 2005.

Also to cut untidiness, a growing number of HTiB suppliers in 2004 adopted so-called virtual-surround technologies, which use sophisticated digital signal processing (DSP) techniques, often combined with unusual speaker designs, to deliver five-speaker surround sound through only the three front speakers (the front-left and front-right speakers and a front-center dialog speaker). In 2005, at least eight suppliers planned to offer such systems at prices expected to start at around $250.

A handful of companies also offer HTiBs that use only a single front speaker to deliver five channels of surround sound.

Such systems appeal to a wide variety of potential buyers, from decor-conscious consumers to small-apartment dwellers who don’t have room for all the speakers needed to deliver a compelling 5.1- or 6.1-channel experience. Owners of big homes also benefit if their room configurations make it impossible to position five or more speakers in the proper places to deliver a satisfactory surround experience.

Satisfying decor-conscious consumers is also behind the surge in HTiBs with wireless surround speakers. These systems use radio-frequency (RF) or infrared (IR) technology, instead of speaker cables, to deliver sound to left and right surround speakers. At least eight companies plan in 2005 to offer wireless surround systems at prices starting at about $199. Wireless kits are also available for use with any HTiB to cut the surround speaker cord.

HTiBs Pack in the Features
Nowadays, consumers get more than just a DVD player and speakers when they buy an HTiB. In 2005, consumers will find a greater selection of HTiBs with:

• DVD-recorders. At least five suppliers planned to include them in HTiBs, up from one supplier in 2003.

• Combination VCRs/DVD players: Far more suppliers are incorporating combination VCR/ DVD players in their HTiBs to reduce clutter, in some cases packing three devices –VCR, DVD player and A/V receiver – into a single chassis. At least one company in 2005 plans to pack a VCR and DVD-recorder into its HTiB.

• Personal video recorders (PVRs): Video-recording hard disk drives (HDDs) will appear in 2005 in systems from     at least two suppliers. The pair’s systems also feature DVD-recorder.

• High-definition output: At least four companies plan to offer DVD-equipped systems that convert DVD video into high-definition (HD) video for true-to-life viewing on an HDTV. Only one company offered that feature in 2004. System prices start at about $399.

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.

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. By early 2005, the price of basic, low-powered HTiBs, with a DVD, fell below $99 during special promotions.

HTiBs are so popular that factory-level sales have risen every year since 1998, when sales were a mere $229 million, CEA statistics show. In 2004, sales hit $971 million, according to CEA estimates. That’s up only 1 percent from the previous year, but the small percentage dollar gain doesn’t truly reflect HTiBs’ true popularity. Unit sales do, and those rose an astounding 34.4 percent to 4.87 million units in 2004, according to CEA estimates. Attribute the unit-sales explosion to production efficiencies and competition that drove the average wholesale price down in 2004 by 24.5 percent to $200.

To further stimulate sales, multiple suppliers offer systems whose cosmetics complement the striking, stylish designs of flat-panel plasma and LCD displays, whose popularity is soaring. The systems sport silver finishes that match the displays’ finishes. The speakers are tall and slender, and some are shallow enough to hang on a wall on each side of a wall-mounted display.

The enhanced styling, suppliers contend, helps eliminate aesthetic objections from consumers who are attracted to flat-panel displays as much for their striking style as for their picture quality.

Shifting Buying Patterns
In years past, consumers’ growing preference for simple HTiB solutions contributed to startling declines in sales of traditional full-size audio components, which include A/V 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 2003, sales dropped an historic 18.3 percent to $981 million, marking the first time that component sales dipped below the $1 billion mark since CEA began tracking them in 1985.

Times are changing, however. Factory-level component-audio sales surged in 2004 by an estimated 16.2 percent to $1.14 billion, CEA said. The upturn is driven in part by consumers’ growing tendency to invest more in home theater audio now that many of them have upgraded the video portion of their home theater systems with DVD players, HDTV and digital video recorders (DVRs), CEA analyst Sean Wargo said.

Marketers also attribute components’ resurgence in part to renewed interest by retailers in aggressively merchandising home audio components as a high-performance alternative to lower cost, lower profit HTiB systems. Suppliers also cite cosmetically appealing designs that integrate with a home’s decor and new products that give consumers more compelling reasons to upgrade from lower price HTiB systems.

Such component-audio products include:

• A/V receivers that simplify the integration of TV sets with multiple video sources. These receivers reduce the number of video-cable connections in home theaters consisting of an A/V receiver and multiple video sources, including over-air and cable HDTV tuners, DVRs, satellite-TV tuners and DVD players. These receivers accept multiple types of video cables (for example, from a VCR’s composite-video output, a DVD player’s S-video output, and a high-definition TV tuner’s component-video output). The receivers then “upconvert” or “transcode” the composite and S-video signals to, for example, component video. All video signals are then routed through a single HD-capable component-video output. From the back of the receiver, all you have to do is connect one component-video cable to the HDTV set. At least four companies planned in 2005 to offer such receivers.

• Receivers that upgrade the video performance of a home theater system. At least three suppliers planned in 2005 to offer receivers with sophisticated video processors that turn a standard-definition digital video source into a high-definition spectacle. The video source can be a DVD player or standard-definition digital-cable or satellite signal. Select receivers from at least three other suppliers enhance standard-definition video. Expect more receivers of this kind in the future.