Avi Greengart is the Research Director for Consumer Devices at Current Analysis (Mobile Phones, Connected Devices, and Digital Home). He also regularly writes for Slashgear, sporadically blogs at Home Theater View and Tweets far too often as @greengartAvi's expertise lies in understanding consumer electronics marketing, consumer behavior, and technology adoption patterns: where new technologies meet the mass market. 

 

 

Avi Greengart is an expert on the convergence of technology and entertainment: video, audio, computing, and wireless, how these are coming together, and what's likely to survive long enough to make a difference in your life.

Column 17                                                                                           January 3, 2002

Attention Shoppers: Special on DLP in Aisle 6

What would it take to make home theater projectors mainstream?

This week’s column continues (concludes?) the digital projector theme started in column #15 (PowerPoint or Peckinpath: Business Projectors for Home Theater), and #16 (Review of the Plus HE-3100 “Piano” Home Theater Projector).

Sidebar: Mainstream Products and the Enthusiast

When friends hear that I have a projector, their first question is often, “where do you get the movies?” It doesn’t take long to explain that it’s a digital projector, and displays movies from my DVD player. Many of them have DVD players (or plan to purchase one soon), yet connecting it to a projector still seems like an exotic hobby to them. Why?

Well, one reason is that until recently, a projector meant a large box professionally installed at a cost of $25,000 and up. That’s obviously not something most people can afford, and, in fact it is so exotic that they’ve never even heard it was possible – outside of private screening rooms for movie stars. But with the advent of small, digital projectors, could this be something that really catches on with the general public?

What would it take for home theater projectors to become mainstream?

First, is it even possible? Many hobbies (and the niche market players serving them) stay that way. For example, lots of people buy boats. In the aggregate, there are a lot of boat owners, but the percentage of the population that owns boats is rather small, and unlikely to change any time soon – boats are very expensive, and require a large body of water nearby, storage, and operational training. So if projectors are boats, we’re sunk (…sorry). DVD players, however, have certainly become mainstream. There are a lot of different ways to define mainstream, but when you can choose from several models at Wal~Mart, you know you’re mainstream. Based on the latest sales figures, home theater audio is following DVD’s lead. Once people hear what they’re missing (typically at a friend’s house), they consider adding the receiver and speakers to their DVD player for full surround sound. Manufacturers have responded with Home Theater In a Box sets, and – yup! – you can buy one of those at Wal~Mart, too. If video transport (DVD players) and audio playback (HTIB) can become mainstream, enhanced video playback should be a natural.

And it is – big screen TVs are selling well, despite the poor economy, and despite September 11.* So, it doesn’t require too much imagination to predict that even bigger TVs with much smaller footprints should sell well to mainstream buyers.

There are two potential roadblocks that need to be considered:

q       Standard television shown this large looks terrible, even with the best technology trying to compensate by doubling or quadrupling the image information – low resolution looks real fuzzy real big. HDTV has the extra resolution we need, but it is taking off too slowly to be much help. Therefore, home theater projectors will largely be limited to watching DVDs for the near future.

q       Until 3500 lumen light cannons become inexpensive, projectors require an environment with total light control. While many people will gladly turn out the lights for a huge, spectacular image, it simply isn’t practical for many others.

Fortunately, I believe that the lure of home theater is enough to overcome these issues –  people will buy projectors primarily for watching movies in the dark. Still, market research is needed to determine just how much of the market is affected.

What should the product to look like?

Assuming consumers want to watch movies at home, on a big screen, and in the dark, what does the product need to look like to get them to buy? Based on my initial research into consumer needs, here is my top ten list, in no particular order, for a consumer-friendly home theater projector: 

1)      It must cost no more than $3,000, ideally including a cables and screen package. Pricing is critical. In consumer marketing, there are “magic price points;” hit this price, and consumers line up. Anything above that price simply will not attract buyers. In this case, the competition is big screen rear projection televisions, which currently cost $2500 - $3500. A home theater projectors selling for $3,000 would be extremely competitive. Another wave of buying will occur at $2,500 (currently the entry mark for digital rear projection televisions), and obviously, $2,000 would be even better.

2)      It must be able to display all the resolution on an “enhanced for widescreen” DVD.

3)      To ensure that consumers view the investment as somewhat future-proof, it must be able to display HDTV at DVD resolution levels. A higher priced version should be available that can display HDTV at or near the full resolution.

4)      It must be quiet. It should also be small, light, and unobtrusive.

5)      It must project a high contrast, visually exciting image free of obvious pixelation.

6)      It must contain an excellent internal scaler.

7)      It must include a short throw lens (for use in a small room) and zoom (for use at the rear of a larger room). It must be mountable on a tabletop or out of the way on the ceiling. It should include digital keystone adjustments to further compensate for imperfect placement.

8)      It must not have basic technical problems that cause a significant minority of viewers to have eyestrain or headache. It should not have a halo of light surrounding the image.

9)      It should be bright enough to overcome minor room light and still present a watchable picture.

10)  It should include inputs consumers expect. This means composite, S-video, component video inputs using RCA jacks (not BNC jacks which require custom cables), and a DVI input for some measure of compatibility with future cable boxes.

Technically, these are all achievable goals. As proof, there are three currently available products that aim in this direction. The Sony Cineza comes somewhat close - but falls short on picture quality. The Plus HE-3100 “Piano” comes quite close, missing only a zoom lens, an HDTV-capable component video input, and some brightness. The InFocus LS110 meets nearly all the requirements… except price. At the initial price of $5,000 it’s not a mainstream contender.

So fix a few things, and we’re set, right? Not so fast. Plenty of products have had the technology going for them but failed because they forget the marketing. We need to ensure that a mainstream consumer

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Sees the product

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Buys the product

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Doesn’t return the product

Sees the Product

I’m not talking about a big, splashy, expensive advertising campaign (although, if everything else is set up properly first, it certainly wouldn’t hurt). This is simply a matter of distribution: you have to reach Joe SixPack where he shops. Current home theater projectors are sold through specialty retailers – typically small businesses, who deal with small volumes and charge large mark-ups. These businesses exist to serve enthusiasts unwilling to do all the research themselves, buy everything over the Internet, and install everything themselves. The problem is, our friend Joe never goes in there. Joe buys his electronics at big box electronic stores – in the U.S., that means Circuit City and Best Buy (and, to a lesser extent, Sears, regional chains such as Fry’s, and warehouse clubs). Sell your product here, or you won’t sell your product to mainstream buyers at all.

Buys the Product

Since we know that a projector requires light control, it has to be demonstrated in a dark room. This is common sense, but not all big box retailers are set up for this, so some negotiating with the retailers is in order.

Next, we need to ensure that the retailers’ sales force helps sales rather than hinders. This is a new product category – most retail sales people are not enthusiasts themselves, and they’ve probably never seen a projector before, let alone sold one in a competitive environment. This calls for large doses of sales force training. To ensure the training gets across, pair the training with sales force incentives (“spiffs”). Then follow up with more sales force training.

Finally, make it easy for Joe to buy a complete solution. Screen options (and aspect ratios) are actually more difficult to understand and buy than projectors themselves. Provide one or two packages that include the projector, cables, and screen so that Joe has one stop shopping and fewer decisions to make.

Keeps the Product

The goal is to ensure that Joe can install and use the product all by himself – without hiring a custom installer or home theater consultant. This will require quite a bit of hand holding, and this hasn’t been the strong suit of Japanese electronics companies in the past. Still, it can be done – a prime example is RePlay, which is basically a computer, but is easier to install and use than a typical VCR. Open the box, and you see an excellent printed quick start guide, and a manual written in plain English for the average person. Once you have the product connected to your TV, a video guides you through basic system operation. The RePlay basically sets itself up the rest of the way.

For our projector, we’ll need a quick start guide, a printed manual written in English for the average person, and a video guide on VHS tape. Particularly confusing topics include where to place the projector (throw distance), aspect ratios (and how to properly set up your DVD player), reiterating the ambient light guidelines for best picture (none), and how to choose a screen.

The operating software of the product itself and the remote control must be designed with ease of use in mind.

Why Isn’t Anyone Doing This?

Movies appeal to both sexes. The DVD player is the fastest growing consumer electronics product in history. Home-oriented products are selling well despite a soft overall economy. And the home theater projector could come along for the ride, if manufacturers would target the mass market. So why don’t they?

From a technical standpoint, there’s no reason a manufacturer couldn’t hit a perfect 10 on my top ten list, and still make a healthy profit – assuming the market is large enough to obtain economies of scale. Economies of scale are present with all mass-market products, but digital products get amplified benefits, because the value is all in the silicon, not complicated, fragile picture tubes.

Currently, most home theater projector manufacturers are targeting the enthusiast market. The distribution model is through small independent specialty retailers with high margin requirements – they need to make a lot of money on each sale to pay their rent and make payroll. To protect this established channel, these manufacturers have prohibited sales of their products over the Internet. As long as home theater projectors are sold exclusively through specialty retailers, projectors have no chance at a mainstream audience.

Manufacturers of business projectors don’t have this channel conflict issue – they sell most of their products through large, Internet-oriented business suppliers. They would be ideal entrants into the home theater market, selling through big box retailers. So far, they’ve been reluctant to do so on their own.

There is hope, though. Plus is going about half way. With the Plus HE-3100 Piano, they’ve done a good job designing a projector suited for home theater while keeping the price in the right place. However, they are trying a unique distribution model: they're keeping their total margins high by selling direct over the Internet, and providing a kickback to specialty retailers who demonstrate the product. I'll be really interested to see if they maintain this distribution model – it isn’t designed to attract a mainstream audience, and I'm not convinced it will work for the enthusiast market either.

InFocus is also going about half way. With the InFocus LS110, they're keeping margins high and selling through specialty retailers. However, they've also announced their intention to sell it to large consumer electronics manufacturers who will distribute it - presumably at lower hardware margins and lower sales margins - through big box retailers. Properly marketed, this has an excellent chance of success.

That's where the home theater projection market is today - on the verge of riding the DVD wave and becoming mainstream, but hampered by the current sales and distribution model. By following the steps I’ve outlined above, within ten years we could have $500 light cannons on sale at Wal~Mart. Hey, it could happen!

-avi 

*Or, perhaps, maybe because of it. In Israel, where they are unfortunately even more familiar with terrorism on a daily basis than we are here in the New York area, sales of in-home activities – especially video rentals and food delivery – are way up. There’s been speculation that the US market will experience a similar increase in “nesting” oriented purchases. Early 2001 Christmas sales results confirm this.

Sidebar: Mainstream Products and the Enthusiast

For today’s home theater enthusiast, this may all seem like silly conjecture – even if projectors become mainstream, what enthusiast would pick one up at Wal~Mart? None, but that’s not the point. Whenever a mass market is available for electronic goods, the price heads sharply lower. Not only that, but features once only interesting to professionals are rapidly added to these low cost models to differentiate them from even lower cost entry level models. For example, the first DVD players cost around $1500. More affordably priced units followed in the $500 – 1000 range, but with the mainstreaming of DVD players you can now get entry level players for $100 at warehouse stores, complete with component video outputs – once a premium feature. Today’s premium feature is progressive scan output – once available only as $5000 external decoders, then incorporated into $2000 DVD players, now found in $229 “top of the line” models from Panasonic. While I don’t expect projectors to sell for $229, it’s still clearly in the enthusiast’s best interest for their hobby to become mainstream.

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© 2001, 2002 Avi Greengart