A few days ago, we awoke to the news that Oppo has decided to pull out of the AV market and concentrate its efforts on mobile phone production, abandoning all those amazing products that it has built a solid reputation on. Many AV fans will be hugely disappointed that their Blu-ray players of choice will no longer be available and there’ll no doubt be a rush on to snap up the remaining stocks.
Is this move simply the result of corporate decisions made in the boardroom to concentrate on the main areas of the business and abandon the peripheral stuff? Or is it indicative of the changing nature of home entertainment by an enlightened corporation that sees no future in physical formats?
I’m sitting in my parents’ house looking at my father’s hi-fi system while writing this, and in front of me is a CD player, turntable and even a cassette deck. There isn’t an Ethernet cable in sight, nor a wireless streamer or tablet to control it. Nor is there a Bluetooth connection sending music from the phone to the hi-fi. It’s physical media through and through. And I’m sure that this is by no means atypical of audio systems up and down the land. Are we really standing on the brink of there being no more CDs, records, DVDs and Blu-rays? I’m not sure we are. Not yet anyway.
It’s certainly not the case with vinyl, as we know. Sales are continuing to go climb, with the BPI’s figures showing around 4m units sold in the UK in 2017. That’s a massive rise from the 205,000 just ten years ago. And yes of course this is going to remain as a niche format, never reaching the lofty heights of the 70 billion streams that we saw in 2017. But it has undoubtedly got a future as a ‘serious’ format that hi-fi people will continue to cherish. Over in the digital world things are changing of course, but there were still 800,000 sales of CDs per week last year. That means there are still a lot of CD players in use across the country.
We tend to embrace the latest technology and instantly write off the thing it is supposedly replacing, but clearly the CD player is set to be an important part of many people’s musical lives for a good time to come. Not everyone is an early adopter, making the switch to streaming and ditching their CD collections, as the CD sales show. Sure, the increase in streaming is phenomenal, but how much of this is music on the go compared with music at home? CD player sales actually increased slightly in 2017 compared to the previous two years, so perhaps things aren’t quite as clear cut as the headline figures suggest? And interestingly, by comparison, unit sales of turntables saw a small dip in 2017 after many years of consecutive rises. However, the sales by value went up, suggesting a shift to higher priced turntables – maybe after dipping a toe in the water with a £70 supermarket record player, people are now moving into turntable 2.0 territory, buying a better quality one as they like what the vinyl is giving them.
Films are possibly a different kettle of fish. We saw a rapid shift to DVDs after the demise of VHS by the high street video rental shops, but now most, if not all of them, have disappeared entirely. And even though the studios have tried to keep the Blu-ray market buoyant and fresh by introducing 3D movies and now 4K, the trend does seem to be somewhat unstoppable in the direction of streaming and on-demand viewing. Netflix, Amazon Prime, Apple TV, Google Play, Now TV and the like offer unlimited access to virtually any movie anytime and anywhere. This is underlined with the GfK figures for sales of Blu-ray players. 2017 saw a 34% drop in sales of players, while conversely 4K TV sales went up by 27%. That shows a clear move away from physical media for HD and UHD content towards the smart TV and delivery down the wires. Perhaps that move by Oppo shouldn’t come as such a surprise after all then.
Where does all this leave the retail sector? Well clearly no shop wants to be sitting on a stock room full of Blu-ray and DVD players, based on the sales evidence above. Turntables and even CD players are probably a safer bet and maybe a few smart TVs and streaming boxes wouldn’t go amiss – but we all know how dire the margins are on these things.
Maybe our chargeable USP should be service and the added value that our expertise can bring. We don’t make enough of our years of experience and how much we can enhance people’s home entertainment through careful set up and calibration. With the means of obtaining video entertainment moving away from physical media and to the streaming services, now is the time to show just how good we are. The consumer will need help using their new service – they’re never as intuitive as the claims – and this is where we can make a good margin and also make sales of the AV amplifiers, speakers, TV mounts and furniture etc. The seismic shift in content delivery could actually provide great opportunities.