Audio and Video Equipment Manufacturing
Business for Sale Industry Economics
2003 - 2021
2021 - 2027
The Audio and Video Equipment Manufacturing sector makes electronic audio and video equipment for home entertainment, motor vehicles, and instrument amplification. The retail business faces a number of new and formidable challenges over the next five years due to new technologies and developments in consumer media and entertainment consumption.
Coupled with an annualized rate of loss of 1.2%, revenue is predicted to decrease to $3 billion by the end of the year. Companies are predicted to benefit from rising revenue growth in 2021 because of new income being generated by stores that reopened after having to shut down due to the COVID-19 (coronavirus) outbreak.
The largest global corporations are at the forefront of the sector. While some manufacturers have relocated to nations with lower labor costs, the bulk of Samsung Group’s production is now done in nations with cheaper labor. During the five-year period, the surviving domestic operators have spent much of their time on cost-cutting measures and product diversification in order to better compete with the larger firms, which has led to higher profits.
Even if replacement items are not currently being used, the possibility of their entering the market persists because of fast technological development and innovation in competitive sectors. e.g. an internet-connected device may be used as a replacement for conventional audio and video equipment; the number of broadband connections is predicted to expand at an average rate of 2.6% per year over the next five years.
Manufacturers have responded to this danger by creating goods that have great sound quality and cater to the desires of the market, resulting in a decrease in the number of job losses in the manufacturing sector. This move towards focusing on a different product line has resulted to a spike in earnings throughout the time period.
Even though production will continue to be moved offshore, the difficulties the sector has are projected to stay the same over the next five years through 2026. On the other hand, positive movements in new end markets and raw materials will partially counterbalance these pressures.
Continued declines in the price of electronic components, together with development in the overall economy and increasing consumer demand for building items from the sector, is expected to result in higher industry income.
Also, since emerging economies remain appealing to manufacturers and exports are anticipated to expand over the next five years, these countries are considered ideal markets for manufacturers. Total revenues are expected to expand at an annualized rate of 1.4% over the next five years, which results in a total of $3.3 billion in revenue.
In the Audio and Video Equipment Manufacturing industry, which manufactures such electronic audio and video equipment as TVs, speaker systems, amplifiers, DVD players, stereos, and headphones, the principal business is to produce electronic audio and video equipment. With respect to the time span of five years beginning in 2021, this sector has struggled with the impacts of offshore activities and technological progress while also benefiting from falling input costs.
Sales is projected to fall at an annualized rate of 1.2% over the next five years, resulting in a drop of $3 billion in revenue during the last five years. In order to compete with the ever-increasing number of imports, local businesses are trying to set themselves apart by offering better quality items. Due to the significant quality and specialized items, which enhance the average industry profit margin, many goods have higher pricing, resulting in profits for the market (measured as earnings before interest and taxes).
Even though demand for products has been fairly steady, operational expenses have increased because of more cases of the coronavirus, and hence predicted profits have fallen from 4.8% of sales in 2016 to 3.9% in 2021. Nevertheless, overall revenue is forecast to expand 5.5% in 2021, owing to an anticipated growth in downstream demand from consumers and car manufacturers.
The increased predominance of offshore production is reflected in the rapid increase in the percentage of imports during the previous five years. Some of the world’s largest consumer electronics companies, such as Hitachi Ltd., have completely shifted their manufacturing offshore over the course of the last five years. Similarly, shortly before the five-year term started, Bose Corporation laid off a considerable number of people at its South Carolina plant, which it had announced it was moving to a manufacturing site in Malaysia.
In large part, the expanding number of offshore projects is the result of the continuing need for infrastructure development and a rapidly increasing middle class in emerging nations, such as China and Mexico. New classes of wealthy people are emerging in these nations, which is providing an opportunity for manufacturers, who must compete for a larger and more lucrative market, while still supplying less costly labor.
The advantages of Internet communications and package monitoring have made it even easier for companies to offshore manufacturing facilities, leading to the speeding of these facilities’ transfer. Smaller goods such as headphones, cameras, and portable speakers are now able to be sent much more easily, which has led to numerous operators relocating to other countries. Nations that levy lower business taxes include other countries as well. Despite the fact that labor prices are growing overseas, the relative cost benefits of offshore are still considerable.
Even with outsourcing activities, total imports are predicted to drop at a yearly pace of 1.9% to $2.2 billion. This is due in part to growing manufacturing costs which have an effect on cost increases in important trading partners, such as China. In a study conducted by the Global Payroll Association, an industry-related publication, which was dedicated to gathering data on minimum wage increases, it was discovered that 20 of mainland China’s 31 administrative regions increased their minimum wage in 2018, with nine regions raising it in 2016 and 19 in 2015.
The price of imported equipment is rising, which means profit margins for equipment importers will shrink, but demand for imported equipment is still predicted to fulfill 54.6% of domestic needs in 2021. Meanwhile, though exports are predicted to decline at an average pace of 2.3% to $1.2 billion over the next five years, they will continue to increase in 2021. Although the use of offshore manufacturing has become a viable business strategy, the demand for exported goods and re-exported goods has decreased among key trade partners.
Over the last two years, the consumer electronics sector has shown continual demand growth. A good example of this is the video section, which has gone from analog to digital and from standard definition to high definition (HD). The HD model is predicted to be replaced by a 4K one with definition four times as high. As a consequence, people are turning to flat-panel liquid crystal display (LCD) TVs and plasma displays as replacements for older cathode-ray tube (CRT) TVs.
Additionally, as of 2020, 80.0% of the US population will possess at least one internet-connected TV device, up from 57.0% at the end of 2015, according to the Leichtman Research Group Inc. The advent of the shift has prompted many people to upgrade their televisions. Because time went on, a substitute market for more efficient sets with bigger displays and supplementary possibilities, including as streaming services, arose.
Additional to this, the launch of Blu-ray has hampered DVD player sales, while on the other hand, digital video recorders and video streaming services might eventually replace devices such as DVD players in the future.
In the audio market, the decrease in demand for MP3 players due to smartphone sales growth was a consequence of a further transition. The global unit sales of Apple Inc.’s iPod declined throughout the course of the last five years, until the discontinuation of the iPod Nano and the iPod Shuffle in 2017. Nevertheless, the Beats by Dre business sector accounted for a greater percentage of the company’s overall sales.
This latest crop of smartphones is encouraging a reduction in the industry’s sales of audio and video equipment, even if these goods have been steadily improving in terms of sound and video quality. A plethora of other items, including tablets, are now manufactured with comparable functionalities. The majority of manufacturing, however, takes place outside of the country.
Data from the Federal Reserve Bank of St. Louis reveals that, in terms of personal consumption expenditures, US purchases of audio and video equipment, including photography equipment, have fallen between 2010 and 2019 (latest data available). While this data does not discriminate between local and foreign manufacturing, it is critical to point out that it only covers expenditure on goods and services.
Over the last five years, however, disposable income has grown at an annualized rate of 2.2%. This forecast, however, calls for a fall in per capita disposable income beginning in 2021 as a result of the cessation of coronavirus-related stimulus payments to individuals, which helped boost per capita disposable income in 2020. There has been a rise in disposable income, which means that more discretionary spending is available, and that means higher total demand for audio and video production items.
Additionally, increasing demand in the automobile industry comes from the fact that automobiles are now equipped with more common information and entertainment systems. Auto manufacturers often include, or provide the ability to include, a wide range of industry offerings to obtain a competitive edge over other industry rivals.
Although consistent import penetration is on track to trim the number of operators by a compounded annual growth rate of 1.8% to 446 enterprises over the next five years, the results are not as promising for other countries. Despite the drop in the number of companies, the number of employees has climbed at an annualized rate of 3.1% to 10,687 people during the last five years. The expected surge in employment is believed to be the outcome of the increased need for research and development staff brought on by industry leaders.
With the U.S. domestic economy predicted to see growth over the next five years, together with a rise in demand for electronic audio and video equipment, the Audio and Video Equipment Manufacturing business is anticipated to see steady demand growth over the next five years. Over the next five years, rising home values will cause residential building to expand, which will lead to a rise in expenditure on audio and video equipment.
Over the next five years, residential construction is expected to rise at an annualized pace of 0.7 percent. With rising demand for industry goods in the face of growing demand for entertainment and sound systems in new houses, consumers are expected to budget for luxury entertainment and sound systems in their new homes, raising demand for industry goods.
Furthermore, there is the possibility that the demand for audiovisual systems, such as movie theaters and car manufacturers, may increase due to people’s renewed interest in movies and cars after the severe and widespread illness of the coronavirus. However, these trends will be partly countered by rising internet connections as well as an ongoing increase in the number of shipments from the rest of the world.
With an increasing number of internet connections, consumers now have a wide range of items that may replace conventional industrial goods. While revenue growth is projected to remain steady at 1.4% to $3.3 billion over the next five years, these replacements and imports will curb revenue growth for the Audio and Video Equipment Manufacturing business, which is forecast to rise at an annualized rate of 1.4% over the same period.
The increased need for system platforms that provide communication, information, and entertainment in one product is gradually blurring the market for audio and video goods, while also drawing new competitors to the industry. Conversely, cellphones have audio and video capabilities, while Sony’s latest PlayStation platforms have both Blu-ray support and the capability to connect to the internet. as well as the Computer Peripheral Manufacturing and Software Publishing industries (IBISWorld report 33411b) will be pressured by other industries, especially by the Computer Peripheral Manufacturing and Software Publishing sectors (51121).
There have been several recent advancements in the video business including three-dimensional (3D) televisions and internet-capable television (TV) systems. There are a number of new goods on the market as well as greater consumer spending, and they will likely help to offset losses in domestic demand for audio and video equipment.
Both the analog-to-digital technological revolution, and the resultant price erosion in consumer audiovisual goods, have had an impact on society. A result of this is that progress in critical components, like as semiconductors and circuit downsizing, are helping to bring component counts down. Improvements in manufacturing process design, such as switching to cell-based production, will result in additional cost reductions.
The most significant cost reductions will be passed on to consumers, which will help to promote higher demand for industry goods. Technology that changes rapidly is predicted to lead to shorter product life cycles, which encourages more research and development activities and increases the chances for high-risk ventures for industry operators.
This helps explain why there will be less and less discretionary income for consumers over the next five years: Emerging technologies give a mechanism for people to spend their extra money and anticipate further gains of 2.1% per year over the next five years. In this case, in the field of consumer electronics and home computing, there are developments that are connecting, and new technologies in the field of home networking are making it possible for individuals to engage with one another using computers and tablets.
As a result, there will be more focus on items such as smartphones and tablets, all of which have been growing in popularity due to their mobility and downsizing. At a same time, new cars are being outfitted with electronic systems that must be paired with audiovisual systems.
As a result, automobile businesses must manufacture and install audiovisual systems compatible with computers installed into the vehicles. Products that we have included here include features such as GPS and wifi capability. In addition, car manufacturers are focusing more focus on vehicle distinctiveness, which is resulting in increasing demand for automotive electronics.
While the import numbers and value will continue to rise, at a yearly pace of 0.3% to $2.2 billion over the next five years, total imports are anticipated to be little more than that. Additionally, the increasing popularity of industry replacements, such as laptops, smartphones, and tablets, would lead to a rise in rivalry for local operators and international makers of industry items alike.
Due to this, industry operators will be looking for new chances during the next five years. Also, as an example, the foreign operations of Harman International Industries Inc. (Harman), which was bought by Samsung Group (Samsung) in 2017, nonetheless continue to offer equipment to car manufacturers in growing areas, thereby increasing Harman’s position in those areas.
The amount of money that is spent by firms on various audio and visual equipment, in the context of the expanding markets in developing economies, is expected to grow at an annualized rate of 2.0% to $1.4 billion by 2026. For more than two decades, international competition has been a constraint on the amount of money generated by the exports sector, but in 2026, exports are expected to account for 42% of total industry income.
Additionally, because of businesses such as Harman, the Audio- and Visual-Equipment Production business is projected to have significant competition from foreign manufacturers due to the fact that they will be extending their manufacturing capacity to new locations outside of the United States. Industry growth will be held back due to past outsourcing and consolidation, which is likely to lead to very little growth over the next five years.
On the other hand, the industry’s growth in demand for luxury goods and the expansion in the use of industry products in residential and automotive settings are expected to slow the pace at which operators depart the sector. In sum, as a result, the number of firms is predicted to drop by an annualized 0.5% per year to 435 independent operators during the next five years.
While revenues are predicted to rise at a steady pace, employment is predicted to rise at an annualized pace of 0.7% to 11,057 people as major companies continue to add employees to meet increased competition from international companies.
In industries where profits are very low, there is intense rivalry, therefore making it difficult for growth to occur. During the five-year period between 2021 and 2026, the remaining domestic producers will continue to focus on producing high-quality products and vehicle manufacturing contracts with lower input costs, and industry profits will increase from 3.9% of revenue in 2021 to 4.9% of revenue in 2026. Nonetheless, local manufacturers will certainly continue to lose market share to imports owing to the comparatively higher operating expenses that they face in the emerging nations.
This sector is made up of the makers of electronic audio and video equipment for home entertainment systems, cars, and public locations. Manufacturers of photographic equipment and telephone answering machines are not in the photographic equipment and telephone answering machine business.
Consumers are significant drivers of demand for this established business, which is furthermore supported by technological innovation. Changes in goods and preferences need that goods continually evolve to stay ahead of customer desires and preferences.
Technological developments and the constant introduction of new products and lines have helped this business avoid both product and market saturation as well as provide a reasonably stable stream of income. However, the equipment manufacturing business in the United States has fallen because technological innovation has moved demand away from traditional items and toward alternative items such as smartphones.
According to data from the Erisa Industry Analysis Division, the number of industries anticipated to shrink on an annually basis at a pace of 1.2% between the years 2022 and 2026 is growing. In addition to increased rivalry from imported goods, it is the actions of industry operators that have propelled these developments.
Industry value added, which takes into account how much a particular industry contributes to the country’s GDP, is projected to grow at an annualized pace of 1.0% each year over the next decade, while the U.S. GDP is forecast to expand at an annualized rate of 1.9% over the same time period. Although worldwide rivalry and more outsourcing has intensified, this sector is regarded as mature owing to consistent technical innovation and the possible presence of marginal growth chances in the future.