Recently I was sitting by the pool at a Runco dealer-rep-press event
and the topic of conversation among a prominent editor, one of the most
prolific salespeople in the industry and myself was the future of
high-end AV. Runco represents the pinnacle of consumer video equipment
and, in many cases, as you might expect, comes packed with a price tag
to match. Baby Boomers and well-heeled members of Generation X line up
to invest in these projectors and plasmas that go beyond the mass
market standards and include the new, lofty THX video standard, as well
as professional calibration. They see the performance benefits of what
a few hundred or thousand dollars gets you. But will the Generation Y
with their “whatever” attitude ever feel the same way?
Roughly speaking, Generation Y’ers are in college now or fresh out of
school. They have never known a world without music downloads,
high-intensity video games and the Internet. Paying for software isn’t
always the highest priority, the way it was with Boomers and X’ers, who
remember shopping for LPs, CDs, Laserdiscs and DVDs as collectors not
just consumers. While the age difference is slight between Generation X
and Y (as little as 10 years), the buying attitude is radically
different. In general, Generation Y’ers are drawn to convenience over
performance. This poses a frightening conundrum for true high-end audio
and video companies. Baby Boomers would have sold one of their kidneys
to get a McIntosh amp or JBL speakers for their dorm rooms to listen to
the latest from Led Zeppelin, Jimi Hendrix and the Doors during the
late 1960s. Today, Generation Y’ers are barely willing to part with
$300 for an iPod without boo-hooing about price.
The good news about Generation Y is that they love AV stimulation. As
the recent boom in attention deficit disorder drugs suggests, they
might love stimulation too much to ever have the patience to sit down
and watch a film with subtitles and or attentively listen to complex
yet delicate orchestral arrangements. However, if you show them an
all-out good time, they can be impressed. The video game industry
understands this value proposition better than anyone. Video games sell
for upwards of $50 and kids who are bitter about a hardware investment
of $300 for an iPod will line up to buy this year’s version of Madden
Football from EA Sports in ways no one band or movie star can sell
their wares on a disc of any kind.
In
terms of audio stimulation, stereo is just never going to be good
enough for Generation Y, yet the know-it-all geniuses who took a
$33,000,000,000 domestic music business from the early 1990s and turned
it into the stinker it is today ($9 billion in CD sales, $3 billion in
downloads and $3 billion in ring tone sales) screwed up SACD and
DVD-Audio to the point of no return. This same group of industry
visionaries hasn’t released a single audio-only title on Blu-ray or HD
DVD. Just a quick note to the powers that be – more than 85 percent of
the $33,000,000,000 in sales from the early 1990s consisted of back
catalogue sales. Perhaps if you tried selling your music to kids in a
higher-resolution format, with surround sound and video (think: like a
video game with amazing audio and video), there might be hope. For the
music business, I think it will take having the sorry-looking
60-year-olds, who drive their Ferrari F430 Sypders so their salt and
pepper ponytails can blow in the breeze of Hollywood Boulevard, finally
retire. Younger executives will need to realize the vast problems the
music industry has and will need to craft more creative solutions than
the lowest-lying-fruit answer known as downloads. Music in
high-resolution surround sound, video in HD, supplements that compete
with video games and prices lower than that of a movie on a disc will
get college kids racking up credit card debt to buy high-resolution
music.
The story is a little more upbeat when it comes
to video. The video industry has basically thrown Moore's Law out the
window when it comes to how fast technology changes and how affordable
it has gotten. Boomers, X’ers and Y’ers alike see a $2,900 60-inch
plasma with an HD movie or sporting event on it and they have the “I
need this in my life” urge. Thanks to the price points on flat HDTVs
now, college kids can afford topnotch video. For the future, them
getting into video this early is really good news. Many of them will
want to become enthusiasts. They will buy calibration discs and learn
the surprisingly complicated basics of video and, as they earn more
money, will invest more in video. We have never seen a smarter, more
tech-savvy generation than Generation Y. They will learn to love what
HD video has to offer and will push the envelope on the low end as well
as the high end for decades to come. Also note: it is no coincidence
that Hollywood studios, video game companies and television networks
alike are creating hundreds of hours a week of unique HD content for
consumption via cable, satellite and HD disc formats like HD DVD and
Blu-ray. The music industry should take note, but they won’t.
I fear for the high end, especially the world of specialty audio, when
the likes of Apple is selling downloads as “high-definition” when they
are really closer to one-fourth the resolution of CDs – a technology
that is pushing 25 years old. I remain optimistic about the future of
the high-end AV world. The music industry has a long way to go to find
itself, yet the movie studios, video game companies and TV networks
seem to have their fingers on the pulse of the consumers of America and
the world as they create high-quality content in high-definition
formats. One trip to a Best Buy or even a Costco will tell you Boomers
and Generation X’ers are on board with what they are doing, as you see
them loading their carts with huge HDTVs. Generation Y’ers, as starved
for a thrill as they are, are just a little too early to the game. Give
them five to 10 years to establish their careers and increase their
incomes and they will start to seek the bigger and better things that
the world has to offer. Right now, their iPods seem like fine wine, but
when they see the best the AV world has to offer, they will realize the
convenience is unbeatable but the taste is like “two-buck Chuck” from
Trader Joe’s. Once you taste the good stuff, it’s hard to go back.
Generation Y will realize this and, in 10 to 15 years, will help the
high-end AV market grow to even bigger levels than today.
