Economy slows home entertainment, automation growth

By Jeff Smith, Rocky Mountain News (Contact)

Published September 2, 2008 at 9:05 p.m.

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Photo by Darin McGregor / The Rocky

Workers prepare the Toshiba display Tuesday for the Custom Electronic Design & Installation Association Expo 2008 at the Colorado Convention Center.

The home entertainment and automation industry is considered mostly recession-proof, especially at the highest end.

But it is showing signs of being hurt by the weak economy and fewer housing starts.

Glitzy technology, with the tougher economy as the backdrop, will be center stage this week at the Colorado Convention Center.

About 550 exhibitors will display the newest home entertainment and automation systems as part of CEDIA, the annual Custom Electronic Design & Installation Association Expo.

This is the last of three years for the CEDIA show in Denver. It moves to Atlanta in 2009. The trade expo is where dealers, installers and manufacturers do business, and it isn't open to the public.

Nearly 30,000 installers, dealers and manufacturers are expected to attend the event, which runs through Sunday.

Park Associates, a leading industry research firm, recently projected that industry installer/dealers could see revenue increases of 8 to 9 percent this year, compared with 15 to 20 percent averages posted in 2004-2006. The U.S. residential custom electronic and design installation industry generated about $9 billion in revenue in 2007.

"In a nutshell, yes it has (been affected by the weak economy and housing market)," said Don Gilpin, executive director of CEDIA.

But Gilpin said home-automation systems - which can control heating, air conditioning, lighting, entertainment, security and more - are coming down in price, a good sign for consumers.

He said the industry also is trying to combat the image that home entertainment and automation systems are an energy drain, noting that automation can help home owners be more energy-efficient and save money.

Many new products are launched here because of the fast-approaching holiday season, and the exhibitors - which include giants like Sony, Microsoft and Panasonic - will display their share of high-definition flat screen TVs, touchscreen home automation panels, and interactive software.

In a nod to today's youth, gaming systems increasingly are being incorporated into home entertainment systems, Gilpin said.

Still, the tougher economy is sure to be an undercurrent.

Dan McCord, president of Colorado Concept Lighting in Wheat Ridge, said last year at this time his firm had four big home projects.

"This year, we have two big homes going," McCord said. "At this point, we haven't seen any growth (this year) at all."

He blamed not just the slow economy.

"The election year always seems to make people a little more cautious," he said, especially when there's talk about possibly raising taxes on the rich.

McCord said he also is seeing contractors go outside their niche to compete. In other words, a smaller pie "and more pie-eaters."

Diana Dannelly, sales and marketing manager at Tech Dwellings in Denver, which does home theater and automation work, said the company's sales force has had to be more aggressive pursuing leads.

A Parks Associates survey of 1,090 U.S. households earlier this year showed that home theaters remain popular and that they are more recession-proof than several other categories of consumer electronics.

"I think that the notion of cocooning (at home) also resonates well in hard times," wrote analyst Kurt Scherf.

Dannelly said that's the experience of Tech Dwellings.

"Definitely, the money goes to home theater first, then music streaming," she said. "Then lighting control and home automation."

smithje@RockyMountainNews.com or 303-954-5155

CEDIA at a glance

The Custom Electronic Design & Installation Association's annual expo of the latest custom home entertainment and automation systems, featuring about 550 exhibitors and dozens of education and training courses.

* When: Industry education courses today, trade show Thursday through Sunday at the Colorado Convention Center

* For: Nearly 30,000 contractors, designers and installers. Not open to the public

* Economic impact on the metro area: Estimated to be around $60 million

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