Since the mid-nineties, digitalization has ensured a regular boom in the tech industry. Many new products, applications and services have succeeded in massively boosting the use of the latest technology at ever lower prices.
At the same time, consumer behavior has changed fundamentally due to the ubiquitous and unlimited access to the internet, social media and networking between content and hardware. In a relatively short period of time, the high demand for smartphones and smart TVs has drastically and sustainably reversed the use and distribution of music and television or film.
However, the development of digital products has not only characterized consumer behavior, but has also been the source of some convergence of hardware. In many cases today a smartphone replaces the MP3 player, the navigation device, the photo camera or the tablet and the credit card, the fitness tracker and much more thanks to ever-increasing screen sizes and advanced technology.
Structural change in the multimedia sector
The market for multimedia products is now in a deep crisis as measured by demand. The high demand of the past years has led to strong market saturation, so the manufacturer has had to foot the bill for the end customers the past two years.
On the one hand, a large number of devices are only in the middle of their service life, which means that the consumer often does not see any additional use or buy-in for a replacement purchase due to small or even poorly communicated innovations in conventional products.
Even for 2017, the bottom is still not reached. The prospects for recovery are low, with a noticeable, structural change in the sector.
Smart TV dominated CES
The groundbreaking annual CES fair in Las Vegas produced a glimmer of hope at the beginning of the year with the industry presenting a large number of innovations. The focus, however, was once again on smart televisions with bigger and better pictures.
The TV market is, of course, an essential part of the entire multimedia business and the decline in sales recorded in recent years is indeed striking. Whether the presented innovations can stimulate the saturated TV market in the short term, however, is questionable.
The driver in the multimedia area is undoubtedly the smartphone. The steady growth was attributable to the penetration, which had not yet been exhausted, as well as the product innovations up to 2015 and 2016. The turnover in this area was only partially compensated for by other declining multimedia categories.
In the future, the opposite will probably be the case despite advances in new devices with higher battery operation times. The trend of growth could decline in the future as a result of the lower subsidies by the telecom providers as well as the often achieved marginal use.
Unsteady photo market
The whole photo and video area is almost right in the free fall, as the smartphone increasingly replaces the classic camera with increasingly better camera functions.
As CES 2017 showed, the innovations and visions of the industry are likely to hit the market again in many places with new perspectives. Particularly interesting are 360-degree film cameras in combination with VR glasses, as well as compact film drones in addition or as a replacement to Actioncams.
Renaissance in audio
As far as the sound is concerned, high-quality audio seems to be experiencing a renaissance. Thanks to high resolution audio, sound quality is coming back to the forefront for consumers. Both audio-players and headphones in the highest resolution promise an unprecedented sound experience and bring the music lover into completely new spheres. This kind of innovation not only enhances the quality of the sound world, but also creates new, desirable products in the market.
At the same time, the audio-home market is benefiting from unbroken demand in the streaming and multi-room segments, which grew by 8 percent in value and 5 percent in value respectively. This trend will continue to grow as a result of continuous development and new suppliers.
Taking a chance on the smart home
The smart home has become an ever-present catchword at CES. The term is as broad as it is incomprehensible, but everyone seems to be able to imagine something related to home networking. The range of products and innovations also take into account the primary need for safety, energy management and control of all possible household appliances and equipment.
The challenge of the manufacturers is to offer the consumer simple and reliable products, which can be installed and operated easily and intuitively at an affordable price. A simple communication of the benefits and understandable advertising play an equally important role.
The recent changes in consumer behavior have presented a number of challenges and opportunities for electronics manufacturers. The convergence of hardware has made many products obsolete and led to structural changes in the sector. The markets for smart TVs and phones face growth challenges, while innovative products in the visual and audio segments are opening up new opportunities for established players. The smart home remains a mystery and presents maybe the biggest opportunity, with consumers showing interest but lacking understanding of products in that segment.
Luca Giuriato is a Senior Market Manager at GfK. To share your thoughts, please email email@example.com or leave a comment below.
Most Recent Posts
- Differentiated customer experience is key to success in marketing to Hyperconnected Consumers
- How to attract the maximum share of Black Friday shoppers
- #Decade: What ten years of hashtags tells us about consumers today
- Smarter living with 5G, but what about the data?
- Researching the mind of a ‘distracted viewer’: The greater than ever role of engagement and the gains of AI