Audio Revenue Hidden in Hardware

Tech-savvy audiophiles are pumping up profits, as researchers predict surges in the digital audio hardware and music-related markets. In-Stat/MDR expects worldwide portable digital music player unit shipments to grow from about 6.8 million in 2002 to over 36 million in 2007, and Jupiter Research (a unit of this site’s corporate parent) finds that music will continue to be the largest online entertainment segment.

In-Stat’s research indicates that hard disk drive-based players will experience the highest growth rate, and CD/MP3 players will have the highest volumes with about 22 percent of all portable CD players incorporating MP3 technology in 2003. Digital audio player ownership increased from 15.5 percent in 2001 to 20.3 percent in 2002, and North America will remain the dominant market for portable digital audio players through 2007.

The home jukebox and receiver markets are still in their infancy, and are growing at a slow rate in terms of volume. “However, the increased penetration of broadband and home networking technologies, and the ability to share content around the house will have a positive affect on this market,” says Cindy Wolf, an analyst with In-Stat/MDR. Both home jukeboxes and receivers will experience their highest growth in 2004, but jukeboxes will continue to out-ship receivers.

Additionally, a growing number of consumer electronics devices, such as DVD players, personal video recorders (PVRs), and PDAs, are incorporating digital audio technology, and In-Stat estimates worldwide unit shipments of PVR products to increase from 1.5 million in 2002 to over 11 million in 2005, with North America accounting for over 80 percent of worldwide PVR shipments in 2003. This percentage will drop to 55 percent in 2007, as demand for PVR products increases in Europe and Asia.

Jupiter’s examination of the online entertainment market indicates a growth spurt from $6.9 billion in 2003 to $15.7 billion in 2007, with approximately 22 percent of that total coming from digital goods and services. Digital subscriptions and downloads will grow from $800 million in 2003 to nearly $3.5 billion in 2007.

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