Media Centres Fail to Achieve Significant Sales

Media Centres have failed to achieve significant sales, despite high expectations at their launch in 2002, reports market research firm GfK. In the past 12 months only 150.000 media centres were sold representing sales of ?100 million; this accounts for only 4% of desktop computer sales, and a tenth of the 2 million DVD players and recorders that sold in the same period.

Media Centres, computers adapted for playing music, surfing the internet and watching DVDs, controlled by a remote control on the sofa rather than keyboard in the office, allow users to easily download films, sport and television programmes. GfK believes that high prices and inadequate marketing approaches have led to Media Centres not progressing beyond early adopters.

Industry expectations are well evidenced; GfK report that compared to last year the number of models available has doubled to over 150. The proliferation in models has only led to a modest increase in sales though. However, GfK reports that although the overall desktop market is decreasing by 30% year on year, Media Centres are growing by 56% in volume. This growth, however, was significantly driven by retailers dropping prices below ?600 in January to drive volumes of sales, presumably in an effort to shift unsold holiday season stock.

This range of entertainment in one box is not only an advantage for the product, but also one of its downfalls. According to GfK's IT Business Group Director Jean Littolff: "Consumers need to be instructed on how to use Media Centres to get maximum benefit. They cannot simply be sold as a box in a store if retailers hope to penetrate beyond the early adopters. Even further drops in prices alone would not have the same effect of an in-store display of the entire set-up".

The other main obstacle is price. Average selling prices remain at ?690, ?233 pounds more than an average desktop computer, and ?515 more than a DVD recorder. If consumers do not see significant benefits of a Media Centre over a DVD recorder, this price differential could prove to much for the market..

This is not to understate the opportunity that still remains. GfK's Jean Littolff indicates: "With some clever marketing, Media Centres could become as familiar to consumers as iPods. If the industry acts quickly, it may stave off the threat to Media Centres, the next generation of media gateways, which allow streaming from existing PCs to existing home entertainment systems. Media gateways currently available have sufficient bandwidth for the streaming of music, but once the new European standard is ratified, now expected for early 2007, streaming of video content will be feasible, and if Media Centres are not entrenched in the market by then, they may never be".

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