Audio and Video Equipment Manufacturing Business

Summary: A large part of the audio and video market in the U.S. is being served by multi-national companies. But one category, speaker manufacturing, is played on mostly by local companies.

Are you interested in starting a business in this field? Get a general idea about the industry from our basic guide.

Audio and Video Equipment Manufacturing Overview

According to research, there are about 550 audio and video equipment manufacturers in the United States. Their revenue, when taken all together, is about $10 billion yearly. Competition for market share is highly dominated by the top-tier companies in the industry. The largest players include Harmon International, and divisions of Sony and Philips that are operating in the U.S.

These large companies are able to maintain their leadership owing to economies of scale in producing, marketing and distributing their products. Because of the large volume of their production, the efficiency of their machines, and their cutting-edge technology, they can produce equipment cheaply on per unit basis. They also have highly competent product engineers that conduct researchers to improve design and introduce innovations. That way, they stay on top of the competition in terms of technology and cost.

Major manufacturers of audio and video equipment are usually subsidiaries of foreign companies, U.S. companies that are outsourcing labor, or had licensed their brand names to foreign manufacturers with more famous brands. U.S. companies take up greater role in marketing and selling equipment and accessories. If there is one product category that U.S. manufacturers excel in, it is in the area of speaker systems.

U.S. Niche: Speaker Systems

The manufacture of speaker systems, while appearing purely electronics, is more than just assembling the necessary components. It is achieving the right balance of the elements -- crossover points, and amplification, among others -- to achieve quality sound, that is the selling factor for all speakers. As such, speaker manufacturers usually bank on their long manufacturing experience – obviously, the longer one has been in the business, the more developed its technology is.

One decision prospective speaker manufacturers would have to make is on the type of speaker to produce. Will it be for movie theaters, in-door/out-door speakers, car speakers? Another is the mode of distribution. Will the business produce and supply to other stores, sell their own products (which is usually the case), or supply custom-made speakers? Where will supplies such as magnets, cone papers, and voice coils come from? How many will be produced for a given period?

As in any business, owners would have to take care that they are delivering quality at competitive prices, and keeping up with the technology, for example in measuring and testing loudspeaker parameters. As this is a highly-specialized business, they would have to have experience in the field. That experience could be learned by working on a similar business. Entrepreneurs without such an experience, can hire engineers and technicians who do.