By Alison Rice. With their stadium seating, big-screen views, and surrounding sound, home theaters would seem to belong to the realm of the rich and famous.

But the high-end indulgence is fast becoming a middle-class must-have, for both personal and pocketbook reasons.

"People are willing to put money into [home theaters] because they realize that home is where they really want to be," says Bob Micho, TECHTouch division manager at Village Homes of Colorado, in Littleton, Colo. "The home is their castle, prices [for home theater components] are coming down, and they're more familiar with and trusting of the technology."

That demand is driving more flexible and affordable home theater options, as builders and manufacturers develop alternative ways of serving their buyers. It's a must if builders want to stay competitive. And they should: Profit margins on home theaters and home theater rooms run from the high teens to 50 percent, depending on the option and the builder.

But there is competition for that consumer dollar. According to analyst Tom Edwards of NPDTechworld, a sales tracking firm in Port Washington, N.Y., the fastest-growing segment of the home theater market — before and since September 11, 2001 — has come from "home theaters in a box," pumped-up speaker systems meant to complement a customer's existing home video system.

"It comes down to wants and needs," explains Edwards. "The want is for the best you possibly can get, but the need is to entertain yourself and your family and keep your kids at home."

Now Showing

Village Homes has found that sweet spot between buyers' wants and needs with a handful of home theater packages selling for $2,200 to $4,000, including components and installation.

"What we specialize in is the realistic price range for the home buyer," Micho says. "They get great quality sound in a price range that most people find reasonable."

Photo: Courtesy Village Homes of Colorado

Tactile Tech: At Village Homes of Colorado's TECHTouch showroom, buyers can compare and contrast different home theater systems. Customers obviously agree. Twenty-two percent of Village buyers opt for a home theater system, the best-selling TECHTouch option, up from a capture rate of 10 percent just two years ago. Home theater options represent a natural progression for Village, which began offering structured wiring as standard in 1997. From there, it was only a short jump to selling and installing home theaters, which the builder began doing in-house in 1999. "We were sending this revenue-generating part of construction out and giving it to subcontractors," Micho says. But no more: Village now employs three installers, who handle the home theaters as well as alarm systems and other tech-oriented options.

Other builders have found similar success with entirely different approaches. In Phoenix, Meritage Corp.-owned Hancock Communities offers a home theater option that includes everything but the electronics.

"We're not experts in that, so we felt more comfortable going to the professionals," explains Desiree Coats, vice president of marketing for Hancock, whose buyers get a movie-ready room with wiring, lighting, and architectural details (a step-up floor layout that mimics "real" movie theaters, for example). Buyers may also add a wet bar with a sink and refrigerator.

Builders' Competition

Year "Box" Sales Average Price
1999 525,000 $380
2000 732,000 $457
2001 1,165,000 $497
Source: NPDTechworld
Big Boxes: "Home theaters in a box" are a hit with consumers, who add the multiple-speaker package and, increasingly, a DVD player to their existing television and VCR. While prices for home theater technology have dropped, prices for home theaters in a box have increased because of the inclusion of a DVD player. "[Consumers] are buying better packages," says NPDTechworld analyst Tom Edwards.

The room-only approach appears to be working. At the two communities where the theater rooms are offered, 20 to 30 percent of Hancock buyers select the option, paying $3,975 to $4,300, depending on the development. Luxury builders cover both ends of the spectrum. At Mizner Country Club, a Toll Brothers community in Delray Beach, Fla., buyers can pick from three prepackaged home theater options ranging from $29,900 to $69,900. They may also choose their own custom installation — the most popular choice among the 10 percent of Toll Brothers' Florida buyers who opt for home theaters, according to Joe Pease, assistant vice president at Mizner.

Manufacturers see opportunity in all these options. Last year, Owens Corning rolled out the Visionaire FX, a turnkey package for builders that want a hassle-free way to offer the option to their buyers. "It used to take six months to put together a home theater," says Jeff Van Sloun, general manager for the Toledo, Ohio-based manufacturer's room solutions business. "You can do this in two or three days and be done." Van Sloun expects to sell a hundred of the systems this year.

The dealer-installed package, which includes acoustic features, electronic components, and theater seating, comes in two levels, the "sophisticate" and the "connoisseur." It retails for $45,000 to $85,000.

Lights, Camera, Action

Even with home theater packages, though, re-creating the Hollywood experience at home involves some practical considerations.

Theater rooms should have only one door, and, ideally, no windows, to block exterior light and sound, according to Van Sloun, who also recommends that builders isolate the room acoustically to prevent sound from traveling to other areas of the house.

Placement within the floor plan varies. While some builders, such as Hancock, give the home theater its own wing, others transform a first-floor family room, a bonus room above the garage, or a portion of a walk-out basement. "People want it accessible from where they're entertaining," Van Sloun says. "The only problem is when it's [way] back in the corner of the basement."

Finally, builders must remember to educate their buyers, who can be completely bewildered by their new high-tech home theaters. Village Homes installers typically spend an hour or two demonstrating the system and how it works, from the TV to the VCR, DVD, cable, and satellite.

"[Training the customer as technology advances] is the biggest challenge we face," Micho says. "After a customer spends $3,000 to $4,000 for a [home theater] system, they expect to know how to use it."

Published in BIG BUILDER Magazine, September 2002