Copyright 2016. The NPD Group, Inc. All Rights Reserved. This presentation is proprietary and confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

Prepared for 2016 Energy Star Products Partner Meeting

Increasing the Volume on Sound Bars

October 2016

Ben ArnoldExecutive Director, Industry AnalystConsumer TechnologyThe NPD Groupbenjamin.arnold@npd.com@TechBarnold

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

US sound bar sales grew just 7% in 2015 (20% growth in 2014) as demand shifts into lower cost products

Demand for sound bars is being driven by multiple sources

– Big screen, 4K TV adoption

– Promotions/bundling

– Consumers aged 18-34

Sound bars are taking on more non-TV use cases as wireless features and streaming services expand

TV brands continue to account for a majority of sound bar sales

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Sound bar market overview

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

19

Sound bars are challenging mature home theater categories

Source: The NPD Group/Retail Tracking Service

Home Theater CategoriesDollar Volume 12ME

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Home Speakers Home Theater AudioSystems

Receivers & Amplifiers Sound Bars

Revenue (

$ U

SD

Mill

ions)

12ME Aug '14 12ME Aug '15 12ME Aug '16

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

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Sound bar demand continues to be positive

Source: The NPD Group/Retail Tracking Service

Home Theater CategoriesUnit Growth YoY

-40% -20% 0% 20% 40%

Home Theater Audio Systems

Home Speakers

Receivers & Amplifiers

Sound Bars

12ME Aug '15 12ME Aug '16

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

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Sound bars are contributing to some displacement of other audio products

Replacement/DisplacementDevices Using Less Often or Relocated

51%

26%

35%

43%

45%

46%

Any

Wireless speakers

A/V Receiver

Home Speakers

HTIB

Another Soundbar

Base: Sound bar Owners who Own/owned each device

Source: The NPD Group/Soundbar Ownership & Application Study

Q. Please indicate which of these home audio products your household is using less often or has stopped using now that you own a sound bar. Q. Which of these have you relocated/moved to another location in your home or do you no longer own as a result of owning this sound bar?

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

-10% -5% 0% 5% 10% 15%

The NPD Group / Retail Tracking Service12 Months Ending December 2015

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Market growth is being driven primarily by lower cost products

Revenue Growth (%)

$0.0$100.0$200.0$300.0$400.0

Under $200

$200-$400

$400-$600

$600-$1,000

$1,000+

Revenues ($USD Millions)

Sound BarsRevenue, YOY Growth by Price Segment

12ME Aug ‘16

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Samsung VIZIO Bose Sony Sonos LG ROM

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TV brands account for a majority of sound bar sales

Sound BarsDollar Share by Brand, Monthly

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

24

A third of 18-34 expect to buy a sound bar in the coming 12 months

Q. How likely are you to purchase each type of home audio product in the next 12 months?

Likelihood to Purchase Soundbar in Next 12 Months(Extremely/Very Likely)

Base: US rep consumers 18+

18%

13%

19%

22%

14%

32%

16%

7%

US repconsumers 18+

Soundbarowners

Do not own asoundbar

Male Female 18-34 35-54 55+

Soundbar Ownership Gender Age

Source: The NPD Group/Soundbar Ownership & Application Study

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

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Sound bars installed in bedrooms are more likely to be used for audio

31%

47%

Living room Bedroom

Base: Soundbar owners

Living Room Vs BedroomUsage Insights

Incidence of Connecting Portable

Devices

Share of Time Content Type

is Sourced

81%66%

8%

11%

12%23%

Living room Bedroom

While listening toradio, music, podcasts,etc.

While playing videogames

While watching TVshows, movies, videos,etc.

Q. Thinking of all the time your household spends using this soundbar, approximately what share of the time is the soundbar used to listen to each type of content? Q. Which of these portable devices, if any, do you or anyone in your household ever connect to the soundbar?

Source: The NPD Group/Soundbar Ownership & Application Study

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

Multi-room sound bars now account for 20% of sound bar revenues

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Multi-room (same brand) Multi-room (mult brands) Paired Audio (Bluetooth) Not Expandable

Sound BarsDollar Share by Expandability

Source: The NPD Group / Retail Tracking Service

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

0% 20% 40% 60% 80% 100%

Smartwatch

Wireless Speaker

Media Streaming Device

Desktop PC

Notebook PC

Tablet

Smartphone

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Nearly four in ten (38%) consumers say they have used a digital assistant like Siri or Alexa

Ever Used Voice Controlled Digital Assistant

Source: The NPD Group / May Omnibus

Base: Online Consumers

Q.15 On Which Of The Following Devices, If Any, Have You Used A Personal Digital Assistant

Application, Such As Siri, Alexa, Cortana, Or Google Now?

The NPD Group, Inc. | Proprietary and confidentialDocument classification: Internal Only

Thank youThank you

28

Ben ArnoldExecutive Director, Industry Analyst

Consumer TechnologyThe NPD Group

benjamin.arnold@npd.com@TechBarnold