POV: The AV Industry's Strength in Numbers
Jul 1, 2007 12:00 PM, By Randal A. Lemke, Ph.D.
InfoComm International recently retained Acclaro Growth Partners to study the size and scope of the audiovisual market in North America and offer advice to businesses in the different market segments. The result is the North American AV Industry Market Definition and Strategy Study, which has determined audiovisual products and services comprise a $25 billion industry in North America. The study also forecasts an 11-percent growth in the audiovisual industry over the next two years. The study was released at InfoComm 07.
Why is the AV industry so strong? The growth of digital signage, videoconferencing, and command-and-control facilities has resulted in a 30-percent growth in demand for AV services over the past three years. In addition, the boom in construction and building renovations is the leading driver of demand for audiovisual products and services, as AV is now considered an integral part of designing and outfitting buildings. Sixty percent of AV goods and services are purchased as part of a new construction or major renovation projects.
The past several years have marked a period of unprecedented growth for the audiovisual industry. This decade has seen an insatiable demand for control systems, projectors, displays, videoconferencing systems, digital signage, and sound reinforcement.
The convergence of all things AV and IT have played a large role in changing the industry. As AV products started operating over IP networks, the industry has largely transitioned focus from box sales to integration of complete interoperating systems. Even though the price of AV technology dropped and margins on product sales have diminished, revenues have increased due to the critical importance of collaboration and communication in business and beyond. It is the value-added services and maintenance contracts that continue to fuel industry growth.
Interest in large screens and high-definition televisions is creating growth in the display market. HDTVs are growing more than twice as quickly as the overall display market. Improvements in picture quality have fueled increased interest and sales in high-definition videoconferencing products and services. The demand for videoconferencing equipment and services is expected to increase by an additional 20 percent between 2007 and 2009.
Digital signage has grown explosively over the past few years, with industry experts estimating a growth rate of 10 percent per month. More than one million digital signs are expected to be found in North America by 2009. The financial services, government, education, retail, healthcare, and transportation sectors are implementing digital signage to deliver information, live and on-demand video, and more to key audiences. Over the next three years, corporate officials estimate that 45 percent of corporate AV budgets will be spent on digital signage and videoconferencing goods and services.
Contracts for service and maintenance of audiovisual systems are also growing. Three years ago most AV integrators did not offer these services, or they offered basic maintenance contracts that would be considered extended warranties. But as the complexity of AV systems has grown, users have expressed a growing need for service contracts. The interest in ongoing maintenance of audiovisual systems reflects that need in government, education, and business. AV has been elevated from technology that is nice to have to technology that is mission-critical.
The government, corporate, and education markets are the three largest consumers of audiovisual products and services. The growing need for communication and collaboration in these environments is fueling a reliance on AV.
In addition, the growth in demand for rental and staging activities over the last three years has been a direct result of a positive economy. Corporations are hosting more events and they have become larger in scale, with very high production values. Approximately $2.75 billion was spent on rental and staging services in 2006, representing nearly one quarter of all funds spent on AV services.
The only market that appears to be approaching its saturation point is the house of worship market, due to reduced construction in this sector. Most existing megachurches have already invested in high-end audiovisual equipment.
The 2007 North American AV Market Definition and Strategy Study goes beyond establishing basic facts about the size of the industry, and it offers specific advice to businesses involved in the world of AV based on market segment and size. To order a copy, please visit www.infocomm.org/mdss.
Randal A. Lemke, Ph.D., is the executive director of InfoComm International, a trade association of the professional audiovisual and information communications industries.
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