PRO AV Forecast 2011: Silver Linings
No one claims the AV industry is out of the woods, but most agree the worst is behind us?and the future's a new ballgame.
Andreas Watt, CTS, is on his cell phone, driving to an AV job in the Denver area. A selfdescribed military kid, he's "heading into battle," as he puts it, in order to keep his fi ve-man shop competitive in a slowly healing economy. "I love installing—love it," says the owner of Xcite Audiovisuals in Centennial, Colo. "If something goes wrong, I don't just send my guys out there to fi x it. I'm out there with them in the trenches."
It's a professional philosophy that served Xcite AV well when the nation slipped into recession in December 2007 (unbeknownst to much of the pro AV industry, until its effects were felt months later). In fact, Watt says, Xcite AV didn't feel much impact from the economic crisis, and now the company's laser focus on customer service and willingness to chase even the smallest AV projects could prove a roadmap for other integrators navigating their way out of the business doldrums.
"It seemed like lots of guys put their eggs in one basket, either large commercial projects with general contractors or, in the residential market, large custom homes that cost $4 million," Watt says. "We had guys just doing basement renovations, which was good business."
In the commercial market, Xcite AV took a new contract with MillerCoors and ran with it. "We got MillerCoors right when the economy went bad and things were really tight," Watt explains. "But they still had plenty of little jobs for us and we treated them like big jobs. Being a chameleon in the industry helped a lot."
"Adaptability" might be the word of the year for AV integrators. Because pro AV is largely at the mercy of others–commercial construction, corporate clients, school and government budgets–successful AV firms learn to roll with the punches. The good news, according to Pro AV's latest forecast survey, is that the industry is more optimistic about the future. Companies are adjusting to short-term realities, such as taking on more small jobs, and they're slowly filling their pipelines with work.
"When we look at our business and talk to our customers and the influencers around us, we're busy and they're busy," says Steve Metzger, president of Biamp Systems. "There's certainly some caution, but right now we're very optimistic."
The industry was similarly optimistic more than two years ago when Pro AV conducted its first forecast survey ("The Road Ahead," December 2008). In that study, 63 percent of AV prosincluding integrators and installers, consultants, dealers and distributors, rental and staging firms, and AV manufacturers–expected more revenue in 2009 than they generated in 2008. That was before the AV market felt the full brunt of the recession. This time, in a survey fielded in late November 2010, 69 percent said they expect a rosier 2011.
"Given the state of the economy, business is okay. We've survived well," says Sue Lepp, senior vice president at Lorton, Va.based Design and Production (D&P). According to Lepp, D&P has a healthy backlog of larger design/build contracts for 2012 and 2013. "For 2011 we're filling in some holes," she says.
What happened to AV companies between 2008 and 2010, when by most accounts it wasn't business as usual? And how will that affect their recovery? In interviews with AV professionals about how they see the market, they all agree that AV technology remains in high demand from organizations that recognize the need for new ways of communicating, engaging audiences, and better running their businesses. Those same organizations are also more careful with their money, and some need help in maintaining their AV systems. That means that many AV companies are adjusting their mix of products and services.
"We went out and chased jobs over the last 18 months that we normally wouldn't have gone after," says Lepp, whose company specializes in museum installations. "As far as AV goes, the smaller jobs are not as complex. They may not be centralized. There may be a lot of standalone interactive kiosks or maybe a single theater. And it's not surprising to see what would have been a projection system turned into a 60-inch flat-screen."
In the 2011 Forecast Survey, AV pros who'd seen a recent increase in revenue were asked to cite the single biggest reason for that increase. In a significant change from two years ago, 40 percent said the reason was that their company was handling more work than before, but only 10 percent said it was because the jobs they handled were bigger. In 2008 when Pro AV asked the question, only 26 percent said it was because they had more work and 20 percent said it was due to bigger jobs.