All Systems Go In The Gulf

AV Magazine

http://www.avinteractive.com/news/all-systems-go-in-the-gulf-31-07-2009/

Sony’s broadcast and professional division makes $1.7bn annually, and, around this time last year, it went public with its desire to double that figure by 2011 (AV, July 2008). Given the worldwide slump, that’s an optimistic aim, but the pressure is still on to maintain a record of five years of consecutive growth. With poor revenues forecast across Europe, the division is pinning its hopes on growth hotspots in the Middle East and the CIS to keep targets on track this year.

While the region is not immune to the recession, there are substantial opportunities that are currently attracting foreign a-v firms.

Sony has had a presence in the region for more than three decades, in recent years becoming a major supplier to broadcasters with outside-broadcast trucks and delivering large system builds for upgrades to digital and HD. Among other things, the ratio of HD to SD sales from broadcast to retail is 20:80 – it’s the reverse in Western Europe – which has helped with Sony’s success in the region. But, by its own admission, the success in broadcast has meant it has failed to sufficiently address the professional market, identified as key to its profitability.

‘We expect our a-v business to be flat in Europe this year,’ says Sony marketing director EMEA David Bush. ‘Our MEA business has been growing year on year for the past decade.’ But he admits: ‘We’ve had our hands full with broadcast and haven’t been as focused as we might have been on the a-v side.’

Bush reckons the division can build on the experience of its broadcast success to capitalise on the strength the company has built elsewhere in a-v systems and installations. But there’s no question that while Sony has had its eye off the ball, rivals including Christie, Barco, Polycom and Tandberg have stolen a march; Sony is now playing catch-up.

‘One reason we’ve been a bit slow to develop our non-broadcast business is that we have found it relatively difficult to identify integrators and specialists on the ground,’ says Bush. ‘There is a need for that education and knowledge.’

Partly to address that issue, Sony last month brought its regional dealer network together for a two-day fact-finding and education session in Dubai that included demonstrations of its flagship videoconferencing and digital signage products. With local sales moving away from box items toward big-ticket projects, the emphasis was on Sony having the products, support and engineering resources to back its dealers up.

Dubai remains the region’s business hub with its comparatively liberal culture and tax incentives. But its economy has nosedived. Its oil now comprises just 3% of GDP. The ruling Al-Maktoum dynasty saw this coming and set in train the process of diversification that sparked Dubai’s emergence as a centre for tourism, air travel, commerce and financial services. Dubai swapped oil dependence for real-estate, with 40% of all economic activity related to property. The collapse of the global property market has brought those plans almost to a standstill.

Economic revision

‘The glory days of blank cheques are over,’ says Dave McMahon, head of operations with leading UAE solutions and systems integrator Almoe, which handles Extron, Epson and Crestron. ‘In the past, it was a bit of a free- for-all. There was an abundance of work, everyone was opening a-v integration firms. Now, business is more competitive, margins are squeezed and smaller players bankrupted. There are cash-flow issues, but business remains strong and we’re busy recruiting from Europe.’

Almoe recently completed an audio distribution and control network for Dubai’s Meydan Racecourse and is in talks with the developers of the S4 stadium (see box) to deliver a multi-LCD screen AV/IT solution.

‘A lot of new entrants tend to just assemble projects on site, whereas all our systems are built and factory-tested before installation,’ says McMahon. ‘That’s basic quality of service, but it’s something many suppliers here don’t do. It’s vital to increase the overall standard of quality because bad reputations begin to infect the market.’

McMahon reports an influx of a-v integrators from Europe looking to plug the gap of a lack of projects at home, but it’s not straightforward to set up shop here when the client is usually the government. ‘The criteria for winning a pitch is not necessarily quality, cost or reputation, it is often down to which minister you know and how much influence they have,’ explains one Abu Dhabi-based systems integrator.

That’s not to say the authorities are dismissive of new approaches, says Almoe business manager Vivek Anand. ‘Clients are very open to innovation,’ he says. ‘They want to work with the latest technology and if they like something it will be green-lit with little bureaucracy so development can happen extremely rapidly.’

If Dubai is fading, Abu Dhabi is primed to become the Gulf’s leading light. It wants to be a major world city by 2030 by weaning itself off oil and becoming a knowledge-based economy and the region’s cultural capital. To this end it has set up production facility and training academy Twofour54, fitted out by Sony, to cultivate an indigenous media industry.

‘We are not here to cluster real estate but to give people the means to create content in all forms of media,’ says chief executive Tony Orsten, a former head of international channels at Paramount Pictures. ‘Although Arabic speakers have a fantastic storytelling history, their production and craft skills in media are low, so it was essential to establish a training academy and bring them up to international standard.

‘But there are no media jobs so we have to stimulate the entire media ecosystem,’ he explains. ‘The quickest way to achieve that is to bring in partners, including CNN and the BBC. English is the second language and the UK the nearest talent pool.’

Positive signage

The need for quality production values extends to all aspects of digital media, and none more so than signage. Sony believes there’s huge latent demand for it in the region, held back by the lack of effective content for the hardware.

‘The market is nascent but we expect growth of more than 100%,’ says Rajiv Khurana, VP, MEA for Dentsu Marcom. ‘Outdoor digital billboards are rare but new transport infrastructure could change that (see box). Malls and hotels have started using DS solutions and try to out do each other. There’s potential for far greater promotion in store. The issue is that we need to establish good quality messaging. Far too often, signage is static, informational and unimaginative when research tells us that footfall and direct POS revenues will increase dramatically with tailored and entertaining content.

“Customers will see more digital signage but businesses aren’t using it to its advantage,’ says Khurana. ‘We need advertising skills and a creative video culture to make it more attractive and then it will explode. There are so many possibilities.’

MEDICAL AND EDUCATION

Middle Eastern governments have prioritised education as key to transforming knowledge-based economies. Demand for VC suites, interactive white boards, projectors and signage is strong.

‘In Saudi and Kuwait there are big university expansions, therefore, big opportunities for portable projectors and videoconferencing,’ says Almoe business manager Vivek Anand. ‘HD is the buzz word.’ The University of Sharjah is apparently keen on placing Sony’s Canvas in its reception.Sony MEA general manager, Takashi Miura, notes: ‘Iran is one of the biggest markets for projectors because so many of its population are going through education.’

Dubai’s Healthcare City features a Harvard medical school and copious auditoria, simulation tools, and training rooms with high end a-v installations.

DUBAI

– A 75km driverless, automated metro link opening this September with multiple enclosed OOH signage

– Dubailand. The $4bn theme park is currently on hold. California’s Thinkwell Design is well positioned to win the contract if work resumes, having created Dubai’s Ski Dome.

– A 60,000 seat sports stadium (dubbed S4) is under construction. A 10,000-seat stadium and a cricket pitch are already part of Dubai’s Sports City.

– A £60bn second major international airport at Jebel Ali is the centre piece of Dubai World, a planned residential, commercial and logistics complex scheme.

QATAR

– Education City. A 14 sqkm development on the outskirts of Doha housing outposts of leading US universities such as Cornell, Georgetown and Carnegie Mellon.

SAUDI ARABIA

– King Abdulla Economic City (KAEC). A $40bn new city intended to drive the emirate’s future economy with a 50-year timeframe. A rail link might connect it with Abu Dhabi.

ABU DHABI

– Opening soon, a £15bn cultural quarter hosting Guggenheim and Louvre museums. Four others are planned and the a-v pitches are reportedly out on all of them.

– The country’s new race circuit will premiere the climax to the 2009 F1 Grand Prix this November after which it will become a Ferrari theme park.

– A $22bn home for 50,000 people ready in 2016, Masdar is promoted as the world’s first zero-carbon, zero-waste city powered entirely by renewable energy.