AV Magazine
Poor economic conditions have severely hampered business but
the region is set for the fastest growth in Europe on the back of EU funds.
Which countries constitute Eastern Europe? InfoComm’s latest
Industry Outlook and Trends Analysis report includes the Soviet-era buffer
states of Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia in
Central Europe, pushing Eastern Europe as far back as Mongolia (and roping in
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan for good
measure). While Europe’s border has moved East, most people still regard Poland
as Eastern Europe, making InfoComm assessments a little tricky.
It anticipates that Central and Eastern European AV revenues
will grow by a seven per cent and 10 per cent CAGR (compound annual growth
rate) respectively 2016-2022. On these statistics, East Europe’s projected
revenue makes it the fastest growing of any region in Europe albeit from
stagnation since 2008/09.
“The biggest issue is the general economy,” says James
Kennedy, operations manager, Peavey Commercial Audio who adopts the more
conventional approach to Eastern Europe country definitions. “The Romanian and
Bulgarian markets are still very weak but just showing signs of growth.
Poland – which was such an excellent market for us in terms of growth a few
years ago – seems to have stagnated, the Zloty/US$ exchange rate being a major
culprit. Hungary, which had a bad recession is coming back strongly, though. We
saw good state sponsored AV projects last year with some theatre installations
being discussed for 2017-18.”
“Most of the region is in a positive position in terms of
AV, but the volatile exchange rate has a significant impact on business,” says
Melinda Von Horvath, vice-president of sales for Peerless-AV.
Many projects are ongoing and there’s a huge opportunity to
upgrade legacy equipment in sports stadia and transport. Examples of this can
be seen in Budapest.
Nikola Šostaričová, K-array product specialist and ceo of
distributor, SOONN spots a recent upward trend in pro AV in Czech noting
increased demand for projects from architects and general designers. He expects
a slight increase in sales of medium and high quality pro AV components.
Poland is a “steady market”, according to Boguslaw
Klodzinski, area sales manager, Vivateq (RTI’s European Distributor). Most
turnover comes from the public sector because its revenue is tied to tenders
from the Polish government.
“The biggest hurdle has been the new parliament (elected a
year ago) which has slowed the launch of new public tenders for universities
and public institutions and put a significant number of AV projects on hold
until funding comes through,” Klodzinski says. “As a result, our dealers keep
postponing the integration of these projects from month to month. Dealers fear
that the number of projects will decline, putting AV companies in heavy
competition for them. If the situation continues, then within the next few
months, we expect these companies will reduce the price for labour and their
subsequent margin for these projects.”
EU funds to the rescue
An EU purse worth €200 billion 2016-20 is kickstarting
activity. “For the last twelve months there’s been a lack of public money
spending causing most AV companies (in the region) to drop in turnover around
20 per cent from 2015 to 2016,” says Serge Philippo, Crestron’s regional
director. “The overall state of pro AV seems to be in good condition though as
EU funds are spent.”
Since Poland is a recipient of European funds dedicated to
advancing culture, several cities are interested in integrating AV solutions
and adding AV staff into existing museums “as a way to modernise the facility
and draw more frequent visitors,” says Klodzinski. “In this sector they’re
looking to incorporate total AV systems that tie together control and signal
management.”
In market areas controlled by the state and using EU
subsidies such as universities, administrative and cultural centres and
museums, the selection of AV technology is based on tenders where the main
evaluation criteria is price.
“Most AV technology supplies are delivered through large
construction companies that try to get the best price from AV system
integrators,” says Šostaričová. The usual margin for these companies varies
between 25 and 35 per cent of the prices set by the project. “This reduces the
quality of AV realisation because the supplier is forced to look for
alternative solutions.”
Capital cities concentration
It’s noticeable that rental and staging is booming in Poland
since it doesn’t have to deal with public tenders. “Many of our dealers are
performing services and shows for bigger companies both within Poland and
abroad,” reports Klodzinski. “Growth is also visible in the residential/home
cinema space. Almost all the companies that also focus on residential AV are
busy and handling some nice projects.”
Prague, Warsaw, Bratislava and Budapest, concentrate the
most AV because that’s where state ministries and decision makers are
located. Russian AV projects really only happen in Moscow with some in St
Petersburg.
Price sensitive
The region remains a very price sensitive market with sales
traditionally composed of entry level local solutions, agrees Horvath. Basic
local manufacturing means manufacturers outside the region “must have a better
quality and competitive price proposition” to compete.
In terms of volume, the market is still below that of
Western Europe, which means even Eastern European AV brands look west. “The
most serious requests and orders come from overseas and Western Europe,” says
Agnes Szentannai, project manager at Hungarian projection mapping specialist,
Maxin10sity. “The vast majority, if not the whole of our business, comes from
these areas.”
Since AV “is not widespread” or ingrained in East European
business culture, local AV innovators, such as Maxin10sity, have to face
internationally.
“There are not many requests from our own country primarily
because of budget restrictions, while a lot of opportunities are offered
abroad. So, we think globally when it comes to establishing an event, not
limited to the East European market.”
The practical expertise of AV professionals in the region
means there is a definite market for higher end quality products, reckons
Horvath.
“Demand for sophisticated functionality and pleasing
aesthetics is a trend that continues to grow,” she says. “Interest and demand
for AV technology, for example LED, in education, transportation and stadia is
showing positive signs of growth. Safety testing is recognised as being more
important now for work in the public domain.
“However, sometimes these requirements are underestimated by
the local specifier or installer, which often try to win the installations via
‘low price alternatives’, rather than fully understanding the needs of the end
user and the importance of the quality, servicing and installation. Over time, and
just like in more developed markets, we expect this to change.”
If the biggest opportunity for the region in the next few
years is the opening up to EU funds, the biggest challenge is to convince end
users of a proper quality solution that will suit their needs.
“Unfortunately, the knowledge of end users regarding AV is
very low which is why they are not able to recognise which solution is better
and which is worse,” says Philippo. “Usually end users don’t use consultants
either for their projects so actually they don’t know what they are buying.”
He says the situation is getting even worse. “When it comes
to public tenders, where the tender specification must be open enough to allow
offers from at least two manufacturers, end users do not know which specification
is allowed and which is not. Without the help of a local integrator, they may
end up with a bill for professional equipment and services, but low-quality
systems and no service.”
That said, there is potential in the local market. iMapp
Bucharest is a projection mapping competition on the façade of the Palace of
Parliament Bucharest where Maxin10sity is the event’s art curator.
“As far as creativity is concerned, the artists from Hungary
are pioneers in the projection mapping business and they have been dealing with
creating such shows right from the beginning,” says Szentannai. As a result,
(Maxin10sity) can offer extremely experienced and skilled artists for this
application technology.
The SIGNAL Festival in Prague, an annual light festival held
in October, is now the largest cultural event in the Czech Republic
co-organised by the city of Prague and the government. Last year’s event drew
over half a million people according to Cisco, one of the participants.
In Poland, AV integration companies and projects are
concentrated in Warsaw and Wroclaw, followed by Krakow, Poznan, and
Gdansk/Gdynia. “Warsaw and Wroclaw are a result of a strong technical
university presence, which produce students who are familiar with the benefits
of technology, and go on to establish AV companies,” says Klodzinski.
The eastern part of Poland is receiving “a significant
contribution” of EU funds to activate this part of the country. “The biggest
opportunity Poland has is being part of the EU, and because of the availability
of funds, even in smaller towns people can see the footprint of those
investments,” says Klodzinski. “AV companies have a great opportunity because
those funds have been earmarked for specific applications where AV solutions
are needed.”
Russian/Chinese influence
The region’s economy tends to ride and fall with the
centrifugal force which is Russia. The country has had its own
sanctions/currency issues with the Rouble devaluing three fold against the US
dollar over the last two years – but it’s now relatively stable. This
stability, albeit valuing the Rouble at half what it was in 2014, has led to a
number of projects being restarted.
InfoComm anticipates that the country’s economy will cease
to contract in 2017, and nudge up against two per cent growth in 2018. While
any number of unanticipated factors and risks may derail Russia’s return to
growth, the region’s AV segment as a whole has shown an ability to weather
systemic contraction in Eastern Europe’s largest marketplace, InfoComm
suggests.
The 2018 FIFA World Cup stadia building programme has led to
a lot of activity, including the build of 12 stadiums and major investments in
transportation infrastructure, public spaces, and hospitality in and around the
host cities and major tourist venues.
All venues undergoing construction or renovation are to be
certified with a Russian or international green-building standards. The
Luzhniki Stadium in Moscow, Samara Stadium, Nizhny Novgorod Stadium, Volgograd
Stadium and Saransk Stadium have already been certified in accordance with the
BREEAM standard.
“The emphasis (of the WC2018 activity) is on locally made
product, but designed elsewhere,” reports Kennedy. “It is common knowledge that
a certain US company is having speakers built in Moscow for the installation in
Luzhniki.”
China is investing in the region, particularly
infrastructure, as a means to reduce the transport time for shipping Chinese
product to west Europe markets. It is, for example, financing the $2.5 billion
Belgrade-Budapest high-speed railway and the Industrial and Commercial Bank of
China has set up a 10 billion Euro ($11.15 billion) investment fund to finance
projects in Central and Eastern Europe.
Case study: Moscow Metro & bus service
Zytronic supplied nearly 700 touch sensors for self-service
ticket machines installed on the Moscow Metro and at Moscow bus stops. The 17
and 19 inch sensors were supplied by Elatec to Russian SI Progressive
Self-Service Systems, and are part of a roll-out which will eventually extend
to over 1,600 machines. The terminals are designed to operate reliably all year
subject to the extremes of Muscovite seasons where temperatures can range from
-30 to +40 degrees C. The touchscreens still detect the touch of a user wearing
heavy winter gloves. Half of all tickets are now sold through the machines
since installation.
No comments:
Post a Comment