Not even withdrawal behind borders threatens to stop the juggernaut that is the US’s massive $53 billion pro AV market.
https://www.avinteractive.com/features/market-sectors/pro-av-trumps-tariffs-25-10-2017/
There’s no way around it. The United States’ AV market is the world’s biggest by some margin. Relative to China – the world’s second biggest AV market – the US generates roughly twice as much demand. In 2016, the nation’s AV industry was worth nearly $53 billion. Through 2022, the industry will grow by four per cent year-on-year, according to AVIXA.
Here are more superlatives: the US accounts for over 80 per cent of the overall pro AV spend in the Americas region (encapsulating Canada, Brazil and Mexico) which is tipped to attain $83 billion and retain its number one status by 2020.
That’s not withstanding any road bumps of contraction as a result of erratic White House policies or a more sustained withdrawal of trade behind its borders. “The United States’ relative importance to the Americas market is not anticipated to erode,” says IHS Markit analyst, Merrick Kingston.
Jim Vasgaard, who is described as spectacular projects manager for Daktronics, says pro AV there is growing “at a very aggressive rate in multiple different niches and applications”.
“Opportunities are continually presenting themselves in retail, digital signage, billboard, live event and commercial markets,” he says.
The market “is vibrant, dynamic, and growing” reports Jeff Singer, executive director, product marketing for Crestron. “All indicators point to increased market growth and adoption. Video is rapidly becoming an integral part of business, education, government, and across all vertical markets. It’s no longer a luxury.”
Jay Rohe, vice-president of US sales at Milestone, says its integrators “can’t find enough people to hire because they have so much work,” and Nick Belcore, executive vice-president, Peerless-AV, finds the market very robust, adding: “we expect dynamic expansion in the coming years.”
Tariff threat
Foreign manufacturers, however, might be more alarmed by President Trump’s threatened protectionism. “Any EU manufacturer could be affected by import tariffs if the EU were targeted with these policies,” notes Josh Radin, US director of sales at Italy-based K-array. “At this time, very few of the AV products going into most installations are built in the US, so protectionism will increase the cost of installations and/or profit margins for suppliers and integrators across the entire industry.”
When it comes to signage, Belcore says that typically, LCD and LFD panels have been driven by components that have generally been imported. However, recent shifts in manufacturing of these within North America “should allow the US to retain a competitive edge should protectionist regulations come in.”
Howard Newstate, vice-president, Experience Innovation, Holovis predicts pricing pressure due to the tariffs but most respondents quizzed by AV Magazine on this topic preferred not to speculate.
Tim Albright, founder of AVNation, has no such qualms. “The economic situation is in a slow growth mode,” he suggests. “Most integrators we talk with are relatively busy and have been experiencing sustained growth for the last three years. That said, there are several indications that the economy will take a dip in the next five years. As much as they are growing they are not in a hiring frenzy. They have added staff but not to the level that they might have in the past.”
He believes import tariffs will have a negligible effect given that most US-based integrators use primarily US-made products. “With control and video distribution, the main players are Crestron, Extron, and AMX – companies which do use parts from overseas, but their main production plants are in the US.”
Digital signage growth
A significant area of growth is digital signage, particularly incorporating interaction. “Screens are bigger, thinner and brighter. Outdoor displays are more versatile and robust, as are the mounts and media players,” notes Belcore. “The ability for content to learn about the target audience engaging with it is growing at an exponential rate.”
Daktronics says its ADFLOW business segment is trending in colleges, universities, grocery stores, and quick-serve restaurants. “The idea of connected devices is driving a lot of experimentation and creative solutions,” says Vasgaard. “Our customers are looking to capture data to target their customers with intelligent solutions. Live event and retail locations want to be able to track and understand more about their customers’ habits in multiple environments, looking to see any noticeable patterns based on metrics gathered by these technologies.”
He points to “an ever-quickening race” to higher and higher resolution in LED displays leading to Near Pixel Pitch (NPP) technology. “With viewing distances as close as three feet from the displays, these are being used in applications where viewers can walk right up to the displays,” he says. “Of course, 4K is continually sought out and the industry is even looking into 8K or even 12K solutions. From the boardroom to the university lunchroom customers are looking for content at higher resolutions and larger sizes. They are looking to social media integration as the viewing experience is going from passive to active and engaging.”
Albright attributes a rise in demand to “bad experiences with IT companies doing a poor job and giving integrators an opportunity to shine in these instances.”
2028 Olympics ahead
Although a decade out, this sector is likely to be galvanised by LA’s 2028 hosting of the Summer Olympics. The country is also in the running – in a joint bid with Canada and Mexico – to hold the 2026 FIFA World Cup which will be the first tournament with an expanded line up of 48 teams.
Milestone also signposts growth. “Customer demand is driving it,” says Rohe. “The ability to access information digitally in the marketplace, airports, or anywhere… it’s just where the consumer expectation has gone.
“There’s also a lot of ‘one-to-one stuff’ in the classroom with notebooks and chrome and other new interactive technologies,” he explains. “Unified communication is another big area. Conference room technology and the ability to connect through Skype is definitely changing the way we communicate with each other.”
This is a trend noted by Polycom. “Smaller organisations especially want a videoconferencing solution without having to invest in hardware,” informs Tim Stone, vice-president of marketing EMEA. Polycom partners with cloud-based video communications provider Zoom in North America. “This partnership transforms any huddle room or conference space into a productive collaboration environment.”
The need for flexible working is also driving the growth of AV solutions in North America, Stone observes. “With more and more businesses moving into co-working spaces or encouraging a more flexible working approach they need to have the technology in place to ensure this is possible. Huddle rooms in co-working spaces are huge in the US and they need to be equipped with collaborative technology to work effectively.”
The firm can name NATO (North Atlantic Treaty Organisation); and credit management firm TransUnion as users of its solutions.
Coast to coast
Rohe characterises the overall user base wanting the cutting edge of technology. “I believe they take mitigated risks, but they are conservative in their approach to make sure that their customers get a quality product that exceeds their expectations.”
Albright, though, cites Fortune 500 companies as “pretty conservative”. “Education wants cutting edge,” he says. “This is an over generalisation, but an accurate one.”
There’s a danger in treating the 50 states as a homogenous market, although the differences aren’t that diverse.
Major metropolitan areas will naturally have a higher concentration of AV. “The age of the city, geographic size and population will decide if AV is more spread out or concentrated,” Belcore observes. Chicago differs greatly in terms of digital signage to New York, for example.
“The AV market is not differentiated by geographic region,” reckons Singer. “Regions have different cultures, but those differences may influence messaging and style, but not necessarily type of technology or solutions. Different cities or states may have different economic drivers. Each local economy may rely more heavily on a different industry, for example, healthcare, energy (oil and gas), pharmaceuticals, technology, manufacturing, or even tourism. Some have a high concentration of universities while others may not.”
In the market for more than 40 years, Crestron, has an extensive internal sale force, which is organised by regional territory and then by dealer size and vertical market. It subsequently sells through a vast dealer network. According to Singer, “the market is highly complex, rapidly changing, and very competitive. The main challenges are differentiating from the competition and reaching such a large and highly segmented market.
“Obviously, New York, Las Vegas and Los Angeles account for more of the high-end hospitality/dining installations, but otherwise the AV is pretty consistent across the US,” says Radin.
What’s odd, according to Albright, are cities like St. Louis which have “an inordinate amount of AV companies. I would not characterise the States as homogenous by any stretch.”
Orlando’s concentrated AV
Newstate points out that Orlando has the highest concentration of media-based attractions “making that a very desirable location for manufacturers looking to flourish in that area.” He predicts a growth in attractions across the rest of the nation.
“Every (themed attraction) operator wants to be first to market with new technologies and drive storytelling though new solutions that are as impactful as possible. Current technology of interest includes 3D LED tiles and methods for intelligent interaction that goes beyond the standard notion of ‘point and shoot’.”
Vasgaard reckons the market is “fairly homogenous” with an equal interest in the technology. “Cost is a much larger driving force than the geographic region,” he says, a point reflected by Holovis. “The biggest competition is white noise from companies who base their entire value proposition on price,” states Newstate. “This has a negative impact on true innovators in the AV space whose promise of value is to provide high quality products that deliver superior results. The ability to educate and manage the expectations of the market are muted by the white noise of price leaders who only copy and follow.”
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