February 26, 2020 by Sean Wargo

AVIXA's Market Research Reveals the New Year Will Be Bright

Binoculars | AVIXA

Whether reviewing your bucket list, reprioritizing your life, or taking stock of business, the beginning of the year is always a great time for reflection. In our case, as research staff working for AVIXA, our thoughts go to the industry. Specifically, we consider what the prior year brought and what we can expect for the one dawning. And though it may sound like a repeating soundtrack, we can equivocally say, the future continues to look bright for this rising sector.

What are the specifics? As a global industry, according to AVIXA’s Industry Outlook and Trends Analysis (IOTA) reports, pro AV generated approximately $247 billion in revenues for all products and services in 2019, representing a growth of 6.8 percent over 2018. This year shows similar with revenues rising 5.6 percent to $261 billion. If you follow world economic expectations and outlooks, both years’ results show more than double the growth expected for global Gross Domestic Product (GDP). Not a bad place to be. The lower growth does reflect some of the concerns over declining economic growth, but postulates that in the end, the industry continues its expansion.

The challenge with such forecasts is that the topline can mask the tumult underneath. Individual company experiences can vary greatly. As we always hear – there will be winners and losers. The losers of which will be sure to cry foul about a rosy outlook. Even those watching the game unfold are often able to pick out exceptions to the general rule. And certainly, black swans do occur to disrupt markets or sectors. All of that aside, optimism remains at the toplines, thanks to some favorable trends.

It all starts with the sheer diversity of the vertical markets pro AV serves. Think about it. AV is everywhere. Whether in a boardroom, classroom, stadium, museum, hotel guest room, lobby, theme park, corporate event, concert, travel hubs, or even patient care facility, audiovisual technologies are enabling or enhancing consumer experiences. Some of those application areas could suffer in an economic downturn, but most times the declines are limited to certain areas. So far, the data suggests a strong outlook across the core markets.

AVIXA conducted research within the vertical markets over the past 12 to 18 months to learn more about the state of demand for AV products and services. We learned that the vast majority of buyer firms surveyed had capital expenditure projects planned to occur within the next two years. Highest among these were the education (85 percent) and transportation markets (86 percent), where classrooms and hubs were expected to receive investment during that time. Even retail, which has been the subject to a lot of negative press thanks to widespread store closures, showed a majority of decision makers planning spending (57 percent). As a starting point for investment in AV solutions, this bodes well.

Markets with Capital Expenditure Plans in the next 12-24 months | AVIXA Markets with Capital Expenditure Plans in the next 12-24 months

Even better for the outlook on technology spending, the majority of those with CapEx plans said these plans represent an increase from prior year. Transportation is the big gainer here, with 83 percent saying they plan to increase spending. Retail was second at an unexpectedly high 76 percent. This tells us very clearly – those retail firms still in business are planning to upgrade their experiences. As other research shows, AV will play a pivotal role in these upgrades as well. This is of course in addition to the operational expenditure on technology that is not accounted for here. (Read more about this in AVIXA’s series entitled Market Opportunity Analysis Reports, or MOAR for short.)

Expected Increases to Planned Capital Expenditure Spending | AVIXA Expected Increases to Planned Capital Expenditure Spending

What these firms will invest in also varies by market, but one solution area is quickly becoming the darling of the industry. Though conferencing and collaboration is the largest solution area as companies invest in a slate of new cloud-based technologies, digital signage is gaining fast. The IOTA reports show signage represented $34.1 billion to the pro-AV industry in 2019, in second behind conferencing and collaboration at $38.6 billion. Compound annual growth though favors signage here though, shifting it into the top spot by 2024.

What’s going on? Several things are converging all at once. In some economies, like China, a rising middle class is presenting a growing opportunity for discretionary spending, which thus attracts advertisers. Enter digital signage as an outdoor advertising solution for reaching these consumers. More importantly, companies across the markets explored above are seeing greater ways to communicate and engage with their customers and are making it a statement of their brand to do so. This is a benefit for providers. Being attached to questions of branding puts a solution in an entirely different category than is normal for technology procurement. Instead of a solely cost-oriented approach that may be normal for operations, this is attached more to marketing and so has a different value proposition. In short, the dollar value of the opportunity and potential for margin are different. Of course, note the use of the word ‘potential’ here as there are never any guarantees.

The point here is to continue to encourage a narrative about the pro-AV industry that is a positive one, despite the threat of rain in the forecast or the challenges faced by individual firms or business models. For now, the data shows a positive outlook and reveal abounding growth for the taking. Here’s hoping each of you reap your fair share of this expanding opportunity!

About Sean Wargo

Sean Wargo is Senior Director of Market Intelligence for AVIXA. He is responsible for helping AVIXA realize its strategic goal to become the authoritative source for market intelligence in the AV industry through data capture, analytics expertise, insight delivery, and world-class market research.  Sean was formerly the Vice President of Research at BDS Marketing, LLC and Director of Industry Analysis at the Consumer Electronics Association.

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