At the same time, the commercial side of the business was doubly challenged by the Great Recession. Most major verticals reined in spending starting in 2008, while at the same time, the pro-AV industry witnessed growing incursions on its flanks from residential integrators fleeing the challenged housing sector, IT businesses eyeing AV as an adjunct service, and others. More recently, there has been several years’ worth of merger-and-acquisition activity that has changed the makeup of both the service-provider and the vendor sides of pro AV. In short, it’s been a head-spinning time for commercial audio-visual companies.
Competition is getting more diverse, while at another level it’s consolidating. We see residential dealers migrating into the commercial space, often with a very different mind-set from traditional commercial integrators. We also see IT firms attempting to broaden their role with clients, again with a different mind-set. In addition, the ubiquity of AV has led some influencers, such as design firms and project management firms, to attempt to set budgets without the ability to ascertain the desires and needs of the client, which then often leaves the client with an inadequate budget for their needs. And once budgets are set, it is very hard to move them higher. So funds that could have been spent on technology end up on the floor, or in the bathroom fixtures, rather than in AV systems. It is more important than ever to ensure that AV experts are at the table from the beginning.
Andrew Johnston, Installation Director at Conference Services says consolidation’s impact varies based on what’s being consolidated. We’re less concerned about conglomeration among the AV systems integrators that Conference Services might work with to execute its designs, which he views as cyclical, than he is about consolidation among manufacturers, which can use the added heft to squeeze out integrators, designers and consultants that are also product dealers.
“They might say that there’s no intention to bypass the integrator, but it doesn’t always work out that way,” he says. On the other hand, Andrew notes, manufacturers that expand through Mergers & Acquisitions often take a long time to fully integrate new divisions into a coherent single entity. “And not every company can achieve that,” she says.
Andrew also says that although industry consolidation can shake up the business terrain, it also can create opportunities, noting that AV and IT aren’t the only sectors being affected by consolidation.
“Globalisation may be an overworked term these days, but it is forcing companies that are our clients to find ways to do more with fewer human resources,” he says. “And that’s something we can help them with.”
Andrew says the technology now available offers integrators the tools they need to create systems that can be scaled globally but managed centrally, reducing clients’ needs for trained operators at their various locations around the world. “We can let them run a conference room in one city from a control room in another,” he explains. “That results in huge cost savings for them in the form of fewer employees dedicated to technical operations.”
It also presents a new potential revenue stream for AV integrators, which can remotely monitor those systems for maintenance and management purposes, adding even more efficiency to the mix. “That also has the benefit for the client of being able to predict potential problems and address them quickly rather than reacting to them after the fact,” Andrew says. “Everything we’re talking about here is a business opportunity.”
“AV firms, like in all industries, must continue to find new ways to generate revenue,” he says. “But due to the ever-changing technological landscape, it is imperative that AV professionals continue to further their education and remain knowledgeable of current and future technologies. The AV landscape remains competitive, as IT and managed service companies consider forays into our industry. When a company has top-notch employees who see the changes coming or who have experience with converging markets, we are able to plan accordingly and prepare in advance for the market growth. Oftentimes, they already have the processes in place to handle the type of service-oriented business plan to which many in the AV industry are just now catching on.”
Adversity and opportunity are linked in the evolving business landscape of AV integration. Savvy integrators are finding ways to turn the first into the other.