Through its research in recent years, Futuresource has identified the install audio markets as a key opportunity for brands across the professional audio industry, ranging from large system touring vendors, through to business music brands and conferencing microphone suppliers. However, as with many professional audio segments and other areas of AV, the installation market is expected to experience significant negative impacts relating to the COVID-19 outbreak.
Before the outbreak, installation was the fastest growing segment across professional audio. This was driven by an increased emphasis placed on audio as a tool for engagement, but also by a switch to in-house equipment sales rather than rental. While spend across the following areas is expected to be impacted, growth verticals have been driven by a range of unique factors, which include but are not limited to:
As mentioned in another blog in this series, almost all events of significant size have been postponed or cancelled, and much of the world has gone into lockdown. This was one of the first measures taken by many governments and will also likely be one of the last restrictions to be lifted. By their very nature, large events are unpredictable breeding grounds for the virus. Even in install, a significant portion of audio demand is dependent on events, and after lockdown is lifted, such venues will still likely see limited attendance due to regulations and concerns from the public.
Fortunately for large system install, much of the opportunity sits with small to mid-sized event spaces, which is where restrictions will be lifted first. There also remains some positivity in the short term, with many of these venues being repurposed for live streams and broadcasting. Although this will have little impact on speakers and amplifiers, other areas such as microphones, interfaces, headphones and mixers will show some positivity here. Already, there has been a significant surge in the number of artists announcing broadcasts or online gigs, with Andrea Bocelli organising a streamed concert in an Italian cathedral as a key example of this. However, overall concern and lack of confidence is expected to push many purchasing decisions to the end of the year, especially for permanent installation.
Although the market looks more positive outside of event spaces, businesses will still be impacted significantly by the outbreak. The largest impacts here will come from integrators not being able to install and more importantly, those verticals that require speaker systems in public spaces that are shut down during the outbreak. Non-essential retail is a large vertical for professional audio, especially for speaker systems, and with limited footfall expected even after restrictions are lifted, it is a difficult time for many retailers. There will be many retailers and restaurant chains that will not be able to weather the storm, with a range of companies already having gone into liquidation. That said, this is a small percentage of businesses overall and there is substantial support for businesses still in operation. With many having less overheads of staff and rent, and still receiving online sales demand, some will have cash ready for when stores re-open.
Similarly to retail, hospitality, museums, restaurants, bars and many other applications that rely on public gatherings are also feeling the impacts of lockdown. These areas will experience similar trends but largely worse, with many not being able to transfer their businesses online. Hospitality is likely to be one of the worst impacted areas of install, due to its inherent dependence on public space, tourism and business travel. As a result, the impacts on this industry will extend beyond lockdown, with international flights and the aviation industry playing a large part in this. That said, there has been discussion of hotels using down-time to upgrade AV solutions, hoping to gain more “local” demand outside of accommodation as the year progresses. The transport sector itself is also an area which is expected to take some advantage from down-time over the coming months. Driven in many cases by long-term government structural investment, these projects now have flexibility in working hours. Similar trends are seen in other verticals, ranging from theme parks to higher education, and these projects, along with projects already underway, are expected to hold some stability for the market.
One of the more positive areas for install professional audio this year will be the corporate and meeting room space. Under lockdown, the use of video and audio conferencing platforms has experienced significant growth. Once lockdown is lifted, this demand is expected to translate into significant growth in hardware sales. Firstly, this is because when employees are immediately allowed back to work, it is still likely that many will continue to work remotely at least part of the time to avoid infection and limit the spread. Immediately this requires corporates to invest in conferencing hardware to help support this eventuality for those that return to the office. On the other hand, longer term, this stint of working from home will push significant cultural changes. These include more people working from home generally and this becoming more accepted, but also experience in the use of video and audio platforms as key collaboration tools. From Futuresource’s research across audio and video conferencing, it understands that these are key enablers/inhibitors of video conferencing adoption in the meeting room, and as a result, audio solutions that facilitate it.
Overall, the COVID-19 outbreak is expected to be a difficult time for the installation audio market. However, there remains some significant bright spots which will help audio vendors weather the storm. It is a vital time to pivot businesses in the short term to take advantage of these opportunities, especially in those areas that will receive growth long after the outbreak ends, such as conferencing. However, it is also important to note that all the verticals discussed in this report will recover within good time, with demand recovering significantly in the second half of the year and approaching normality in 2021. It is likely at this point that there will be significant amounts of pent-up demand, with even more value placed on public events and gatherings than ever before.
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