Moving Head Pro Lighting Sector Stalled by COVID-19

2020 started well for the MHPL sector, with vendors seeing sales hit targets in January and into early February.

February brought some supply issues from Chinese MHPL ODMs, which carried over into March. Although the ODM supply side of the MHPL sector has re-established itself over the last two to three weeks.

The major issue for MHPL vendors currently is that sales of new fixtures to the rental channel, which accounts for over 60% of global MHPL value, have plummeted. Demand from rental house end-customers in all world regions has flatlined, especially from the key theatrical, live staging, corporate and installed leisure verticals. This is due to events, concerts, festivals and sports tournaments/matches being postponed or cancelled.

Rental houses are consequently sitting on existing equipment rather than their usual “churn and replace” cycle that occurs once or more per year. When they are holding way above the “ideal” 20-30% of inventory on their shelves, then now is not a good time to invest.

There has also been a slowdown in the fixed-install channel; the only MHPL fixtures and lighting consoles really shipping currently are those for fixed-install projects that were already due to be delivered during Q1 or Q2 2020. In general, there is significant caution around all CAPEX from both the rental and fixed-install channels.

The consequences for resellers, and especially rental houses, have been severe in cases, with larger companies laying off significant numbers of staff, and some smaller businesses even going under.

China had a full lock-down due to COVID-19 of around 60 days, and there are expectations that other countries will at least follow a similar 60-day pattern. Futuresource understands that the events markets in China and other parts of the APAC region are still completely stalled. In addition, despite many restaurants and clubs having re-opened over the past month, organised gatherings of more than 250 people are expected to take much longer to recover.
Two forthcoming showcases for the MHPL/C sector, Pro Light and Sound and InfoComm have been postponed, which inhibits the ability of vendors to market new fixtures and peripherals.

The duration of this crisis for the MHPL/C sector is hard to anticipate; small and medium-sized events (up to 2,000 people) may well be pushed back to later in Q3, or into Q4, with more major events missing a year altogether and not taking place until 2021. It is likely that more rental houses and resellers will suffer over the coming months.
Smaller MHPL/C vendors may also find, in a market prone to high levels of discounting and tight margins, that they struggle to keep their doors open as 2020 progresses.

With demand from the theatrical, live staging, corporate and installed leisure verticals set to remain scant in Q2 and, at best, sketchy in Q3, global MHPL/C sell-in value will inevitably fall in 2020.

Futuresource’s December 2019 MHPL/C Market Report anticipated a value rise of 3% in 2020, but the reality of three disappointing quarters, at least, in 2020, could hugely impact on this metric.

The broadcast vertical remains one current beacon for the MHPL/C industry. Whilst there have been some production cancellations or postponements, recorded and live broadcasts are continuing, and some enterprising recording artists are also releasing recorded or live-streamed video content in this present climate, facilitating the use of MHPL/C.

There are also some signs of MHPL/C demand, albeit low-level, re-emerging from markets in Asia, most notably China, Japan and South Korea.

As and when global MHPL/C demand starts to recover, we do not expect to see an immediate rebound, as economies worldwide are likely to be impacted by potential unemployment, the burden of government borrowing, and austerity. However, as confidence returns, so will CAPEX from the major verticals that the MHPL/C industry serves.

Some of this CAPEX recovery will also depend on individual government decisions regarding mellowing of social distancing rules, potentially allowing events at smaller venues of a few hundred people or fewer to take place initially before larger events are permitted. There will inevitably be an element of consumer reticence regarding gatherings for a period of time after COVID-19 passes.

As the schedule of events that drives sales of MHPL/C gains momentum again, so should rental channel demand lift and accelerate. There could be a spike in orders, as MHPL/C equipment overdue for replacement is churned, bringing a delayed “wave” of demand in 2021 from the shortfall of 2020.

If there is some vendor and channel rationalisation during 2020, in a heavily populated MHPL sector, this may bring, moving into 2021, a “silver lining” to the current cloud. This would be in the form of less aggressive discounting by MHPL vendors, rental houses and resellers, as the MHPL industry finds its inevitable, new status quo and the entertainment and corporate worlds resume their full activities.

About the author

Jeremy Wills

Jeremy joined Futuresource Consulting in 2001. He holds a degree in French from Kings College, University of London. Jeremy is a member of the Professional AV team. He focuses on Signal Distribution, Meeting Room Control, AV Managed Services, Interactive Displays, Professional Lighting and Esports.

In previous Futuresource roles, Jeremy was part of the Imaging team covering consumer camera and photo output markets and, prior to this, a member of the Home Entertainment team, tracking the global pre-recorded media manufacturing and storage media sectors. Jeremy has managed two research and analysis teams during his years with Futuresource, as well a wide variety of syndicated and custom research projects.