2016 CI: State of the Industry Report

The AV integration industry has settled into slow-and-steady growth but those that don’t accelerate their ability to deliver IT-friendly solutions will hit a wall.

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When it comes to the state of the AV integration industry as we enter 2016, well, it really depends how deep you want to go.

There’s the on-the-surface, Bill Parcells’ “you are what you are” interpretation, and what you are is an extremely resilient industry that has avoided whiplash from ups and downs since the pre-recession renaissance.

An impressive 41 percent of surveyed integrators say their 2015 revenue is up between 6 and 20 percent while nearly 10 percent are seeing upwards of 20 percent growth; about one-third say revenue is flat in 2015; and only 16 percent are down more than 5 percent.

That’s according to the 2016 State of the Industry survey of 140 integrators and consultants conducted annually by CI Research and NSCA.

When asked about projections for the upcoming year’s revenue — a question that typically reveals much optimism — the respondents’ answers are pretty much the same as last year’s with slightly more expecting to be up and slightly fewer expecting to be down. These are positive trends for sure but not consistent with the dramatic growth and optimism of previous post-recession years.

That’s the good part, says NSCA executive director Chuck Wilson. “There’s nothing wrong with slow, steady growth,” he says. “Running a company is like making good bar-b-que, it’s low and slow. That’s how you make the best decisions — slow and steady growth instead of these wild swings up and down.”

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InfoComm, in its AV Market Definition & Strategy Study that it produces with Acclaro Growth Partners, reports seeing similarly modest growth. Globally, the study projects 11 percent growth in 2016, but growth in Asia “will be significantly higher” than in other markets, says InfoComm executive director David Labuskes.

In North America, growth will fall more in the 3 to 5 percent range. That’s a function of the maturity of those markets in terms of technology, he says, adding that InfoComm’s economic snapshot was “very optimistic” for the last quarter of 2015.

One company that’s extremely optimistic, belying the slow-and-steady trend, is AVI-SPL. The industry’s largest integration firm grew at a 10 percent clip year-over-year to $577 million in projected 2015 revenue. AVI-SPL saw two consecutive record-breaking months in the second half of 2015. The driver of the growth, according to VP of marketing Kelly Bousman, was AVI-SPL’s ability to win a cluster of very big and very video-centric projects.

“I think the roller coaster ride may be over, but what we’re seeing is a very dynamic marketplace,” Bousman says. “We’re heading into 2016 with fantastic momentum.”

AVI-SPL’s success speaks to the notion that while the reality may be slow-and-steady for the vast majority of integration firms, well-positioned firms can rise above competitors.

“Get big, get niche, or get out,” is a mantra used to describe the state of the AV integration industry by Julian Phillips, executive VP of Whitlock, another behemoth integration firm at $235 million in 2014 revenue. He says in a market in which he anticipates rapid consolidation it’s become extremely important for integration firms to either scale their offerings or to leverage their niche expertise.

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“There are thousands of integrators out there right now. I do not believe for a minute that a lot of them are going to have to go out of business, but I think they need to make improvements to survive.”

Being just an AV integrator isn’t good enough anymore, Phillips says. “You have to be a UC and IT integrator as well. It’s not an option anymore to say I live on an AV island.”

Whitlock, he adds, made a commitment to provide a full range of services, “wide and deep.” If a firm can do that, “there’s huge upside potential for you, because there are very few that can do that.”

So the market is slow-and-steady for most and extremely dynamic for the well-positioned. But again, how deep do you want to go when discussing the state of the industry? The more you dig, the more you find credible folks who are worried about the viability of many of the industry’s AV integration firms.