Venues AV Vertical Markets. Corporate Education Government Retail Hospitality Healthcare. Global End-User Perspective

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1 2015 AV Vertical Markets Global End-User Perspective PHOTO: PRINCESS CRUISES Corporate Education Government Retail Hospitality Healthcare Venues infocomm.org/marketresearch

2 Copyright 2015 InfoComm International All rights reserved. Printed in the United States of America Published by InfoComm International, Waples Mill Road, Suite 200, Fairfax, VA No part of this work may be used, reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior agreement and written permission from InfoComm International. The contents of this work are subject to revision without notice due to continued progress in methodology, design, installation and manufacturing in the audiovisual industry. This material is sold as is, without warranty of any kind, respecting the contents of this work, including but not limited to, implied warranties for this work s quality, performance, merchantability or fitness for any particular purpose. InfoComm International and Acclaro Growth Partners shall not be liable to the purchaser, user or any other entity with respect to any liability, loss or damage caused directly or indirectly by this work. 2 Vertical Markets End-User Perspectives Study

3 Table of Contents About InfoComm International... 4 Introduction... 5 Study Methodology... 6 Research... 6 Analysis... 6 Assignment Timing... 6 References... 6 Contact Information... 6 Global Contacts... 7 Venues: Vertical Market Assessment End-User Interviews Executive Summary Products and Technologies Current AV Products and Technology Adoption Life Cycle Future AV Investment and Five-Year Outlook End-User Investment Decisions AV Purchase Decision Driver Preferred Channel Partners Impact of Convergence on AV Investment Decisions Value of the Integrated Service Provider AV Purchase Decision Factors Analysis Post-Installation Services Trends End-User Decision-Making Process AV Purchase Decision Organization and Degree of Centralization AV Budgeting Process and Sources of Funding Importance of ROI Sources of Information for AV Decision Makers AV Purchase Process Bid Out vs. Sole Source AV Purchase Process Spec-Driven vs. Consultative Concerns and Challenges Impacting End Users Appendix Geographic Region Definitions Vertical Market Segment Definitions Global Contacts, by Region End-User Interviews, by Vertical Market Acclaro Growth Partners InfoComm International

4 About InfoComm International InfoComm International is the international trade association representing the professional audiovisual and information communications industries. Established in 1939, InfoComm International has more than 5,000 members, including manufacturers, systems integrators, dealers and distributors, independent consultants, programmers, rental and staging companies, end users and multimedia professionals from more than 80 countries. InfoComm International is the leading source for AV standards, market research and news. Its training, certification and education programs set a standard of excellence for AV professionals. InfoComm International is the founder of InfoComm, the largest annual conference and exhibition for AV buyers and sellers worldwide. InfoComm also produces trade shows in Asia, Europe, Latin America and the Middle East. Additional information is available at infocomm.org. 4 Vertical Markets End-User Perspectives Study

5 Study Methodology InfoComm commissioned Acclaro Growth Partners to conduct a global vertical markets study covering trends and dynamics from the perspective of end-user organizations in the corporate, education, government, retail, healthcare, hospitality and venues segments. Research The data and information for this report was gathered through a combination of secondary research and personal deep-dive conversations and interviews. Secondary research drew on a wide range of published and online data sources to obtain relevant information in each vertical market. Information obtained through secondary research was used to support the interview process and make the interviews more effective. Insights were collected on market trends, issues, drivers and constraints, with a focus on their impact to the end user. The majority of the findings and perspectives put forth in this study were derived using primary research. The primary research consisted of approximately 170 personal interviews and conversations, the majority of which were with 130 end-user organizations in seven vertical markets and in all regions of the world. Interviewees also included manufacturers, AV and ICT integrators, distributors, manufacturer rep firms, design consultants and industry experts. See pages 7 and 8 for a break out of the end-user interviews by region and by vertical market segments. Analysis Qualitative comments such as the majority (indicating more than 50 percent) and most (indicating more than 75 percent) were used to indicate consistency of perspectives. End-user comments were used as representative examples, are identified with quotations, and are attributed to the type of organization making the specific comment. Comments such as several or some indicate multiple mentions but not necessarily the majority of opinion or circumstance. One-off comments were not included unless specifically identified. Assignment Timing The research and analysis for this study were conducted between January and May, References Please refer to the Appendix for definitions of the geographic and vertical market segment terminology used in this document. Contact Information Acclaro Growth Partners: Julia Baillie, Partner Phone: julia@acclaropartners.com InfoComm International: Kaitlyn McAuliffe, Market Research Phone: ext kmcauliffe@infocomm.org 6 Vertical Markets End-User Perspectives Study

6 GLOBAL CONTACTS: All contacts, by region For this Vertical Markets End-User Perspectives Study, InfoComm interviewed 130 end users in seven vertical markets globally. Additionally, to supplement the information provided by end users, InfoComm contacted approximately 40 industry participants, including integrators, manufacturers, consultants, distributors, rep firms and industry publications. Total Contacts by Region all types (percent of total contacts) 30% 28% North America Asia-Pacific Europe 8% 14% 20% Middle East/Africa Latin America InfoComm International

7 GLOBAL CONTACTS: End-user interviews, by vertical market The Venues Vertical Market Assessment is one in a series of reports published by InfoComm, collectively the Vertical Markets End-User Perspectives Study. InfoComm interviewed 130 end users in the following seven vertical markets globally. End-User Interviews by Vertical Market (percent of total end-user interviews) Healthcare 11% Corporate 22% Government 12% Retail 12% 12% 15% 16% Education Hospitality Venues 8 Vertical Markets End-User Perspectives Study

8 Vertical Market Assessment VENUES InfoComm International

9 VENUES: End user interviews InfoComm interviewed end users in the venues vertical market globally, in two segments: Entertainment: sports venues, performing arts venues, theaters, karaoke clubs, nights clubs Exhibition/events: conference centers, convention centers, museums, other exhibition and events venues House of worship: churches Venues End Users Interviews by Region (percent of total venues end-user interviews) 30% 25% North America Asia-Pacific Europe 20% Middle East/Africa Latin America 10% 15% 10 Vertical Markets End-User Perspectives Study

10 VENUES: Executive summary Technology has become pervasive and we are increasingly confronted with it as part of our daily lives where we work, live and shop. This has resulted in increased technology expectations and the standard for excellence has been raised. These heightened expectation levels flow into the venues market, where people are looking for a higher quality technological experience than they would have had in the past. End users report that meeting the demands of the tech-savvy public is driving investments in state-of-the-art AV technology. Technology is no longer an option; it is the currency on which people operate today and it has become a must have for venues to attract attendance. AV technology provides a competitive differentiator and end users indicate that it is beneficial in securing events to be held at their facilities. AV manufacturers and systems integrators selling to venues face mounting pressure to deliver spectacular results. Customers continue to raise the bar because they are aware of what can be achieved with AV technology, and they want to deliver exceptional experiences. As reported in InfoComm s 2014 Market Definition and Strategy Study, the venues market represents the second-largest customer vertical, with 14 percent share of the global pro-av market. Major global and regional sporting events have a substantial impact on pro-av growth. For example, the 2014 World Cup in Brazil and the upcoming 2016 Olympics have provided huge opportunities to manufacturers and service providers of pro- AV solutions. In the rest of Latin America, the large venues market is driven by technology upgrades and renovations of existing structures. AV technology plays a role in delivering exceptional experiences. This is driving venues to adopt new technologies with an outlook for continued investment and strong growth. InfoComm International

11 In the Middle East, Dubai will be hosting the World Expo in 2020, followed by the World Cup in Qatar in These events will drive spending in the region, as 11 new stadiums and related venues and infrastructure are developed. Large venues have a greater degree of interest in providing exceptional experiences in comparison to performing arts centers and smaller venues, and this is a key driver for spending. Karaoke clubs are a significant part of the venues segment in Asia-Pacific, especially in the north Asian markets of Korea, Japan and China. Karaoke accounts for nearly half the Asia-Pacific venues market in pro AV. Although karaoke is a driving force in the Asia-Pacific pro-av market, margins tend to be small and there is a high degree of competition. New builds and refurbishments are ongoing in conference and exhibition venues. This will drive spending as facilities must constantly upgrade their technology to remain competitive. There is a greater appreciation for the role of AV in education, and this is impacting the exhibition venues and museum markets. Many of these venues have education outreach programs and education initiatives are becoming drivers for spending on AV technology. In the house of worship (HOW) market, there is a real disconnect between end-user self-assessments of their internal skill levels, versus systems integrator assessments of end-user skill levels. In general, houses of worship have a much higher opinion of their technical knowledge, and the burden to bridge that gap falls with the systems integrator. In the past, the HOW market in North America was characterized by large projects with mega-churches driving growth. Today, the adoption of networked AV has enabled churches to expand and broadcast to satellite campuses, and this is changing the nature of the AV requirements, with an increasing focus on streaming technology. The HOW market is emerging as a highgrowth opportunity across Latin America and Middle East/Africa. The dynamics are similar to those in the early stages of the HOW market in North America, which were characterized by first-time buyers of pro-av technology. In Asia-Pacific, houses of worship account for only 3 percent of the venues spending. However, churches are a significant market for AV especially audio in Australia, Korea, the Philippines and Singapore. AV technology provides a competitive differentiator, and end users indicate that it is beneficial in securing events to be held at their facilities. 12 Vertical Markets End-User Perspectives Study

12 Across the board, venues end users do not prioritize spending on post-installation services. Managed services are infrequently utilized, while maintenance is viewed as important but often handled internally. In some instances, maintenance and repair services are desired for technologies that require more expert knowledge. Most end users in the Middle East/Africa, Latin America and Asia-Pacific regions suggest that they do not pay extra for services, nor are they willing to pay for them. Services are typically included in the original price and bundled with hardware purchases. Purchase decision making within the venues vertical market is largely centralized, due mainly to the majority of venues being independent or single-location. Justification for technology investment is largely need-based and driven by competitive pressures, but about one-third of end users indicate that ROI is the primary factor, or one of multiple important factors, used to justify investments in AV technology. The vast majority of end users rate the value of an integrated service provider to be low or zero. About one-half believe there may be some value, but it is either not wanted, not needed, or not available. InfoComm International