- Just about everyone I talk to says that the first half of 2008 will be rocking for AV Rental & Staging. I agree and predict record-breaking revenues for everyone that can stay in their offices long enough to answer the phones. And these customers will be asking for more technology applied in unheard of ways. But don't let booming business and new gear distract you from what may be the defining issue for 2008, the economy. In short, what goes up must come down.
- Current technology trends are still creating demand for new staging equipment and skills. Stagers have been inundated with a surge in business this Fall and much of that work involved a long list of new gear or at least more creative applications. The Stimson Group's November Market Snapshot included many comments about traditionally small shows getting a last-minute splash of high tech gadgetry (and budget). What tech trends will Stagers see in 2008? The growth of HD Video Conferencing in the fixed installation market is going to impact staged events. Electronic meetings won't replace face to face meetings as so many have predicted, but it will force Stagers to integrate IP based conferencing into more shows on top of the now ubiquitous Webcasts. I find that regional stagers encounter this sooner than the bigger national companies. This is yet another sign that customers are driving the current market changes.
- The biggest changes are happening in lighting and video effects. Scenery is now a lighting/video landscape covered by low-density LED video products, projection, or LED-based lighting. With the introduction of intuitive programming consoles, these innovations are becoming easier to apply, which means it's simple for just about anyone to meet customer demand for creativity. By the way, lighting is driving another significant trend on shows, IT Networking. Media servers and the demand for displaying interactive remote presenters will push Stagers into providing IT integration on shows. AV Staging will need to invest in hardware and training to make it all work, or risk losing control of digitally exchanged content to commercial IT providers. (BTW- AV Rental companies specializing in convention and trade shows have been doing this for years).
- That's a lot of tech changes to keep up with on top of the growth in business. I am sure you haven't forgotten about the economy? What will a video projector made in Europe cost when the Euro is worth two US dollars? How will stagers finance new equipment when low interest capital isn't available anymore? Will US-based customers be affected by the weak dollar, price of transportation, and higher health rates? Can small companies compete when oil is over $100 per barrel? When will the tenuous economic balance between interest rates, money supply, and consumer confidence implode?
- These economic indicators aren't all bad for Stagers in the short term. The weak US dollar will help to bring more meetings to North America and keep the ones we have here. North American manufacturers are suddenly at a cost advantage in certain areas - although fabrication and assembly are still cheaper overseas. And for the time being, unemployment is quite low in most regions. There is a benefit to higher fuel prices for regional AV companies: Corporations are being forced to look harder at staging providers that do not require additional travel. Regional stagers are seeing huge growth, which in turn generates, ironically, national business. This gives the advantage to companies with full service branches in key cities, a prime driver of consolidation strategies. When one economic factor changes, another one reacts, it's all connected. But, what happens when lots of economic indicators are moving dramatically at the same time? The business world becomes very unsure of itself and this causes many companies to clamp down - at least for the short term. Will you be ready when that happens?
- Who is best positioned to survive the coming storm? Bigger companies are more secure because they have better access to banking, have locked in health care for longer periods, and can adjust personnel levels through attrition. Newer companies have two advantages. First of all their overhead costs - salaries, benefits, office, perks -- are comparatively low. They also have an advantage in buying power - they can purchase what works now instead of what worked five or ten years ago. Today, it is not necessary to purchase the most expensive high end pro gear to pull off a successful show. I am not talking about sub-renting it from wholesalers, I am referring to the cost-effectiveness of buying consumer or "prosumer" video equipment and investing in less-expensive brand names in other areas. Compare the costs of switching a high definition video conference through an Indigo AV mixer versus a full blown HD flypack system (not to mention the audio mixing position and full video crew). Who needs a $50K camera rig when a prosumer HD camcorder will work just fine for a webcast? The amount of capability that can be bought if you don't need to impress folks with the scale of your package (or a brand name) is astounding.
- However, the vast majority of Stagers are somewhere in the middle. Preparing for the eventuality of a recession should be a high priority in the coming months. My recommendations are to maximize your potential returns in the first half of 2008 and be prepared for a downturn in the second half. What that translates into will vary from company to company. Get your strategic hiring completed sooner than later, but be prepared to jettison any dead weight in June. Think hard before buying new technology on spec, but take advantage of purchases you know will pay off in the short term. Tighten up your cost controls now so that when the storm comes you can concentrate on maximizing available business instead of negotiating expenses from a weak financial position. Pay down debt instead of paying out, and keep those lines of credit open. And finally, hope that I am wrong and one hundred years of economic trends turn out differently in 2008.
By Tom Stimson, CTS
A recurring theme across the AV staging industry this past year has been the struggle to keep up with demand. Shows seem to be bigger, the requirements for new technology stronger, and the lead times shorter than ever. When comparing 2007 to 2006, 51 percent either agree or strongly agree that event budgets were up in 2007, and over 80 percent said that creative uses of technology had increased. And in what I consider a significant trend, 47 percent said they were more involved in content creation and development. So many of our new toys require involvement in the production process. To sum up 2007, we worked harder, made more money, and invested in the future.
However, the responses about 2008 indicate varying degrees of catching up. In the chart below we can see that most respondents think it will be harder to grow revenue (36 percent) and profit (52 percent) next year. At the same time, a larger majority think it will be difficult to avoid adding new equipment (77 percent), technology (79 percent), and people (69 percent).
One day we will look back on 2007 as the year that HD finally reached its tipping point in AV Rental & Staging. I expect the driver will prove to be rooted in consumer electronics, but at this point the reasons are still unclear. 38 percent of respondents said it was unlikely or very unlikely that they would purchase a video projector in 2008 that was not HD-native.
Considering that most portable conference projectors are still standard definition 4:3, that is a pretty huge ratio of HD projectors. HD projectors will drive demand for HD switchers, scalers, and processors, but more importantly it indicates a huge need for HD playback and storage.
This was another great month for comments. We asked what surprised our readers most in 2007. There were several themes around shortened lead times, exploding budgets on previously low-tech events, and the challenges these situations can cause. But, several comments echoed Chris Alford of A&V Company:
We are seeing a noticeable interest by venues and meeting planners [for] increased levels of service and creative optionsthe shift of focus towards quality vs. cost has given us a more of a partnership role instead of just vendor. I see more opportunities to negotiate fair and reasonable long term solutions with our clients that we both recognize to be beneficial to each other.
Thats good news. Perhaps the advances in consumer electronics are giving our customers a better appreciation for what stagers can do for them.
Download the complete November 07 Survey including more illuminating comments from respondents at: www.trstimson.com/surveys.
Each month The Stimson Group conducts a short survey of AV industry professionals about a variety of topics. To participate in or comment on those surveys, email: surveys@trstimson.com.
