Jeff Hastings, CEO, BrightSign
As 2022 gets underway, one can’t help but reflect on how transformative the past two years have been. The AV industry endured pandemic-driven changes that nobody could have anticipated. With the benefit of hindsight, it’s becoming clear that our industry is not only changing, but it’s becoming smaller (which is good, and I’ll explain why in a moment). Here’s my high-level analysis of what’s driving this change.
Closing Up Shop
The pandemic’s immediate effects – primarily felt in the second quarter of 2020 through early 2021 – had a crippling effect on businesses in the AV space that lacked the financial cushion to wait-out the pandemic’s darkest days. PPP loans and other institutional support were helpful for some, but sadly the volume of independent AV businesses shrank over the course of the pandemic – an unfortunate reality of the business climate we were all forced to navigate the past year and a half.
The past couple of years have been particularly challenging for smaller entities that lack the critical mass to maintain and support deployments at scale. The pandemic highlighted how important reliable, robust AV networks are to organizations, and consequently they now demand more from their AV infrastructure. Organizations today have higher expectations, and they’re gravitating to technical partners with the ability to support them at scale. This development doesn’t bode well for smaller shops already struggling to get by.
Collaboration & Consolidation
We’re beginning to see some interesting developments on the M&A front. To the casual observer, one might think this activity is being driven by cash-flush businesses snapping up smaller organizations that emerged from the pandemic in-tact, but undervalued. And that’s true to a certain degree. But I view this activity through a different lens: I believe the pandemic highlighted just how vital and essential AV solutions have become in our everyday lives. When you consider how elemental digital displays have become in the workplace, public spaces, entertainment venues, you name it – the pandemic proved just how essential a capable AV infrastructure is to our everyday lives. The smart money knows this, and big bets are being placed today to shape what the AV space will look like tomorrow.
Case-in-point, just look at Spectrio. Backed by private equity, Spectrio is growing aggressively through acquisition with the purchase of Industry Weapon, Screenscape and Enplug, all in the space of one year, during the heart of the pandemic. And more recently, CRI and Reflect Systems announced plans to merge. These one-time competitors are joining forces, presumably because they could capitalize on greater business opportunities together than they would have been able to achieve separately. These are just two of many examples of companies joining forces to deliver a better, more robust solution to their customers.
And most recently, Almo Corporation announced it will be acquired by DCC Technology/Exertis. This is a significant deal in that Almo has been a fixture in the industry for 75 years. This is the latest in a series of Exertis acquisitions, including Stampede, Jam Industries, The Music People and JB&A. Much like Spectrio mentioned above, Exertis appears to be moving aggressively on a growth path driven by acquisition.
Where Does this Leave the Future of the AV Space?
Industry consolidation is often seen as a sign of weakness. In this case, I believe the opposite is true. I think we’re entering a transformative time for our industry – a time when the silos that currently make up the AV space are beginning to meld into one another. Narrowly focused solutions will find it difficult to compete in a marketplace that’s flush with larger operators offering end-to-end AV solutions. After all, customers want seamless solutions – they want to work with a single vendor that provides the hardware, software and support for the lifetime of the installation.
How all of this plays out remains to be seen. But it’s a safe bet that we’ll continue to see more collaboration across the entire AV space. This collaboration will come in many forms – acquisitions, mergers, strategic partnerships and co-branded solutions – all of which will strengthen our industry by leveling-up the solutions we deliver to our customers. This is what the future of the AV industry looks like, and I’m excited by what lies ahead.