The audio-visual sector's continuing transition to software and the cloud is opening a new line of business for channel partners: AV as a service.
This emerging opportunity provides managed services around web conferencing tools, digital signage, huddle rooms, video walls and other AV offerings. AV as a service (AVaaS) also offers customers a different method to fund their AV requirements: a monthly fee vs. an upfront purchase.
The arrival of AVaaS follows a fundamental reshaping of the commercial AV market. The commercial sector, sometimes referred to as Pro AV to distinguish it from consumer tech, has shifted away from its original hardware orientation. Until relatively recently, enterprise AV was characterized by dedicated video conferencing rooms loaded with expensive on-premises gear and meeting areas equipped with video projectors.
Today, software-driven AV tools are delivered through the cloud, making AV a commonplace office technology. The era of occasionally used room systems has given way to daily AV use through offerings such as Microsoft Teams, Cisco Webex and Zoom, noted Michael Lane, vice president, engineering at Onepath, a managed technology services provider based in Atlanta. The company's survey of 100 SMB IT decision makers, published in February, found web-based video tools to be the most popular AV choice, with 77% of respondents citing that technology.
Widespread use, however, has created challenges for businesses as they grapple with AV management issues. Onepath's survey revealed 61% of respondents experienced weekly or daily problems with their AV tools. Connectivity issues, an inability to see or hear everyone on an AV conference and difficulties with setting up or using AV tools were among the main trouble spots, according to Onepath. Respondents also cited too few people on hand to help with AV problems as a top challenge.
Indeed, smaller businesses tend to lack the personnel to address user complaints.
"The SMBs aren't going to have anyone who is an AV expert on staff," Lane said. "That has definitely created some challenges."
Enter AV as a service
The burden of maintaining and troubleshooting AV tools has opened the door for managed services. In February, Onepath unveiled an AVaaS offering that aims to reduce the cost and complexity of buying and using AV technology. The Onepath AVaaS includes hardware installation and ongoing support through an as-as-service pricing model. Services include help desk support, monitoring and management of AV tools, break/fix support and remote firmware updates for network security.
"I think you are going to see a larger trend toward that," Lane said, referring to managed AV services.
Kevin Dillon, vice president of global channels and alliances at Userful Corp., an AV-over-IP solutions provider in San Ramon, Calif., believes it's just a matter of time before AVaaS takes off among channel partners.
"They are struggling to differentiate from their competitors, and they want to have a new solution they can offer and add value around," he said.
In 2019, Userful launched its visual networking platform, a software-based approach to AV that enables organizations to centrally manage video walls and digital signage. The company also launched a channel program last year that targets AV specialists and systems integrators. Userful's REST API lets such partners customize their AV deployments.
"We are looking right now for integrators that want to start selling AV as a service and those who can start to provide customized solutions based on our open API," Dillon said.
Peter Hurley, director of ProAV and collaboration at D&H Distributing, a distributor in Harrisburg, Pa., said he is starting to see as-a-service offerings surface in the AV market. He said as-a-service is sometimes presented as an additional way to finance an AV solution, and that AV customers such as schools and churches might look to channel partners to provide alternative financing options. D&H launched a Pro AV/digital signage initiative in 2018.
AVaaS is poised to attract a range of partners. Those include specialized AV integrators, which for years have been the key channel conduit for commercial AV offerings. AV integrators are expected to play a major role in an evolving market, according to industry executives. The pending merger of AVI-SPL and Whitlock would create an AV integrator with revenue topping $1 billion. The transaction, which Tampa-based AVI-SPL disclosed Feb. 5, is expected to close in the first quarter of 2020.
Kevin DillonVice president of global channels and alliances, Userful Corp.
The service angle is one aspect of the AVI-SPL and Whitlock deal. The merger announcement described the companies as "digital workplace services providers" and noted Whitlock customers will be able to tap AVI-SPL's services operations centers and remote management and monitoring offerings.
But the AV channel goes much deeper than a handful of mega integrators. Hurley said thousands of AV channel partners exist below the top-tier companies. The rise of AV-over-IP technology, which has brought together the once disparate AV and IT realms, has paved the way for more resellers and managed service providers to enter the AV market.
"This has been going on for six or seven years," Hurley noted of the industry's convergence. "Everything goes over Cat6."
Full audio and visual signal transmission once required multiple cables, but a single Cat6 Ethernet cable can now do the job, he noted.
The AV channel's transition from hardware to services isn't a done deal yet.
Some AV channel firms still rely heavily on back-end rebates from hardware sales, Dillon noted. But others are retooling their go-to-market strategies. Those partners, he said, realize hardware is no longer a reliable source of revenue and are "going to cloud and software."
The video projection equipment market provides an example of hardware in decline. North American projection revenue in the Pro AV market is forecast to drop to $1.9 billion in 2024 from $3 billion in 2019, according to research from the Audiovisual and Integrated Experience Association (AVIXA), an AV industry association and tradeshow producer in Fairfax, Va. AVIXA's market surveys point to cloud as the revenue driver for the corporate AV sector (see sidebar "The cloud shift").
Channel companies targeting the AV market's growth segments should find business in a wide range of industries.
"We have sold to over 18 vertical markets," Hurley said. "AV is everywhere."
The cloud shift
New technology approaches and consumption models have transformed the AV world.
And while the commercial AV market continues to expand, the momentum has shifted to cloud-based offerings. AVIXA forecasts the pro AV market in the Americas region to grow at a 4.7% compound annual growth rate, expanding from $89 billion in 2019 to more than $112 billion in 2024.
"The shift to private, public and hybrid cloud deployments over purely on-premises solutions is driving much of the [corporate AV] growth," according to AVIXA.