How big is (or isn't) pro AV?
Since my first day at AVIXA, almost 7 years ago I have often received a specific initial response to our market sizing data – that our circle drawn around the pro AV industry and therefore the resulting total market sizing is too large. While there is a shred of fairness in that, which I’ll get to, to my mind it reflects a bit of myopic and lazy way of thinking about the data set we offer. In other words, it’s forgetting that larger circles can hold many smaller ones, each different than the next, that in turn tell very different stories about the pro AV market. The challenge is to define and draw the right circle for your business. This is the part we own. Where we’ve missed the mark in not helping companies see this potential. I’m changing that for good right here and now.
The feedback usually goes something like this ‘My company generates X amount of revenue, and my nearest competitors generate Y, so there is no way the total market is more than Z’. While there is an automatic bias to that thinking based on which companies are chosen or excluded it also highlights confusion over the terms TAM and SAM and in not properly defining either. TAM is the total addressable market, or overall potential market assuming expanded capabilities in the future. SAM is the service addressable, or the revenue in reach of a given business based on its capabilities TODAY. Allow me to illustrate how both are crucially important, even if most businesses often end up only thinking about a narrowly defined SAM, thereby limiting their thinking and their potential.
To begin with, our measure of TAM, or the total possible market for all things pro AV, including parts of some adjacencies, represents $325B globally. Top-level CAGR is pegged at 5.35% for 2024 to 2029. Participating in this TAM assumes you could reach ALL markets, ALL customer types, ALL solution areas, and EVERY single product category that is encompassed by the IOTA market potential. While there are some companies whose coverage is close, THERE IS NO COMPANY DOING THIS TODAY. However, there are many companies we serve who are doing pieces that do not always overlap. Thus we end up with a large TAM circle in order to encompass as many of the smaller circles we can in pro AV. From here it’s important to drill in to define the SAM circles of those smaller companies.
Let’s take an easy one to start. Something I call Core Control. This market is primarily made up of control systems manufacturers, often, but not limited to companies named some version of ‘-tron’. They are strongest in North American and Europe and they most specifically serve customers seeking conferencing & collaboration, learning, or command & control solutions. They do not often serve live events, fixed performance entertainment systems, or other experiential solutions. Their product sets don’t typically include some other core AV products like displays, microphones, headphones, integrator services, cloud, or generic media servers and storage, at least not as their core business (let’s debate this if you’d like). They also don’t get the mark-ups from the distributors or integrators in the channel. According to this year’s IOTA, they represent just over $10B in raw revenue value in 2024. More importantly, their expected growth rate over the next 5 years is 3.68%, less than the average for the pro AV market at large. They also grew by only 4.5% in 2023, in a TAM that grew 6.9%
Now let’s flip our lens and talk about Event Tech. Here we are broadening to a global footprint and refocus on some more core AV manufacturers in product categories like displays, speakers, video and audio processing, cameras, and back-end servers and storage for managing content but we leave out services and control systems. We also shift to live events, fixed performance, and the experiential solutions. These brands are large multinational companies the likes of Sony, Samsung, LG, Yamaha, and others. Their SAM size and growth, once again without channel mark-ups, is $47.5B with a projected growth of 6.17%. This SAM grew a full 11.0% in 2023 fueled both by pandemic recovery and surging demand for experiences.
Which of those 2 markets would you rather be in? That’s the point, you decide, particularly as you frame up and plan for your company’s particular long-term strategy. You can decide to say focused on an existing defined space, but a lower growth means exceeding the top-line requires stealing share. That may be more challenging and less profitable than seeking new areas for expansion. The point is a data set representing a large TAM in which to explore SAM opportunities is more useful than a narrow one that only reinforces your current market boundaries. We view our job here at AVIXA as challenging those market boundaries and illuminating the potential – the epitome and realization of our goal of being the catalyst for market growth. Let us help. The data is available now. AVIXA's 2024 IOTA
Helping lead the charge of AVIXA's research efforts into the trends and opportunities in the pro AV industry. When not digging into data, speaking and writing about the trends, or discussing where to focus our research efforts next, I enjoy spending time outdoors on walks, hikes or fishing adventures. Though I also have a soft spot for consuming AV content in my DIY home theater, thanks to a love for good audio I get honest from my Dad!
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Good points, Sean. Excellent article.
Of course every marketing person at integration or live event companies, and at equipment manufacturers, is faced with this dilemma. Do you focus scarce resources on gaining market share in the known and more quantifiable markets right in front of you, or do you put more resources toward new and growing areas?
Probably not intentionally, but your first example – the installed AV control category – resonates with the evolution of “market research” in pro AV. Twenty+ years ago, when there was extremely scant data from which to calculate overall market size, most folks used this workaround: for installed AV, you looked at the sales of Extron (a couple of the very largest AV integration companies were good at this), and from that you could make a pretty good guess about the size of the installed AV market as a whole.
Twelve or fifteen years ago, a new dynamic emerged: the “echo chamber”. Take the display market for example: a few market research companies went to the big display manufacturers and asked them what their sales were. Most of the companies answered them not with their actual sales numbers but with numbers that were a combination of their target sales for that year mixed with some TAM magic dust. (I call it magic thinking because rigorous research from you/AVIXA did not exist then). Then add into the chamber: A new marketing exec parachuted into a display manufacturer, and to get a better, “objective” handle on the market, they went to ACME Market Research Inc and asked the ACME folks what the size of the display market was. Guess what they heard. Then they based their sales targets, and sales staff quotas, on what they learned. Such was the moonshine of market research in an industry that was both immature and still lacking in true market data due to the fact that most companies in the space were not publicly traded companies (in this country) and hence did not have to, by law, publicly divulge financial information to the SEC and other entities.
We’re (mostly) beyond that now, with many thanks to AVIXA, but I believe this legacy left – up to today – a flavor of skepticism about what real market research can contribute to decision making.
I’m intrigued by the fact that you, in your pivot to the live events market in your post, allude to the “control” category for live events. As you imply but don’t say, in that space there is not one or two or five dominant “control” or even media server ecosystems that might be analogous to the “trons” for the installed AV market. Indeed. Live event tech, arguably an older market than installed AV, is still the wild west when it comes to controllers and media servers. Well, that would be a great area for market research. Where are we headed there? And will market and control platform dynamics there cross over into installed AV? It’s already happening, I’ve been researching it in fact. But indeed you won’t see it if you’re only looking at the SAM in front of you, not at the TAM that’s not magic dust but based on real trends, real products, and pioneers that are building the market.