The market for professional loudspeakers posted global revenues of nearly $3 billion in 2019, an increase of almost 7%, according to the latest professional loudspeaker industry report from Futuresource Consulting. One of the report’s key themes this year was the impact of COVID-19 and its significant effects on forecasts moving forward. The segment most affected by these restrictions is Live and Touring.
“Over recent years, the touring industry has experienced consistent growth, driven by a range of factors, including the music streaming economy, an overall increase in the use of events as promotional tools, and significant growth in consumer demand for live events,” said James Kirby, pro audio analyst at Futuresource Consulting. However, the segment now faces difficult times, and the “new normal” presents a serious challenge. Kirby also said, “with concerts having been canceled worldwide for some time, large production companies and brands within the industry have faced significant losses and cuts in staff over the past six to eight months.”
While the worst of lockdowns is over for some industries, events will likely be one of the last sectors to return to normality. That said, Kirby said, “the return of the market to previous levels is expected over the coming years following effective treatments or a vaccine and will be driven forwards by the underlying societal demand for memorable and shared experiences, which has become entrenched in modern culture.”
The installed leisure segment, which supports many of the same event applications, shows early signs of improvement and investment.
“As well as being a more positive area for touring brands during the crisis, the installed events space is full of venues, big and small, that are beginning to invest in audio ready for the return of demand over the coming years,” said Kirby. Although this market still faces many challenges, with revenues down significantly in 2020, Kirby said, “it has become key to sustaining business for manufacturers and is showing much more stability than the rental market, with more recent improvements indicating early positivity for the broader events markets.” However, he also states that, “positivity varies significantly by sub-vertical, and more diversified industries with greater cash flow, such as worship, sports and corporate events, are demonstrating significantly more market confidence.”
Portable sound, being an area also dependent on gatherings and performance, has been impacted significantly by the crisis. This is largely because of government regulations on pop-up social gatherings, small day-festivals, and hospitality events. However, looking forward, its recovery is expected to be faster than that of the touring market, mainly driven by the resurgence of smaller events, gatherings and the reopening of practice venues in the midterm. The report mentions that the portable sound market has seen relatively slow value growth over the past few years compared to other verticals, mainly due to falling ASPs. However, it has also shown significant innovation during this time. Powered products, more compact solutions and integrated DSP are just a few of the trends driving growth.
“The home studio monitor segment of the portable sound market has also been an overwhelming area of positivity, and moving into the pandemic, this is one of the only areas which will receive significant revenue gains as a direct result of social distancing policies,” said Kirby. “This, combined with continued innovation in the sound reinforcement market, will be key to portable sound’s growth over the forecast period.”
In this report, the second-largest market, installed commercial, having already achieved the highest growth of any vertical in 2019, is also expected to be the most resilient throughout the pandemic. The report explains that this is because of the greater ratio of larger projects in this vertical and comparatively strong performance from some key sub-verticals, such as government projects, higher education and corporate conferencing. Until 2020, the installed commercial market was demonstrating consistent growth driven by PA/VA technology, background/foreground music and commercial events spaces.
“The EU regulation of EN54 has made a significant impact on the European PA/VA market, and spillover effects of this standard have continued to impact the rest of the world. This is especially the case in the Middle East but has also been witnessed in Asia and the Americas. In Europe, some countries have even implemented in their building technical code that any new building over 300 people in capacity must have an EN54 compliant system installed,” Kirby said. Alongside this, the upgrading of background and foreground music in a range of applications has continued to take hold, with establishments aiming to improve the customer experience in different ways, a dynamic which the report covers in detail by sub-vertical. Kirby mentions that all these trends are expected to be somewhat dampened by the outbreak of COVID-19. However, “these factors will also evolve as a result of the crisis, bringing some unique positivity in the long run.”
The smallest vertical in the report, cinema sound, is also expected to show declines due to the outbreak. Dynamics here follow those of live events spaces, however, Kirby explains, “in the longer term it is likely that COVID-19 will have accelerated consumer content-viewing habits, ultimately causing an even greater negative impact on the growth of cinema.” That said, also mentioned is the overwhelming desire to differentiate the professional cinema experience, which will likely be intensified following the crisis. “Combine this with the need to separate audience members, and this will likely lead to greater emphasis on luxury complexes with improved seating, displays and immersive sound.”
Despite all the industry pressures over the coming years, the rate of recovery is still expected to be significant, with many verticals completely recovering well within the forecast period. That said, there will be many strains in the midterm, with all channel companies, suppliers and end-users being severely impacted. Overall, the market will have lost a significant amount of potential compared with previous forecasts, with little support from governments to keep channel and the events industries intact. Brands will have to carefully navigate this crisis and push resource into positioning products for markets which will see the most positivity over the next few years. For those that can weather the storm, demand will continue to pick up moving through 2021, and in 2022 the total professional loudspeakers market will eventually reach pre-2019 levels.