“Our power amplifier forecasts point to a CAGR of more than 5% out to 2022,” says Chris McIntyre-Brown, Associate Director at Futuresource Consulting. “However, as the sector expands, so do the challenges. We’re seeing the market mature against a backdrop of competition from active speakers, with their built-in amplifiers, particularly in the live performance market, and an influx of low-cost Chinese and Indian brands elsewhere. Combine this with the recent arrival of some heavy outside investment, and the competitive landscape will become increasingly challenging moving forward.”
The combination of increased competition from other product categories and rising investment into the professional power amplifier market is placing greater emphasis on data analytics, research and strategy. d+b audiotechnik’s acquisition by private investment company Ardian in 2016 was followed in 2017 by Samsung’s acquisition of Harman, and Transom Capital Group’s acquisition of Loud Technologies, resulting in selling-off its pro audio business, which included Martin Audio and EAW.
“Investment activities are shining a spotlight on growth, profitability and other related KPIs, to monitor and improve the performance of brands,” says McIntyre-Brown. “It’s a tightrope walk for manufacturers, balancing greater commercialization with the need to maintain brand integrity, and the customer relationships that have traditionally been critical to success.”
To explore this shift in more detail, Futuresource Consulting is hosting its sixth annual Audio Collaborative event in London on 8 November, focusing on the growth and crossover of business opportunities for the entire audio ecosystem. To find out more information, please click here.
Install Leads the Way
Futuresource tracks the five key power amplifier verticals, namely rental, portable sound, installed leisure, installed commercial and cinema sound. Of these, the two installation verticals are high growth areas for the power amplifier market, as well as for pro audio overall. Installed leisure (which includes bars, nightclubs, sports stadia, gyms, casinos and the like) yields more value per project, whereas installed commercial (retail stores, malls, corporate, hospitality and similar) provides far more project opportunities.
Despite growth in both the installation segments, the target audience is highly price-sensitive. As more vendors begin to focus on these key verticals, seeking to gain a foothold, a price war could emerge, applying downward pressure to prices and margins.
“In terms of market value, the Americas continues to lead the world,” adds McIntyre-Brown, “though Asia-Pac is on a prolonged growth spurt and will become the largest market by the end of our forecast period. With the world’s largest addressable market and an array of locally produced low-cost amplifiers, all eyes are on Asia-Pac.”
With the likes of Harman’s Crown, QSC, d&b audiotechnik, L-Acoustics and Powersoft all vying for market share, any competitive advantage can make a big impact on sales.
Companies are trying to influence amplifier purchases by aligning them closer to loudspeaker sales, asserting that their speaker systems cannot be used with third party brand amplifiers. This package promotion has been particularly successful within the touring market, where consistency of sound is a key purchase driver.
Connectivity continues to grow in popularity, allowing audio systems to operate over longer distances. Dante (Digital Audio Network Through Ethernet) is the dominant technology in the amplifier market, using a combination of software, hardware and network protocols to deliver uncompressed, high quality, multi-channel digital audio over a standard Ethernet network.
“The growing importance of research and a need for clear strategic focus is making itself felt, as the opportunities and challenges continue to diversify,” says McIntyre-Brown. “Audio is even feeling the squeeze from video, as multimedia installations and performances become routine, forcing companies to innovate even further to capture the hearts of the audience.”
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